Related: Analyst resets Tesla stock price target ahead of Q3 deliveries The theory might sound a little funky for everyday people, but analysts see it playing out in the auto sector. A butterfly flapping its wings in China is blowing a mighty wind through carmakers on the other side of the globe.

Morgan Stanley analyst Adam Jonas cut his ratings on GM, Ford, and Rivian stocks. All three are falling in early trading.

Key Takeaways Morgan Stanley downgraded the U.S. auto sector and several companies in it because of growing competition from China.General Motors and Ford had their ratings and price targets cut.Morgan Stanley noted that China now produces 9 million more cars than it buys.

Morgan Stanley downgraded Rivian Automotive (RIVN) to Equal Weight from Overweight with a price target of $13, down from $16. The firm believes Rivian's ability to drive competitive compute progress in a financially prudent way is limited.