Seeking Alpha

Morgan Stanley: Tesla's business model is bigger than you think

  • It's all green lights for Tesla Motors (TSLA +17.1%) with the Model S and Model X set to create a "100% captive ecosystem" for the company, according to Morgan Stanley.
  • Analyst Adam Jonas sees Tesla Motors grabbing a respectable 0.9% of the global automobile market by 2028, but it's in other industries the analyst gets dreamy over Tesla's profit potential.
  • By having a jump on rivals with its gigafactory, Tesla could dive right into the $1.5T electric utility market. Morgan identifies a wide variety of potential energy plays for Tesla - including off-peak grid storage, transportable energy storage systems, and black start provisions for end users.
  • Autonomous cars is another burgeoning industry in which Tesla could be well-positioned due to its early start with connected EVs. It doesn't hurt to be the only automaker with a corporate headquarters in Silicon Valley as technology with self-driving cars races forward.
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Comments (53)
  • jmjjmj1
    , contributor
    Comments (176) | Send Message
     
    ...and if we mention TSLA and a price tag to infinity every 45 minutes, we will be able to sell our next offering and make a mint, Says MS
    25 Feb 2014, 12:47 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (4375) | Send Message
     
    First time I've heard the utility company term "black start". From Wikipedia: "A black start is the process of restoring a power station to operation without relying on the external electric power transmission network."

     

    This seems even more farfetched than the Apple buyout rumor, but I sure do like the jump in share price! Keep those rumors coming until we hit $1000 per share and force those shorts to the sidelines.
    25 Feb 2014, 02:03 PM Reply Like
  • SimonSaysShort
    , contributor
    Comments (113) | Send Message
     
    Projecting out to 2028....hahaha
    25 Feb 2014, 12:52 PM Reply Like
  • xxavatarxx
    , contributor
    Comments (3115) | Send Message
     
    Thats what I thought to. : )
    25 Feb 2014, 02:24 PM Reply Like
  • monfrere
    , contributor
    Comments (591) | Send Message
     
    I have to admit, I'm long tesla but found that particular bit to be pretty absurd. I'm long because I'm excited about the almost infinite size of the markets they play in and the fact that almost no one else is innovating in any real way in any of those spaces. Saying they will get .9% of the car market in 2028 makes me a bit embarrassed to be on the same side of the argument with that person.
    25 Feb 2014, 02:29 PM Reply Like
  • Michael Nau
    , contributor
    Comments (972) | Send Message
     
    Infinite market size? How many people in the world can afford a Tesla, let alone want a car that can't go on long trips?

     

    Do people really think that if the Tesla concept catches on, other better-financed car companies won't jump in and erode margins? Oh wait, I forgot, TSLA doesn't have profit margins to erode....
    25 Feb 2014, 04:21 PM Reply Like
  • monfrere
    , contributor
    Comments (591) | Send Message
     
    I'm sorry, cant go on long trips? Is that a real argument? How many times this year have you driven more than 150 miles one way to someplace that you cant supercharge a tesla? For infinite market size, I obviously didn't mean infinite but rather very large compared to a $30B market cap. What if the grid thing works? What if he just licenses the batteries out so other companies can use the supercharger stations? They have the tiniest little sliver of a sliver of one of the many markets they might play in. It's the opposite of Facebook which already has everyone and has nowhere to grow.

     

    As for how many people can afford a tesla... maybe in the near future I'll be saying, "but with oil prices so high, you can only afford a tesla powered by solar panels on your house"
    25 Feb 2014, 05:09 PM Reply Like
  • marshgre
    , contributor
    Comments (673) | Send Message
     
    "Infinite market size? How many people in the world can afford a Tesla, let alone want a car that can't go on long trips?"

     

    So LA to NYC isn't long enough of a trip for you?
    25 Feb 2014, 05:25 PM Reply Like
  • nwdiver
    , contributor
    Comments (406) | Send Message
     
    "How many people in the world can afford a Tesla"

     

    Are you being intentionally dense or did you just "forget" about the Model S. By 2020 Tesla will be selling models S, E & X. Everyone knows how well that sells.
    25 Feb 2014, 07:19 PM Reply Like
  • mitrado
    , contributor
    Comments (2019) | Send Message
     
    I can afford a Tesla's tyre! :-D
    26 Feb 2014, 05:36 AM Reply Like
  • joeinslw@gmail.com
    , contributor
    Comments (703) | Send Message
     
    Are you shorting the stock because you missed the move up when the stock was in the 30's? There are so many people who are so jealous in SA that it's ridiculous, Why else would someone bad mouth a company they don't know that much about? In SA if you have been here long enough you would learn that Elon keeps that information close to the vest, so you wouldn't know all the facts anyway. But Oh yeah, I know I just for.....got they want the price to come down so they could afford to get....in....right?
    6 Mar 2014, 04:19 PM Reply Like
  • Tom Incorporated
    , contributor
    Comments (178) | Send Message
     
