-- Tesla Inc (NASDAQ:) shares have been battered and bruised amid waning electric vehicle demand, but "Morgan Stanley believes the EV maker will emerge stronger from the "EV recession," and warns investors against ignoring the company's AI-related developments. 

"Tesla has significant attributes to be valued as an AI beneficiary," analysts at Morgan Stanley said in a Wednesday note, and kept its overweight rating on stock, with a $310 price target. 

But before Tesla can get credit as an AI company, the EV maker has to do focus efforts on stabilizing its core EV business to stem the negative earnings revisions seen so far. 

The current EV recession, in which demand continues to dwindle, is moving into the next phase, in which, like its auto competitors, Tesla will focus on stepping up efficiencies by not only cutting costs by implementing strategic changes. 

Slowdown in the auto industry, Morgan Stanley says, can "frequently accelerate good management strategies including collaboration and even consolidation."

The current headwinds in the industry has already taken one victim following the recent delisting of Fisker (OTC:), but it may not be the last, teh  leading to fewer competitors in the industry.

With many auto firms expected to face challenging backdrop, the need to survive could likely forced unlikely strategic partners, turning rival companies from friend to foe.  

Tesla could collaborate with Chinese auto and battery partners to pave the way to Western auto markets, the analysts estimated. 

It may take a few more quarters for Tesla to weather the storm and wrestle back the narrative from naysayers, Morgan Stanley says, but believes that once the bearish waves wash away, then the EV maker's other businesses may likely come into the spotlight. 

Morgan Stanley estimates that Tesla's core auto business represents just a fifth, or $62 a share, of its estimate of the EV maker's overall value of $310 a share.    

"We believe investors should not ignore the continued developments of Tesla’s other plays," Morgan Stanley said, many of which are auto-related including the recurring revenue opportunity from the Tesla fleet.