Tunnel market led by Elon Musk's Boring Company to reach $20 billion by 2050, Morgan Stanley says

Published Mon, Feb 7 20223:55 PM EST

Electric vehicles are poised to take over the transportation industry in the coming years, and new infrastructure — specifically tunnels — will be necessary in the transport revolution, according to Morgan Stanley. The Wall Street firm estimates the total addressable market for tunnels in the U.S. could reach $20 billion by 2050, with Elon Musk's Boring Company taking major market share. "Tunnels are uniquely positioned within infrastructure to address the pitfalls of urbanization," said Adam Jonas, equity analyst at Morgan Stanley. "We would pay close attention to Elon Musk and The Boring Company as the Tunnel TAM gains relevance to policymakers, regulators, local transit officials, and, ultimately, investors," he added. Morgan Stanley believes the current transportation infrastructure of U.S. cities is not prepared for the future of electric and autonomous mobility. Therefore, tunnels will be needed to support the change in transportation. The firm estimates roughly 1,800 tunnel miles will be built by 2050 with $12 million in annual revenue per tunnel mile. Plus, Morgan Stanley forecasts 34 billion passenger miles at 62 cents passenger fare per mile. At the epicenter of the tunnel revolution will be Musk's Boring Company, Morgan Stanley said. The firm said the Boring Company touts tunnels that take one-tenth of the time to be constructed and cost a fraction of traditional tunneling projects. "The Boring Company is one of Elon Musk's pursuits which we view as the main disrupter in the tunnel industry to drive the path to a ~$20Bn TAM," said Jonas. "Within the 'Muskonomy,' The Boring Company shares existing or potential synergies with Tesla, SpaceX, and Neuralink." Stocks with tunnel exposure Alongside the boom in tunnels, Morgan Stanley said certain stocks could have exposure to tunnel penetration. The Wall Street firm highlighted a handful of publicly traded names as either potential beneficiaries or competitors. In the utilities sector, NextEra Energy could benefit, Morgan Stanley said. Tesla is another company that will likely have exposure to the expanding tunnel landscape. Meanwhile, the firm expects Joby Aviation to be impacted by the tunnel industry. Machinery company Caterpillar , technology giants Amazon and Uber and transportation stocks CSX and FedEx could also have exposure to the tunnel industry. Energy stock Enbridge also made Morgan Stanley's list. — with reporting from CNBC's Michael Bloom.

Elon Musk speaks at an unveiling event for The Boring Company Hawthorne test tunnel December 18, 2018.

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