Elon Musk's biggest booster says it might be 'time to sleep on the floor' at Tesla

• Elon Musk might need to start sleeping at Tesla again as tough times mount, according to top bull Adam Jonas of Morgan Stanley.

• The firm may slowly be exiting the EV industry, given rising Chinese competition and dimming outlooks, he said.

• Jonas holds a Street-high $310 price target on the firm, but says Musk's compensation deal is also adding uncertainty.

It might be time for Elon Musk to bring back an old corporate habit to reignite Tesla's spark, according to Morgan Stanley analyst Adam Jonas.

"Looking ahead to Tesla's 1Q results ... investors are starting to ask: 'Is it time to sleep on the floor again?'" Jonas said in a note published on April 18.

The reference is to when the CEO would spend nights doing so over past years, in an effort to encourage hard work during tough times.

Just a year ago, this would be an unlikely comment from the long-standing Tesla bull. But now, tougher times might indeed be back, as Jonas acknowledged that an electric vehicle recession has engulfed the leading manufacturer.

With conditions deteriorating and competition rising, it may even be that Tesla is starting to eye an exit from the traditional EV-maker industry. Such a shift has been signaled by the company's recent decision to scrap plans for a low-cost Model 2, and instead focus on autonomous driving and robotaxis. Wall Street didn't love the move, sending the stock even lower to fresh year-to-date lows this past week.

"Is Tesla exiting the (traditional) EV auto industry? At the margin, it seems so. This doesn't mean that Tesla won't keep selling cars (including new launches) for many years to come. But this cannot be the end game," Jonas wrote, adding that Tesla's 50% targeted annual growth rate is no longer valid.

Generally, challenges are penetrating the EV market from all sides, whether they be infrastructure, vehicle affordability and repairability, or rising competition from hybrids. It's not only a domestic issue for Tesla, as cheaper Chinese alternatives are cutting deep into crucial offshore demand.