Morgan Stanley reiterated an Equal Weight rating on EV giant Tesla (NASDAQ:TSLA) with a 12-month price target of $250.00 as slowing sales and rising inventory create the possibility for a “recalibration” of legacy auto EV strategies.

U.S. EV sales appear to have settled near 7.5% of the market share, and penetration of electric vehicles in Europe has slowed down this year following a promising beginning, while the growth of EV sales in China continues to rely heavily on government incentives.

“The auto industry is clearly in the grips of disruption in terms of technology and business model,” wrote MS analysts. “We expect the next stages of the story will force changes in strategy as return on capital comes under the microscope.”

As strategies begin to reform, Morgan Stanley believes that western legacy OEM platform sharing with China-based partners would make sense and that investors should prepare for a number of subsequent potential announcements of collaborations on areas such as battery technology/manufacturing, supply chain, licensing of ADAS/ autonomous driving and other areas.

“Success in EVs will come down to global scale,” added the analysts. “It’s critical for legacy OEMs to maintain substantial scale in the world’s largest EV market to help amortize development costs over as many units as possible.”

Shares of TSLA are down 0.18% in pre-market trading on Tuesday.