The last few months have been highly successful for the electric car manufacturer Tesla Motors Inc (NASDAQ:TSLA). Its Model S vehicle has been extremely successful, and the last week has seen links with Apple enter the public domain as well. If the significance of the latter has perhaps been overestimated, the prominence and public profile of Tesla Motors Inc (NASDAQ:TSLA) has only been enhanced by it. This reflects the upward trend of the company’s share price, which has virtually doubled in a matter of three months.
Morgan Stanley report on Tesla Motors
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It is often said that the best time to diversify a business is when you’re in a position of strength. Thus it is perhaps not surprising that a notification produced by Morgan Stanley this week stated that analysts at the company expect the electric car maker to move into other markets in due course. As the report itself put it, the days when Tesla is known as purely an auto company are numbered.
The company has traded on its ability to produce electric vehicles that can be run off super-charge centers for quite some time, so it perhaps isn’t too surprising that the next move for Tesla Motors Inc (NASDAQ:TSLA) could be in a directly related area. Elon Musk’s electric car company may view the way forward to be in producing its own batteries.
In line with this ambition, Tesla will release plans this week outlining its vision for a ‘giga-factory’ in which it will produce the lithium-ion batteries which will be utilized in its next line of vehicles. The word ‘giga’ is used advisedly; according to murmurings on the subject, this could be the largest battery-making facility in the world.
In accordance with Tesla’s general ethos, the factory will reportedly be powered by renewable sources of energy such as wind and solar power, and will be constructed at least partly with the intention of recycling old battery packs.
Aside from opening up new markets for Tesla, the factory will also potentially help them greatly reduce production costs for their existing electric vehicles. According to Musk, the factory will enable Tesla to produce a truly mass-market electric car within three years; something that if Tesla achieves would be an absolutely huge breakthrough for them. It’s fair to say that the increase in their share price would be far from over should such an undertaking be completed.
Apple tie-in possible
This rumor and prognostication would also make the Apple link make sense. It seems far more likely that Apple Inc. (NASDAQ:AAPL) would be interested in some sort of proprietary technology which could be utilized in their product lines. A collaboration with Tesla could make sense for them, and it would certainly make financial sense for the electric car manufacturer.
It’s perhaps not surprising then that Morgan Stanley is very bullish on Tesla Inc (NASDAQ:TSLA) stocks. This goes against general sentiment, with the company a perennial target for short sellers. But the investment bank sees the current car market as one which is experiencing the most dramatic period of evolution in more than a century. In the new market that is emerging, don’t bet against Tesla playing a major role.