Tesla Tops $30 Billion as Morgan Stanley Boosts Outlook

Bloomberg News

, the electric-car maker, exceeded $30 billion in market valuation after Morgan Stanley more than doubled its projected price for the stock, saying the company may disrupt the auto and energy industries.

The shares advanced 15 percent to $249.36 at 11:18 a.m. New York time and earlier traded at a record high of $250.30. Tesla, which last week forecast a more than 55 percent increase in deliveries of its Model S sedans this year, is up more than sevenfold in the past 12 months. The company's market value of $30.5 billion is more than half that of General Motors Co.'s.

Chief Executive Officer Elon Musk plans to provide details on a proposed 'gigafactory' to produce lithium-ion batteries needed to make more affordable vehicles, he told Bloomberg TV last week. Lower battery costs could help the Palo Alto, California-based company almost double its share of the global car market to about 1 percent and also affect the power industry, Adam Jonas, a Morgan Stanley analyst, wrote in a note.

'If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again, said Jonas, who the shares overweight. ''If Tesla can become the world's low-cost producer in energy storage, we see significant optionality for Tesla to disrupt adjacent industries.''

Jonas raised his projection for Tesla's share price in 12 months to $320 from $153. The new estimation uses a 15-year outlook to allow time for the company to expand its lineup and capabilities. In a bull-case scenario, he said the company may be worth as much as $500 a share.

Energy Storage

With each Model S capable of storing enough energy to power the average house for 3.5 days, a growing population of Tesla cars represents a significant increase in how much electricity can be held in a country's infractructure.

''The scale of Tesla's battery production, even for its own use as an auto manufacturer, thrusts the company into 'key player' status for grid storage,' Jonas said in the note.

The battery plant would be built with partners, and 'there's a likelihood Panasonic would be part of it,' Musk told Bloomberg last week. Panasonic Corp. (6752) is both a Tesla investor and its main supplier of lithium-ion cells. Panasonic's participation is 'not 100 percent confirmed,' he said.

Tesla is worth a little more than half of the biggest U.S. automakers. GM's market valuation is $57.6 billion, and Ford Motor Co.'s is $59.9 billion. Fiat SpA, which owns Chrysler Group LLC, is valued at $13 billion, and Toyota Motor Corp., a Tesla shareholder, is more than $200 billion.

To contact the reporter on this story: Niamh Ring in New York at nring@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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