    You missed the % symbol.
    A "100% captive ecosystem"
    25 Feb 2014, 12:52 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (5787) | Send Message
     
    That's just the TSLA multiplier. Profits and valuations should be multiplied by 100 and P/E ratios divided by 100. Then everything makes sense again;)
    25 Feb 2014, 12:58 PM Reply Like
  • User 16336642
    , contributor
    Comments (52) | Send Message
     
    Outside of Solar City, TSLA will have a negligible impact on storage for the grid. There is no way this master showman can bring down the cost of battery storage to make renewable storage a reality on any sort of scale. But hey, MS knows that they just need to sell inventory to sheep and shorts.
    25 Feb 2014, 12:55 PM Reply Like
  • Ford Prefect 1969
    , contributor
    Comments (2282) | Send Message
     
    "Outside of Solar City, TSLA will have a negligible impact on storage for the grid"

     

    Not sure it will stop a combo of TSLA and SCTY trying or as a matter of fact attracting the capital to do it.

     

    There is a heck of a lot more do than show here. May as well get used to it.
    25 Feb 2014, 01:00 PM Reply Like
  • dcharletta
    , contributor
    Comments (38) | Send Message
     
    Buy low, sell high.

     

    Attach battery packs to the electrical grid. Charge at night from the grid when rates are low. Discharge back to the grid the next day during peak hours. Collect payment.

     

    Another scenario:

     

    Attach solar array to battery packs, and attach battery packs to the grid. Charge battery packs on sunny days for free. When packs are fully charged, solar arrays can sell electricity to the grid. Collect payment. Discharge full batteries at night, or for more profit, during peak times the next day if clouds are forecast. Collect payment.

     

    Looks like Musk's gigafactory may be spitting out little money printing presses.
    25 Feb 2014, 01:20 PM Reply Like
  • Chezterr
    , contributor
    Comments (21) | Send Message
     
    "There is no way this master showman can bring down the cost of battery storage to make renewable storage a reality on any sort of scale."

     

    None? None, whatsoever...?

     

    So, battery tech is NEVER going to advance...?

     

    Didn't you catch any of the news last week regarding Tesla and hybrid LiIon/metal air batteries....?
    25 Feb 2014, 01:28 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (5787) | Send Message
     
    "hybrid LiIon/metal air batteries....? "

     

    There are literally battery "breakthrough" and patent news each and every day. Billions of investments are pouring in this field - everybody wants a smartphone or other devices with better battery life by yesterday.

     

    There are enormous financial incentives worldwide to come up with better batteries.

     

    TSLA finding the ultimate battery solution (long-term) is like buying a lottery ticket and hoping for the grand prize.
    25 Feb 2014, 02:17 PM Reply Like
  • billjac
    , contributor
    Comments (38) | Send Message
     
    User 1633...... Wealthiest sheep I ever saw.
    25 Feb 2014, 03:50 PM Reply Like
  • arondaniel
    , contributor
    Comments (1035) | Send Message
     
    "There is no way this master showman can bring down the cost of battery storage to make renewable storage a reality on any sort of scale"

     

    No. If you have the ability to print your own money, even a company of halfwits could do it.

     

    Personally, I think the game was over at "car of the year". Wondering what's taking everyone so long to catch up.
    25 Feb 2014, 04:09 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (9719) | Send Message
     
    Pie in the sky.

     

    TSLA would have to increase net revenue by 300x to justify this price.

     

    Looking to get in short for the pullback.
    25 Feb 2014, 12:57 PM Reply Like
  • dso1986@gmail.com
    , contributor
    Comment (1) | Send Message
     
    less than 300x

     

    and justify to who? mr. market do what it want.
    25 Feb 2014, 08:34 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (9719) | Send Message
     
    To justify a century of businesses trading at historical valuations. TSLA didn't invent the income statement.

     

    I don't understand the psychology of people looking at a high quality product that normally would sell for $500 but, in their fits of excitement, are desperately offering $4,000 for that product.

     

    Hey, if you are long this name AT LEAST buy some puts to hedge against what I feel will be a brutal pullback.
    25 Feb 2014, 09:58 PM Reply Like
  • PeakOiler
    , contributor
    Comments (298) | Send Message
     
    FB, LNKD, NFLX, AMZN, TWTR, YELP, now TSLA. Dotcom bubble replay, housing bubble replay, thanks to bubble money flowing from Q.E. When will they ever learn.
    25 Feb 2014, 01:05 PM Reply Like
  • Andrei Volgin
    , contributor
    Comments (625) | Send Message
     
    They will not. All people who make these decisions benefit from them: Fed, bankers, Congress, etc. This is an example of 1% screwing the remaining 99%. I belong to that 1%, but I strongly disagree that we can print our way to prosperity.
    25 Feb 2014, 01:22 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (9719) | Send Message
     
    Remember today's 35 year old "investor" was 20 years old during the last tech bubble and they probably weren't paying too much attention.

