Tesla heads towards trillion-dollar valuation as Big Auto stalls on EVs

The Driven

The stock market is making another major re-appraisal of the potential worth of electric car maker and energy storage developer, Tesla, as it dawns on analysts that this company can no longer be considered just a flash in the pan. Tesla, they now admit, is going to be a very, very big company.

Overnight, in major news, Morgan Stanley’s Adam Jonas, one of the most respected auto analysts in the market, dramatically lifted both his price target and his bull case valuation for Tesla – just weeks after an earlier upgrade.

Jonas thinks Tesla stock is currently over-priced by the market.

The market has the stock at around $US1,500 a share and Jonas’ fair value is now $US1,050 a share (up from $US740). But apart from risks – most potently the breakdown in China-US relations, and delays to autonomous driving – he also sees massive upside, so his bull case valuation is lifted from $US2020 a share to $US2500.

That puts a potential market value of Tesla of more than $US500 billion, or $A700 billion. And there’s no reason why it wouldn’t go further towards $A1 trillion. That’s more than every other car maker in the world combined. And the reason is simple: Jonas says it is now clear that the legacy auto makers – despite their big talk and promises – are dragging their heels on EVs.

By 2030, Jonas now reckons, Tesla will be producing three million cars a year and pulling in revenues of more than $US170 billion. And the rest of the industry will be struggling to catch up.

“One year ago, we believed the legacy OEMs (car makers) would have had a far more advanced strategic position to pressure Tesla market share,” Jonas and his fellow analysts write.

“However; Tesla has had, in our opinion, much more freedom to expand than we initially thought, with legacy OEM EV timelines 1 to 2 years further out than our initial expectations.”

In short, Big Auto has seen the future, made some nice speeches, assigned some capital, done some pretty marketing, and then looked the other way.

And while they stumble over the rollout of their EV models – nearly all of them petrol and diesel lookalikes, and various forms of hybrids – Tesla is moving forward with radically different ideas that speak to a very different future; think Cybertruck, the Tesla Semi, the Roadster, and even a multi-purpose van.

To read the full version of this story – and view the photo gallery – on RenewEconomy’s electric vehicle dedicated site, The Driven, click here…

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