Elon Musk Hints At 'Master Plan Part 3': What's In The Works At Tesla?

Zinger Key Points
  • Tesla could be working on a "vertically integrated" battery supply business that resets the industry cost curve, the analyst said.
  • Additionally, the EV maker is working on technology that would fuse the battery  into the structural integrity of vehicles, he said.

Tesla, Inc.'s TSLA Elon Musk on Thursday sent his followers on a guessing game with a tweet that said he is working on "Master Plan Part 3."

Prominent Tesla bull and Morgan Stanley analyst Adam Jonas shared his insights on the statement from Musk in a new research note. 

Jonas Recaps Tesla 'Master Plan': The first part off Musk's "Master Plan" was proof of concept, and part two was about "scaling the concept and prototype development" of the network, Jonas said in a note. 

Part two of the plan was announced on July 20, 2016, when Tesla had yet to become profitable and had a market cap of about $30 billion, the analyst said. Since then, the valuation of the stock has increased by a factor of about 30, he said. 

What Jonas Expects To Come Next From Tesla: Part three of the plan could have to do with "mass industrialization, a network of flywheel and connecting the dots across adjacent total addressable markets," Jonas said. 

Tesla could work on ways to collaborate with Musk's other companies such as the Boring Company and SpaceX's Starlink unit, the analyst said. 

The analyst sees increased possibility of Tesla offering products and services to the electric vertical takeoff and landing (eVTOL)/urban air mobility (UAM) market, moving into aviation.

"The potential skills transferability and network adjacencies are too strong to ignore," Jonas said.

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Tesla could be working on a "vertically integrated" battery supply business that resets the industry cost curve, the analyst said.

Additionally, the EV maker is working on technology that would fuse the battery  into the structural integrity of vehicles, he said. This would serve to improve the vehicle range per unit of mass, leading to incremental cost savings. 

Over time, Tesla is well-positioned to introduce vehicles at a price point of $15,000 or less to penetrate key markets such as India, the analyst said.

Jonas also sees the scope of increased network services or recurring revenues. Tesla, according to the analyst, will derive greater value in the average revenue per use or attach rate of the installed base of Tesla vehicles than from the unit price of the vehicle itself.

Autonomy is likely to feature prominently in any of Tesla's plans, the analyst said.

"In short, if Tesla's share price were to multiply from here, we believe it will have rather little to do with the core business of making and selling cars in the traditional model so familiar to auto analysts," Jonas said.

Morgan Stanley has an Overweight rating and $1,300 price target for Tesla shares.

TSLA Price Action: Tesla shares were trading 3.49% higher at $902.05 late in Friday's session. 

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Photo courtesy of Tesla. 

Posted In: Adam Jonaselectric vehiclesElon MuskMorgan StanleyAnalyst ColorAnalyst Ratings