<table><tr><th>From:</th><th>Richard Kahn</th></tr><tr><td>Sent:</td><td>Wednesday, June 14, 2017 12:17 PM</td></tr><tr><td>To:</td><td>Jeffrey Epstein</td></tr><tr><td>Subject:</td><td>Fwd: Apple, Inc. &amp; Tesla Motors Inc.: Partners or Competitors?</td></tr></table>

Richard Kahn
HBRK Associates Inc.
575 =exington Avenue, 4th Floor
New =ork, NY 10022
tel: 
fax: 
cell:

Begin forwarded message:

From: =/b>"Morgan Stanley" <████████████████████████████>

Subject: =/b>Apple, Inc. & =esla Motors Inc.: Partners or Competitors?

Date: =/b>June 14, 2017 at 12:29:51 AM =DT

To: =/b><████████████████████████>

Reply-To: =/b><██████████████████████████████████████>

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Wealth =anagement

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Apple, Inc. & =esla Motors Inc.: Partners or Competitors?

## Katy L Huberty, CFA =E2 Morgan Stanley

## June =4, 2017 4:02 AM GMT

Tesla has dominated the =potlight in EVs and applied Al in transport. Apple CEO Tim Cook views =utonomous cars as the 'mother of all Al projects' and =E2 a core technology.' We think Tesla investors must =repare for serious competition for talent and investment of capital in =his market.

Please see our colleague Adam Jonas's note on =he same topic, with added color from Tesla's point of view.ln a recent =loomberg interview, Apple's CEO made some of the most candid =nd direct statements on the company's position on disrupting =utos and transport. We share the following thoughts on this evolving =opic:l. Many investors we speak with believe Tesla's lead in =iles traveled and data capture is insurmountable. We question this =osition, particularly at this still very early stage of commercial =pplication in shared autonomy. It is the working assumption of the =organ Stanley Global Autos & Shared Mobility team and the Tech =ardware team (led by Katy Huberty) that Apple will pursue a strategy in =ars/transport, an addressable market we calculate is worth many =rillions of dollars in revenue and many hundreds of billions of =onsumer hours annually. For more, please see our May 15th TSLA =owngrade, The Price of Ambition: Downgrade to EW.2. If Apple is serious =bout pursuing autonomous driving systems as a 'core =echnology,' it will have to harvest real-world miles on public =oads in very large quantities, perhaps in the not too distant future. =here are many potential ways in which it can go about this: (a) with =stablished ride sharing firms, (b) with established car rental firms, =c) in partnership with OEMs, (d) through its own proprietary machine =earning network, (e) more than one or all of the above. 3. From the =pple perspective, core self-driving software is likely the first step =n its autonomous pursuits, and we believe Apple will eventually move =eyond just software into designing a full car and/or launching a =latform for third party services and content over tim

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<http://www.morganstanley.com/img/cs/spacer.gif> Disclosures:
Please see =he full report for risks, disclosures and other important =nformation.

Important disclosures regarding the =elationship between the companies that are referenced in Morgan Stanley =esearch and Morgan Stanley Wealth Management research are available on =he Morgan Stanley Wealth Management disclosure website at https://www.morganstanley.com/online/researchdisclosures.

Morgan Stanley Wealth Management Not Acting as Municipal =dvisor Morgan Stanley Wealth Management is not acting as a municipal =dvisor to any municipal entity or obligated person within the meaning =f Section 15B of the Securities Exchange Act (the "Municipal Advisor =ule") and the opinions or views contained herein are not intended to =e, and do not constitute, advice within the meaning of the Municipal =dvisor Rule.

## June =4, 2017 4:02 AM GMT (cont.)

## Copyright

The =opyright in materials provided by Morgan Stanley is owned by Morgan =tanley & Co. LIC. Morgan Stanley Wealth Management is the trade =ame of Morgan Stanley Smith Barney LLC, a registered broker•dealer in =he United States.

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