In its third act, Tesla (TSLA) could find itself in the skies, speculates Adam Jonas of Morgan Stanley, who closely watches the electric vehicle maker.
“In our view, the chance that Tesla does not ultimately offer products and services to the eVTOL [electric vertical takeoff and landing aircraft]/UAM market is remote. The potential skills transferability and network adjacencies are too strong to ignore,” Jonas said in a new research note.
Jonas believes the segment would be called “Tesla Aviation,” and be a logical evolution of the company’s prowess making electric vehicles.
eVTOL is not a helicopter, as former United Airlines CEO Oscar Munoz reminds Yahoo Finance Live in the above video, but it could be a huge industry estimates Jonas’ colleagues.
By 2030, Morgan Stanley estimates the total addressable market (TAM) for the eVTOL industry in the U.S. could reach $12 billion, powered by interest in non-fuel powered short haul aircraft.
Looking out to 2050, the investment bank projects the global eVTOL market could be worth $9 trillion as companies and government seek ways to reduce road congestion via a green-friendly option.
The industry — no pun intended — is already beginning to take off.
The main players in the sector include upstarts Joby Aviation (backed by LinkedIn founder Reid Hoffman, among others), Archer (backed in part by Munoz’s former employer United Airlines), and Wisk (which just secured $450 million in funding from Boeing).
Morgan Stanley’s Jonas thinks eVTOLs are just one area Tesla will venture into in the decades to come. Another promising venture could be Tesla’s auto operations collaborating with CEO Elon Musk’s other companies, such as The Boring Company and SpaceX.
“We see Part 3 [of Tesla’s story] as mass industrialization, a network flywheel and ‘connecting the dots’ across adjacent TAMs,” Jonas added.
The analyst rates Tesla shares at an Overweight (Buy equivalent) with a $1,300 price target.
Year-to-date, Tesla’s stock is down 17% to $871.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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