Adam Jonas, a Morgan Stanley analyst and one of the most popular analysts covering Tesla, argues that the automaker will likely get involved in the electric vertical take-off and landing (eVTOL) space.
In a new note to clients, Jonas writes about Tesla potentially getting into urban air mobility and electric aircraft:
In our view, the chance that Tesla does not ultimately offer products and services to the eVTOL/UAM market is remote. The potential skills transferability and network adjacencies are too strong to ignore.
The analyst acknowledged that Tesla CEO Elon Musk hasn’t necessarily been on board with the idea.
Musk has long discussed having a design for an eVTOL aircraft.
However, lately, the eVTOL space has mostly evolved into “flying cars” and “urban air taxis,” things Musk has been critical of.
The CEO argues that adding many flying objects in an urban environment will be a safety hazard and add to noise pollution.
For urban environments, Musk has been arguing that going underground with tunnels is a better idea than going up with electric aircraft.
Despite that, Jonas believed that Tesla will get involved in the eVTOL and urban air mobility space.
The analyst even started to see how it would affect its valuation model of Tesla:
What could a slice of the eVTOL/UAM TAM be worth to Tesla? We have run a range of scenarios flexing market share and EBITDA margin assumptions based on our global eVTOL/UAM model (a $9tn TAM by 2050… yes… 2050). Discounted back to the present on a per-share basis, we’re coming up with potential preliminary outcomes on the order of $100 per Tesla share on the low-end to approximately $1,000 per Tesla share (or more) on the high end.
However, Morgan Stanley is not yet accounting for that in its current $900 price target on Tesla’s stock.
Nothing is impossible when it comes to Tesla, but I think Elon’s comment might have been a bit misunderstood.
I think the eVTOL aircraft that he has been talking about was more of a commercial airplane that happens to be electric and has vertical take-off and landing capability.
His comment about what people are trying to do with urban air mobility has been quite clear. I still think that there’s space for that, too, but I am not convinced Tesla would get into that.
What do you think? Let us know in the comment section below.
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