Tesla's multitrillion-dollar opportunity

Walt Mossberg: I admire Tesla, just not using market cap for valuation
Walt Mossberg: I admire Tesla, just not using market cap for valuation

Tesla is positioned to enter several markets collectively worth trillions of dollars, according to Morgan Stanley analyst Adam Jonas.

In a research note published Wednesday, Jonas said he sees Tesla becoming more of an infrastructure/transportation company than an electric car company, and this evolution is key to its potential value.

He identifies a number of markets within Tesla's "ecosystem" it could address:

  • a $10-trillion light vehicle mobility market
  • $1-trillion logistics market
  • $2-3 trillion energy storage market
  • and a potentially multitrillion-dollar market based on delivering content and monetizing data collected during the 600 billion hours Tesla owners (or passengers) spend in the cars.

In fact, Jonas said Tesla's data may be one of its most valuable assets.

"While difficult to quantify," Jonas wrote, "we have long felt that one of Tesla's most important areas of value is its captive ecosystem of data-collecting transport machines with close proximity to [real-time] data that may have any number of adjacent purposes for monetization and/or deepening of the strategic moat."

Thus, Jonas said, any advances in electric car technology give Tesla an advantage in autonomous technology and a potential car-sharing business, while advances in autonomous can feed electric and car-sharing, et cetera.

Of course, there are risks to this, Jonas said. Tesla may never develop the "Tesla Network" car-sharing business CEO Elon Musk has spoken about, and which Jonas is in part basing his investment thesis on. And it is possible that the company ends up being a niche electric car company.

But Jonas also thinks Tesla's Autopilot system may offer tantalizing levels of safety to consumers.

"Our discussions with auto companies and regulators suggest a high level of lawmaker attention to the unprecedented spike in fatalities on US roads," Jonas wrote. "Tesla is aiming to produce human-driven cars that are 10x safer than the average car on the road. In our opinion, anything even close to this order of magnitude of safety improvement could elevate market awareness (both the financial and the consumer market) of Tesla's technologies and the need to replace/upgrade the existing stock of used cars."