     

    They'll learn though...
    25 Feb 2014, 07:54 PM Reply Like
  • Frank Greenhalgh
    , contributor
    Comments (2636) | Send Message
     
    Talk about a "Distorted Reality Field", Musk is the equal to Jobs easily.
    The Giga Factory does not exist except in the mind of Musk. It will take three years if they get financing. No one knows if the present LI Ion batteriy design will be changed or replaced with more advanced battery designs by then.
    Both the Tesla S and the coming X will have ASPs of $100.000.
    The E will have a load of competition when it finally goes into production in 2018.
    I think Tesla is a great company and makes a great car, but assuming that it has the EV world to itself and that it will take over energy storage is really optimistic.
    Google's Autonomous Car adds about $25,000 to its cost. It will be many years before states adopt it, people trust it, and costs are reduced. Probably around 2025.
    25 Feb 2014, 01:07 PM Reply Like
  • alext1379
    , contributor
    Comments (709) | Send Message
     
    Morgan Stanley also assumes no foreign governments will fund their champions with free money to beat Tesla in the areas they think Tesla will make a killing.

     

    So now Tesla goes from making cars to batteries to our electrical grid? Sorry but to me it seems like MS has something to gain from pumping Tesla, either by shorting or they own a lot of shares.

     

    I would love to own a Model X but they currently produce 35k cars, if they hit 500k a year, their market cap would go from 30 billion (more than half of GM now) to over 400 billion, more than Google and they're making billions every quarter, no a few million of non-GAAP profit.
    25 Feb 2014, 01:19 PM Reply Like
  • surferbroadband
    , contributor
    Comments (2743) | Send Message
     
    Elon Musk is not Steve Jobs. Elon Musk is Bill Gates.

     

    A "100 captive ecosystem" is a monopoly.

     

    Didn't the DOJ sue Microsoft for acting like a monopoly?

     

    Monopolies are very profitable.
    25 Feb 2014, 01:26 PM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (4375) | Send Message
     
    The interesting thing about Tesla is that its technology is available to other licensees, but they've only had two takers, Toyota and Mercedes. Their monopoly is entirely in the defeatist minds of their competition.
    25 Feb 2014, 02:08 PM Reply Like
  • embryorambo
    , contributor
    Comments (265) | Send Message
     
    MS really wants that secondary!~
    25 Feb 2014, 01:28 PM Reply Like
  • Black Gold
    , contributor
    Comments (684) | Send Message
     
    Hard to see how an analyst opinion is worth $4B in market cap.
    25 Feb 2014, 02:20 PM Reply Like
  • vandeley
    , contributor
    Comments (122) | Send Message
     
    It's not this is just a short squeeze
    25 Feb 2014, 02:23 PM Reply Like
  • embryorambo
    , contributor
    Comments (265) | Send Message
     
    can you see how one broker would want to pump up a stock so that it was well positioned to be a part of its secondary offering for the Giga Hype?
    25 Feb 2014, 03:53 PM Reply Like
  • Ashraf Eassa
    , contributor
    Comments (9272) | Send Message
     
    To da moon!
    25 Feb 2014, 02:34 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (4470) | Send Message
     
    One analyst can add $4 billion of market cap? That's a bit excessive
    25 Feb 2014, 02:34 PM Reply Like
  • monfrere
    , contributor
    Comments (591) | Send Message
     
    It's still only worth 1.6 Whatsapps ;-)
    25 Feb 2014, 02:37 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (5787) | Send Message
     
    Tesla should add WhatsApp to the car's touchscreen so perma-bull analysts can finally justify a $1000 price target :)

     

    And if that doesn't help, how about releasing some new Hyperloop sketches to keep the momentum buyers happy.
    25 Feb 2014, 02:48 PM Reply Like
  • Deja Vu
    , contributor
    Comments (1471) | Send Message
     
    let me guess TSLA buys bankrupt AONE's shuttered Li battery factory in Livonia Mich.
    25 Feb 2014, 03:25 PM Reply Like
  • MR_Z
    , contributor
    Comments (117) | Send Message
     
    What a bunch of whiners.
    Just enjoy it for goodness sake.
    25 Feb 2014, 05:01 PM Reply Like
  • monfrere
    , contributor
    Comments (591) | Send Message
     
