Analyst Warns Tesla Could Sell Off Following Thursday's Event

In a report published Tuesday, Global Equities Research analyst Trip Chowdhry answered four key questions investors are asking ahead of

's upcoming Thursday event in which the company will introduce a new product line, assumed to be stationary batteries.

Chowdhry noted from a historical perspective, shares of Tesla has always sold off on the news, just like many tech companies, and that "this time may not be any different." However, the analyst noted that Tesla's fundamentals are strong and while short term volatility may be a possibility, he is sticking with his Overweight rating and $385 price target.

Based on Chowdhry's research, Tesla is likely to see a $10 billion revenue by 2017 from stationary batteries. The analyst added that Tesla will have a capacity of about 10GWh to 13 GWh and assuming the company sells 100,000 85KWh automobiles in 2017, the cars will consume only 8.5GWh of capacity, implying the remaining 1.5GWh could go into the Stationary Residential batteries. The math behind the $10 billion figure is as follows: "Assuming 15KWh Stationary Battery and then multiply with one million units = 1.5GWh. Conservatively, assuming an average selling price of $10,000 gives a revenue opportunity from Residential Batteries of $10 billion for Tesla in 2017."

Simply speaking, Chowdhry answered that Tesla will face no competition in the space. He noted that for any competition to significant, they will need to operate a "TeraFactory" or "PetaFactory" to rival Tesla's GigaFactory, and so far no such facility exists. "Tesla has the scale, technology and time advantage, which will be very difficult for the competitors to replicate," the analyst wrote.

Similar to the third question, the answer is a simple "no," as solar panels are not the most compelling reason for a customer to buy a Residential Storage battery. Rather, an "always on" power backup seems to be the most compelling reason, Chowdhry argued.