Tesla's Next Trillion Dollar Industry

Morgan Stanley’s Adam Jonas sees huge opportunities for growth in Tesla.

“Tesla’s quest to disrupt a trillion $US car industry offers an adjacent opportunity to disrupt a trillion $US electric utility industry,” he wrote in a new note to clients. “If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again.”

Jonas raised his target on Tesla to $US320 from $US153. The stock closed at $US217 on Monday, and it’s up 6% in pre-market trading.

Jonas’ thesis isn’t too crazy.

One of the big hurdles in the green energy space is the inability to store it cheaply. Tesla could come out front here, which would be a total game changer.

“Tesla says it will team up with partners to build the world’s largest Li-ion battery pack facility in the US,” wrote Jonas. “We reflect the potential for lower battery costs through higher sales volume nearly doubling Tesla’s share of the global car market to 90bps by 2028, driving our target increase. If Tesla can become the world’s low-cost producer in energy storage, we see significant optionality for Tesla to disrupt adjacent industries.”

Disrupting battery technology and the electric utility industry isn’t even the whole story.

There’s also self-driving cars.

“For autonomous cars, is there a better-positioned OEM than Tesla?” asks Jonas. “We don’t think so.”

Here’s Jonas’s crude diagram laying out the opportunity.

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