An analyst with
Morgan Stanley says the stock price of electric car maker Tesla could
soon be worth almost twice as much as it is now largely because of
the potential of self-driving cars that consumers can rent on demand,
like Uber.
In a research note
to clients Monday, Adam Jonas raised his target price for Tesla
shares to $465 US. That's more that 66 per cent above his old target
of $280 and well above the $243 level the stock closed at on Friday.
Ride-sharing app?
Jonas' main reason
for optimism is a business segment that the company doesn't even do
yet, which is a ride-sharing service using driverless cars.
Worldwide, humans
drive more than 16 trillion kilometresevery year, most of which is
done in cars made by "companies practicing a 100-year-old
business model of human-driven, privately owned, internal-combustion
vehicles," Jonas said."This is fundamentally changing."
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Tesla is a leader in
the electric car world, but sells just a fraction of the hundreds of
millions of cars that major gasoline-powered players like GM, Toyota
and Volkswagen sell every year. While the company says it is on track
to selling a million cars a year within the next decade, it is still
a far cry off from the leaders.
Self-driving cars
soon
But Tesla has an
advantage in a business area it hasn't even entered into yet, Jonas
says, which is self-driving cars in an on-demand mobility service.
Jonas' idea would see a new business that works a bit like
ride-sharing app Uber, but entirely populated by self-driving
Teslas.
He calls the
division "Tesla Mobility" and unlike conventional cars,
Teslas today already have a leg-up in autonomous driving because
their vehicles are fully electric, wirelessly connected to each other
and can "learn" on the go via software updates. "No
other established automaker can claim this today," he said,
which makes it a lot easier for the company to roll out a
self-driving vehicle than for other companies to do so.
Jonas expects the
entire car business to shift away from the current owner-operator
model and toward an autonomous future in which people are driven
around by robots in vehicles they can access only when they need
them.
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Instead of selling
cars to ridesharing companies, Tesla could theoretically take out the
middle man and sell the service directly to customers themselves.
"We view this
business opportunity as potentially additive to Tesla's existing
model of selling human-driven cars to private owners and see
potential for this model to conceivably more than triple the
company's potential revenues by 2029," Jonas' says.
Although the company
officially has no plans to do something similar to the "Tesla
Mobility" unit that Jonas' envisions, the analyst " we
would be surprised if Tesla did not share formalized business plans
on shared mobility within the next 12 to 18 months." The first
driverless on-demand Teslas would then hit the road some time in
2018, he said.
DON PITTIS: Thanks
to Tesla, the electric car is in a passing lane to the future
If it happens, it's
an idea that could be worth billions. Jonas comes up with his $465
price target because it's the midpoint between the base case
assumption that the shares could be worth $319 if the business stays
as it is, but as much as $611 a share if these new revenue streams
come to pass.
The car company, as
it stands now. is worth about $280 per share, Jonas' says, with the
recently announced battery division adding as much as $39 per share.
But Jonas' optimistic take is that the battery unit increases to $87
a share, along with $244 a share for the as yet non-existent
ride-sharing unit, on top of the core electric car business.
"If Tesla wants
to make good on its mission to accelerate the world's transition to
sustainable transport, we see the move to a shared mobility model as
critical," Jonas said.
Source: CBC News
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