    You know how Google always makes amazingly technically superior products that go absolutely nowhere because no one uses them or has even heard of them? Like Google Voice or G+ or Google Sky? I get the feeling Tesla is like that only with good marketing. Maybe Tesla can start buying all the awesome things Google fails miserably at and make them awesome.
    25 Feb 2014, 05:14 PM Reply Like
  • PrincePreston
    , contributor
    Comments (86) | Send Message
     
    Where can I get some of what he's been smoking? They don't have anything that strong in Denver... Sound business model that: Buy the power from the electric co at night, and sell it back to them during the day. And store the power in LIOn batteries, which are so cheap, right? Why they're free, if you own a Tesla... And when the batteries wear out, which they will?
    25 Feb 2014, 08:30 PM Reply Like
  • chipdoctor
    , contributor
    Comments (1782) | Send Message
     
    If the Giga-Factory's batteries are so superior (performance and cost), then they should sell them to the >1Bu/yr cellular market as well.

     

    This could justify a $1000 stock price (and 90% market share). I think its time to option puts and calls, as fundamentals left long ago.
    25 Feb 2014, 08:32 PM Reply Like
  • Mark Krieger
    , contributor
    Comments (4470) | Send Message
     
    A perfect short at Morgan's price target of $325, the question is, will it get there?
    25 Feb 2014, 08:36 PM Reply Like
  • rockinghorse
    , contributor
    Comments (295) | Send Message
     
    In 2020 my guess is that Tesla, Volkswagen (+Audi) and Nissan (+Renault) are three largest battery manufacturers. Therefore it is very good pick that battery storage markets are probably more aggressively growing than electric automobile markets.

     

    Tesla will naturally be large grid storage consumer as superchargers are equipped with grid storage battery to level peak demand and store solar electricity.
    25 Feb 2014, 08:38 PM Reply Like
  • glacier32
    , contributor
    Comments (30) | Send Message
     
    I doubt the motivations of Adam Jones. Remember he asked the first question on last CC which was about financing for giga factory. EM replied he would discuss it this week. Then AJ said he had no further questions. You could see how prepared he was on the CC and what his mindset was. He is now pumping TSLA trying to win the underwriting business for his firm.

     

    Today's report is full of speculations. He mentioned that he was asked by many investors why Tesla has a unique position in battery. He wrote "while I could not answer the question...Tesla has been cooperating with Panasonic for many years and Tesla has won many patents.". Nevertheless he attributed $1.5T utility market to the addressable market of Tesla.

     

    This reminds me of Bubble 2.
    25 Feb 2014, 11:54 PM Reply Like
  • bwmaki
    , contributor
    Comments (469) | Send Message
     
    Looks like it may be Panasonic with the deep pockets for the Gigafactory- note the article says they will likely try to produce lower cost for batteries for all manufacturers, not just Tesla. About what I thought- no secret Musk rocket battery sauce. Released an hour ago.

     

    http://yhoo.it/OB2ow5
    26 Feb 2014, 12:22 AM Reply Like
  • Tales From The Future
    , contributor
    Comments (5787) | Send Message
     
    Yes, just look at the quotes in the report like "flooding the market " - then the analyst writes about 0.9% marketshare by 2028. Since when is such a tiny marketshare disruptive?

     

    There is no substantial proof for best battery or best anutonomous car either, many companies are working on this (Nissan for example aims to have them by 2020 and they have many working demos today).

     

    This timing is indeed very suspicious, why release such a report days BEFORE the giga factory announcement?
    26 Feb 2014, 04:04 AM Reply Like
  • Yarak
    , contributor
    Comments (284) | Send Message
     
    First rule of making predictions: never predict both a price and a timeline.

     

    $320? How about when TSLA is making $32/sh in GAAP profits, after taxes. Or maybe even $16/sh. Do we just trade range-bound until then?
    26 Feb 2014, 05:46 AM Reply Like
  • B. Banner
    , contributor
    Comments (86) | Send Message
     
    0.9 % market share in 2028 is not so unrealistic. Well...under the premise that the other car manufactures finally start to move now with full force - as they already said they would back in 2007. ;-)
    26 Feb 2014, 08:08 AM Reply Like
  • Tradevestor
    , contributor
    Comments (4106) | Send Message
     
    Both sides of Tesla http://seekingalpha.co...
    26 Feb 2014, 08:30 AM Reply Like
  • joeinslw@gmail.com
    , contributor
    Comments (703) | Send Message
     
    Where have all the shorters gone.....??? They aren't around telling the Tesla supporters how wrong we are anymore....
    26 Feb 2014, 11:16 AM Reply Like
  • monfrere
    , contributor
    Comments (591) | Send Message
     
    I'm long too, but dont think that just because a stock is going up that means we are right. Markets can be irrational.
    26 Feb 2014, 11:29 AM Reply Like
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