London Daily

Focus on the big picture.
Saturday, May 31, 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
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
Russia's Fossil Fuel Revenues Approach €900 Billion Since Ukraine Invasion
U.S. Justice Department Reduces American Bar Association's Role in Judicial Nominations
U.S. Department of Energy Unveils 'Doudna' Supercomputer to Advance AI Research
U.S. SEC Dismisses Lawsuit Against Binance Amid Regulatory Shift
Alcohol Industry Faces Increased Scrutiny Amid Health Concerns
Italy Faces Population Decline Amid Youth Emigration
U.S. Goods Imports Plunge Nearly 20% Amid Tariff Disruptions
OpenAI Faces Competition from Cheaper AI Rivals
Foreign Tax Provision in U.S. Budget Bill Alarms Investors
Trump Accuses China of Violating Trade Agreement
Gerry Adams Wins Libel Case Against BBC
Russia Accuses Serbia of Supplying Arms to Ukraine
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
Chinese Woman Dies After Being Forced to Visit Bank Despite Critical Illness
President Trump Grants Full Pardons to Reality TV Stars Todd and Julie Chrisley
Texas Enacts App Store Accountability Act Mandating Age Verification
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Vatican Calls for Sustainable Tourism in 2025 Message
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Trump Threatens 25% Tariff on iPhones Amid Dispute with Apple CEO
Putin's Helicopter Reportedly Targeted by Ukrainian Drones
Liverpool Car Ramming Incident Leaves Multiple Injured
Australia Faces Immigration Debate Following Labor Party Victory
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Macron Dismisses Viral Video of Wife's Gesture as Playful Banter
Cleveland Clinic Study Questions Effectiveness of Recent Flu Vaccine
Netanyahu Accuses Starmer of Siding with Hamas
Junior Doctors Threaten Strike Over 4% Pay Offer
Labour MPs Urge Chancellor to Tax Wealthy Over Cutting Welfare
Publication of UK Child Poverty Strategy Delayed Until Autumn
France Detains UK Fishing Vessel Amid Post-Brexit Tensions
Calls Grow to Resume Syrian Asylum Claims in UK
Nigel Farage Pledges to Reinstate Winter Fuel Payments
Boris and Carrie Johnson Welcome Daughter Poppy
×