While Telsa’s cars run on electricity, its stock price seems to defy gravity. Shares of Tesla rose 17%, or $37.65, to a record $255.30 in midday trading after a Morgan Stanley analyst said the stock could hit $320.
Tesla, which sold fewer than 23,000 cars last year, now has a stock market valuation of $30 billion. That is more than half the $57.4 billion of General Motors, which sold 10.7 million vehicles last year.
“Tesla’s quest to disrupt a trillion-dollar car industry offers an adjacent opportunity to disrupt a trillion-dollar electric utility industry,” Morgan Stanley autos analyst Adam Jonas wrote in an investor report Tuesday. “If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again.”
Tesla Chief Executive Elon Musk is expected to provide more information soon about plans for a so-called gigafactory -- a battery research and production venture that “will allow us to achieve a major reduction in the cost of our battery packs and accelerate the pace of battery innovation.”
The Palo Alto car maker is working with Panasonic and other unnamed partners to develop the factory.
Jonas said the U.S.-based factory would be the world’s largest Li-ion battery pack facility and slash the cost of the expensive batteries that power Tesla’s cars. The factory would also provide new business opportunities.
“If Tesla can become the world’s low-cost producer in energy storage, we see significant optionality for Tesla to disrupt adjacent industries,” Jonas said.
He sees big gains for Tesla from serving the electric power generation and distribution market.
“Many firms are engaged in the grid storage ‘space race,’ the missing piece in the renewable energy puzzle. Include a post-GIGA Tesla in that hunt,” Jonas said.
Tesla, for example, could repurpose aging battery packs from its cars into electrical storage. As the batteries age, their charge capacity declines, but even when they can’t hold enough power to operate a car for long distances, they can still have potent storage capability.
But batteries is just one Tesla play, Jonas said.
He believes the automaker may be the best positioned to bring autonomous cars to market.
“Tesla’s fleet is 100% electric and connected,” Jonas said. “As the role of software engulfs the car, the world’s only Silicon Valley-based car company has the upper hand. We see autonomous cars contributing $5.6 trillion in economic savings globally.”
Tesla is Morgan Stanley's top pick in U.S. autos.
“Tesla is an extremely ambitious company for whom flooding the market with fun-to-drive EVs and giving competitors a headache might not be the endgame,” Jonas said.
Jonas report came out on the same day when Tesla received high marks in an entirely separate environment.
Consumer Reports named the Tesla Motors Model S electric car the best vehicle on the road in its annual review of autos Tuesday.
The magazine called the luxury sports sedan its top pick of all 2014 model year autos. This was the first time since 2010 that Consumer Reports named a top overall pick. The last was the Lexus LS 460L.
Consumer Reports names a best overall vehicle infrequently but its staff was wowed by the $89,650 Tesla it tested, said Jake Fisher, the magazine’s automotive test director. He said it could have won in several of the segments, including the top green car and top luxury car.
“This electric luxury vehicle offers blistering acceleration, razor-sharp handling, a compliant ride, and a versatile cabin with room for a small third-row seat,” the magazine said. “This technological tour de force, while pricey, is brimming with innovation and offers a 225-mile driving range.”
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