Morgan Stanley analyst Adam Jonas sees Tesla as so much more than an auto company. In his new $TSLA note to investors, Tesla 2024 : Another Volatile Idiosyncratic Year, Jonas lays out a bold vision for how Tesla could leverage its strengths in software, AI, manufacturing, and infrastructure to dominate not just EVs but transform multiple massive industries. Is this just pipe-dream speculation or the blueprint for disrupting the status quo?
While the naysayers see Tesla as “just another car company,” Jonas argues that framing is far too limited. In his view, Tesla is simultaneously an AI company rolling out products like Optimus and Dojo that target markets worth trillions. The Auto analyst envisions a future where Tesla vehicles act as data-gathering robotic edge computers, and SpaceX’s Starlink satellites enable a mesh network to connect this fleet. Does this sound far-fetched? Perhaps, but Tesla has surprised critics before.
The Optimus humanoid robot, unveiled last year, demonstrates Tesla’s ambitions stretch far beyond selling Model 3. Leveraging the same self-driving software architecture as Tesla’s vehicles, Optimus has the potential to upend labor markets around the world. Meanwhile, the Dojo Supercomputer, in development for 5 years, could give Tesla an AWS-like cloud computing business. But near-term milestones will be key to proving these moonshot projects are more than science fiction daydreams.
In the auto realm, Tesla is positioning itself as the architecture and infrastructure provider for the larger EV industry. With Ford and other automakers adopting Tesla’s charging standard, Musk’s company stands to profit from rivals’ shift to electrification. As traditional automakers prune their EV investments, Tesla’s economies of scale could allow it to become the leading supplier of critical components like batteries, software, and chips.
So what’s behind Jonas’ continued faith in Tesla despite the slowing economy and latest recall? For starters, he sees today’s auto business as just 23% of Tesla’s current valuation. The rest depends on potential new revenue streams in Network Services, Energy, and Insurance. Admittedly, this assumes Tesla delivers concrete progress translating these fledgling businesses into real earnings drivers.
Longer-term, however, Jonas forecasts robust profit growth, with EPS quintupling from 2023-2030. And he contends Tesla’s tech focus makes it more resilient in a downturn than old-guard carmakers. With a strong balance sheet and industry-leading margins, Tesla seems poised to increase market share as rivals cut back.
Of course, this outlook presumes Tesla can successfully stretch itself across disparate industries while innovating in its core automotive business. With Tesla’s expanding portfolio of “and” businesses, Jonas sees a company transforming transportation, energy, automation, and computing in its own image. In that light, maybe viewing Tesla as “just a car company” misses its real disruptive potential? The coming years will offer the first hints if Musk’s ambitious long game can rewrite the playbook for not one but a half dozen massive global industries.