Morgan Stanley Upgrades Tesla On Growth Potential In Embedded Businesses


A publication by in September claimed Europe would drive the demand for electric vehicles globally in 2020-2021, while Elon Musk’s Tesla Inc TSLA will act as the growth driver in the U.S.

On the other hand, the Chinese EV space would gradually transform into a market, driven by private demand instead of the current subsidy-reliant market. The report also anticipates a fall in battery prices in 2022-2023.

The Tesla Analyst: Morgan Stanley analyst Adam Jona upgraded Tesla from Underweight to Overweight, raising the price target from $360 to $540.

The Tesla Thesis: Citing a “profound model shift,” Adam Jonas anticipates increased revenue generation from high-margin software and services, in addition to its EV sales.

Bloomberg quoted Jonas saying, “To only value Tesla on car sales alone ignores the multiple businesses embedded within the company.”


Why It Matters: Tesla has evolved from an EV maker over time. The company is making headways in other emerging areas like energy storage, ride-sharing, and auto insurance.

Its Powerpack and Powerwall stationary energy storage services can support small grids, whereas its Megapack, the largest battery system with a high density, is built specifically to support larger grids. With a global push for renewable energy usage, these product offerings could generate a higher interest over time.

In July, an Electrek publication claimed that the Tesla Network, a ride-hailing app that engages Tesla owners, could skim market share from other ride-sharing businesses like Uber Technologies Inc (NYSE: UBER) and Lyft Inc (NASDAQ: LYFT). At the time, an analyst from Ark Research estimated Tesla’s addressable market at roughly $50 billion.

Tesla Insurance Services, which is currently limited to California and covers Model S, Model X, Model 3, Model Y, and Roadster, plans to expand this service to other states in the U.S. in the future.

TSLA Price Action: TSLA shares are trading 2.48% higher to $453 in the pre-market session on the last check Wednesday.

Image Courtesy: Wikimedia

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Posted In: Analyst ColorUpgradesPrice TargetTop StoriesAnalyst RatingsAdam Jonaselectric vehiclesMorgan Stanley
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