Tesla Motors has earned a massive price target increase from Morgan Stanley analysts (following a price target cut from FBN about a week ago) as they see the automaker’s autonomous driving technology as likely providing a new way for it to dominate the auto market. Their price target moves from $280 per share to a bullish (and some might say crazy) $465 per share.
Tesla shares rose as much as 5.78% to $257.20 per share in premarket trading.
Tesla Motors to enter shared mobility space?
As is often the case with Tesla bulls, analyst Adam Jonas and his team are basing their thesis on something that doesn’t even exist. It’s all about potential and where they think the automaker will go next, which in this case is shared mobility. In fact, their bull case is a remarkable $611 per share, and their base case is $319 per share—still meaningfully higher than where Tesla shares are trading today.
There have been speculations that Tesla will enter the shared mobility space one day to compete with the likes of Uber and Lyft, and the Morgan Stanley team expects a formal announcement about it within the next 12 to 18 months. They call the division “Tesla Mobility,” and they describe it as “an app-based, on-demand mobility service.”
The Morgan Stanley team believes autonomous driving will increase the number of miles driven per year, which they said will enable drivers to more quickly gain back the up-front premium they pay for EVs compared to traditional vehicles. They also think EVs “should work better in an autonomous, shared model.”
The analysts believe autonomous driving will increase the number of miles driven per year, which they said will enable drivers to more quickly gain back the up-front premium they pay for EVs compared to traditional vehicles. They also think EVs “should work better in an autonomous, shared model.”
Tesla Mobility coming in 2018?
Although they think Tesla will make an announcement about an entry into the shared mobility space by the end of next year or the beginning of 2017, they don’t think the service will be up and running until 2018, possibly not long after the launch of the more affordable Model 3. They believe autonomous driving technology will make shared mobility even more practical and see Tesla as being well-positioned in this area.
They point out that currently almost all of the 10 trillion miles driven per year are by human-driven, privately owned, internal-combustion vehicles. However, they believe this is fundamentally changing, particularly with the advent of autonomous driving technology and networked machine learning.
Jonas and his team have even gone so far as to suggest a name for Tesla’s mobility product: the “Tesla Mobility 1.0 urban transport PODS (Position on Demand Service).” Now that’s getting specific about a service that may or may not exist one day, and even if it does come into existence, it’s still years away.
They also believe that the service could “more than triple Tesla’s potential revenues by 2029, … selling miles in addition to selling cars.” And just to offer a more concrete picture of what they think Tesla will one day accomplish in shared mobility, they put together this graph:
Tesla to incorporate new sensors in Model X
Tesla is set to start shipping the first Model X SUVs next month, and included in those vehicles is a collection of new sensors and software, which the Morgan Stanley team thinks will set a new industry standard for early autonomous driving technology.