London Daily

Focus on the big picture.
Monday, Jul 21, 2025

Tesla is morphing into more than a car maker

Tesla is morphing into more than a car maker

Tesla Inc.’s transformation from an electric-car maker to a software/connected vehicle services provider is the “entry ticket” to a much larger business, according to Morgan Stanley.

Elon Musk's Tesla is way more than just an electric-car maker, according to Morgan Stanley.

That's why the firm says the stock can continue to climb, building on its 428% advance this year, as it transforms to a software/connected vehicle services provider -- the “entry ticket” to a much larger business.

“To only value Tesla on car sales alone ignores the multiple businesses embedded within the company, and ignores the long term value creation arising from Tesla’s core strengths, driven by best in class software and ancillary services,” wrote analyst Adam Jonas.



Tesla’s services business, which includes self-driving, GPS, entertainment options, performance upgrades and more, is expected to grow significantly over the next decade.

Current revenue from services just below $1 billion, or about 1% to 2% of all sales. Jonas believes that business will reach 6% of company sales by 2030, equating to as much as 20% of EBITDA (earnings before interest, taxes, depreciation and amortization, which is a measure of a company's overall financial performance).

Tesla’s advantage lies in its “scale and cost in EVs” which will allow the company to undercut its competition in pricing its products and expand its addressable market, according to Jonas.

New services, which will be distributed to users through software upgrades, have the potential to range from increased self-driving capabilities to upgrade content to insurance.

Jonas believes the boost in services revenue will lift shares by 22% from their current level to $540 per share. His previous target was $360.

Shares could reach $1,068 apiece in a bull case scenario. Jonas also raised his rating to overweight from equal weight.

To reach his price target, Jonas assigns the following sum-of-the-parts valuations to Tesla’s businesses.

Tesla Auto: $254 per share

Tesla Energy: $12 per share

Tesla Mobility/Ridesharing: $38 per share

Tesla Network Services: $164 per share

Tesla as a third-party supplier: $58 per share

Shares were higher on Wednesday after the S&P Dow Jones Indices announced on Monday that the shares will be added to the S&P 500 on Dec. 21 as part of the index’s rebalancing.



The company in the three months ended Sept. 30 posted its fifth consecutive quarterly profit, helping pave the way for its inclusion.

Newsletter

Related Articles

0:00
0:00
Close
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Defends Attorney General Pam Bondi Amid Epstein Memo Backlash
Renault Shares Drop as CEO Luca de Meo Announces Departure Amid Reports of Move to Kering
Senior Aides for King Charles and Prince Harry Hold Secret Peace Summit
Anti‑Semitism ‘Normalised’ in Middle‑Class Britain, Says Commission Co‑Chair
King Charles Meets David Beckham at Chelsea Flower Show
If the Department is Really About Justice: Ghislaine Maxwell Should Be Freed Now
NYC Candidate Zohran Mamdani’s ‘Antifada’ Remarks Spark National Debate on Political Language and Economic Policy
×