Morgan Stanley just came out with an incredibly bullish video illustrating their views on Tesla’s explosive potential.
Adam Jonas, who leads the auto research team at Morgan Stanley, offers his view of why Tesla “may be the world’s most important car company:
“This is a hyper-ambitious company, and the only one we cover whose stock price can realistically multiply by ten. It can also get cut in half. But we think patient investors will be rewarded if they can hang on for a wild ride.”
First, take a look at what Tesla is really focusing on: Battery development. The sort of lithium-ion batteries Tesla wants to manufacture on a massive scale is expected to grow by 300% by 2020.
Here’s Jonas again:
“Tesla’s all-electric power train makes the company one of the largest consumers of lithium ion batteries in the world, and it wants to be the world’s biggest producer of lithium ion batteries. How big? Like five times bigger than the next-biggest player.
By 2029 we estimate Tesla’s 6.5 million unit global fleet will contain a stored energy capacity of 410 gigawatt hours, an amount equal to the entire daily consumption of electricity in the nation of Mexico.”
Even taking that battery production out of the equation, Morgan Stanley says that Tesla’s focus on software, which makes its structure look more like a tech firm than an auto-maker, will be hugely advantageous in the years ahead:
“Around 60% of Tesla employees are involved in software engineering, versus a normal auto company at around 2%. This is important because the value added of software in a car rises from 5% today to 60% over the next decade.”
Not only does Tesla have that existing institutional advantage, it’s even better-placed geographically:
“When Elon wants to hire a key software engineer, he doesn’t call Hyundai or BMW. He goes to places like Apple, Google, Facebook. Theoretically, this talent could move to Detroit, or they could stay in California. Hmmm.”
The video also goes into how much more ludicrously developed Tesla’s feedback systems are — cars all over the world relay data on their performance back to the company so that improvements can be made, and the level of access to such data is above and beyond what any other auto firm can do.
It’s fair to say they’re pretty bullish.
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