Latest news with #lowAltitudeEconomy
Globe and Mail
2 days ago
- Automotive
- Globe and Mail
Forget Robotaxis and Humanoid Robots: Morgan Stanley Thinks This Technology Is the Real Secret for Tesla Stock to Soar
While investors fixate on Tesla's (TSLA) robotaxi ambitions and humanoid robots, Morgan Stanley believes the company's next breakthrough could come from an unexpected direction: the emerging drone and electric vertical takeoff and landing (eVTOL) market. The investment bank sees this 'low altitude economy' as representing a $9 trillion total addressable market by 2050. Tesla's potential entry into this space has gained attention following recent geopolitical events. Moreover, Morgan Stanley noted that drone warfare capabilities have become strategically critical. CEO Elon Musk himself warned on Tesla's earnings call that countries unable to manufacture their own drones risk becoming 'vassal states' to those that can, highlighting America's current manufacturing deficit compared to China. What makes Tesla uniquely positioned for this market isn't just ambition, but the company's existing technological infrastructure. Morgan Stanley highlights Tesla's proven expertise in battery storage, navigation systems, autonomous driving technology, robotics, and large-scale manufacturing as transferable skills that are ideally suited for the development of drones and eVTOLs. The financial implications could be transformative for Tesla shareholders. Morgan Stanley estimates that capturing even a small fraction of the eVTOL market could add between $100 to $1,000 per Tesla share. These estimates indicate potential upside that could easily dwarf the current robotaxi valuations. Morgan Stanley argues that a single eVTOL could generate revenue equivalent to 15 ride-hailing vehicles, which showcases the superior economics of aerial transportation. Unlike robotaxis, which face regulatory hurdles and require extensive real-world testing, the drone market presents a more immediate opportunity for growth. Tesla's vertical integration advantage positions the company to compete effectively against established aerospace players who lack its innovation speed and cost structure. Ark Invest Is Bullish on the Robotaxi A research report from ARK Invest positions Tesla as the clear frontrunner in the emerging robotaxi market. Ark Invest, run by famed growth investor Cathie Wood, cited several critical competitive advantages that could generate massive value for investors. According to the report, Tesla's competitive edge lies in its unparalleled data collection capabilities. For instance, the EV maker's existing fleet generates over 5 million miles daily through its Full Self-Driving software and has accumulated 87 million total US miles, compared to Waymo's 70,000 daily miles. This vast data advantage provides Tesla with diverse real-world driving scenarios that competitors cannot match. Fleet scalability represents another crucial differentiator. While Waymo operates roughly 700 vehicles across limited cities, Tesla can leverage 6.5 million existing vehicles globally equipped with compatible hardware. It can rapidly deploy Model 3 and Model Y vehicles from lease returns and inventory, while customer-owned vehicles can supplement the fleet through opt-in programs. Cost advantages further strengthen Tesla's position. ARK estimates Tesla's Model 3 production cost at $40,000, compared to Waymo's vehicles, which cost over $100,000, with sensor packages alone costing over $40,000. Additionally, Tesla's vertical integration reduces its reliance on external manufacturers, such as China-based Zeekr (ZK), which faces potential tariff headwinds. The financial opportunity appears enormous. ARK projects that robotaxi platforms could reach $4 trillion in net revenue by 2030, with Tesla potentially commanding take rates exceeding Uber's (UBER) 30% due to a superior cost structure. Higher utilization rates above 50% could significantly undercut traditional ride-hail pricing. Beyond financial returns, Tesla's autonomous driving technology could prevent over 40,000 U.S. deaths annually. FSD-equipped vehicles have already demonstrated five times better safety than non-FSD Tesla vehicles and 16 times better than average cars. Is TSLA Stock Undervalued? While Tesla is part of multiple expanding addressable markets, the company must demonstrate its ability to execute and gain traction in these key stock currently trades at 155x forward earnings, which is higher than its three-year average of 114x. Analysts expect Tesla's earnings to increase by 29% annually over the next five years. Out of the 41 analysts covering TSLA stock, 16 recommend 'Strong Buy,' two recommend 'Moderate Buy,' 13 recommend 'Hold,' and 10 recommend 'Strong Sell.' The average target price for TSLA stock is $292, roughly in line with its current price.
Yahoo
5 days ago
- Automotive
- Yahoo
Why One Analyst Thinks Tesla Could Dominate the 'Low-Altitude Economy'
"Look up, your ride has arrived," is a message some see as eventually landing in your inbox. 'In our view, the low altitude economy (LAE) may eventually vastly exceed the size of today's automotive market,' wrote Morgan Stanley analyst Adam Jonas in a research note earlier this week. That term refers to aerial commercial activities conducted within one mile of the earth's surface, airspace now sparsely occupied by helicopters and small drones. Analysts expect advancements in artificial intelligence and robotics to support the launch of new aircraft—notably, electric vertical take-off and landing (eVTOL) vehicles—with applications in areas like logistics/distribution, public security and emergency services, tourism, urban commuting, and intercity transportation. Morgan Stanley forecasts the total addressable 'Urban Air Mobility' (UAM) market will be valued at $1 trillion by 2040 and $9 trillion by 2050. Not everybody's expectations are quite that high: Bank of America recently estimated a market worth $23 billion by 2035. BofA expects adoption to remain relatively slow until at least that year, when it anticipates economies of scale and battery technologies to improve eVTOL cost and accessibility. Whatever the size of the pie, the companies vying for a slice of it include upstarts like Archer Aviation (ACHR), which is currently testing an eVTOL model and partnering with defense contractor Anduril to develop military applications, and Joby Aviation (JOBY), which is in the process of getting its air taxi certified for passenger rides. Morgan Stanley's Jonas thinks those companies could face formidable competition from Tesla (TSLA). The EV maker hasn't announced any intention to develop eVTOLs, but CEO Elon Musk has discussed the need for a homegrown low-altitude economy in the U.S. When Jonas, on Tesla's most recent earnings call, asked Musk for his thoughts on the U.S. and China's AI and robotics rivalry, Musk expressed concern about America's limited drone manufacturing capabilities. 'Any country that cannot manufacture its own drones is doomed to be the vassal state of any country that can,' he said, quoting X user "@naval." 'And we can't. America cannot currently manufacture its own drones.' Tesla, Jonas says, 'has a host of relevant skills to be a factor' in the commercial and military LAE, including its work in manufacturing, autonomy, electric motors and batteries, and robotics. Jonas estimates Tesla's share of a future $9 trillion UAM market could add between $100 and $1,000 to its share price. Tesla's work on autonomous vehicles could give it a leg up on LAE competitors. "Any advancement in the science of autonomous cars accelerates the advancement of autonomous aerial drones," Jonas wrote. Tesla is expected to launch its first robotaxi operation in Austin, Texas, later this month. Read the original article on Investopedia Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
