Tesla's Battery: Morgan Stanley Finally Comments

In a report published Tuesday, analysts at Morgan Stanley maintained their Overweight rating on Tesla Motors Inc TSLA, as well as the price target of $280.

According to the analysts, "Following Tesla's launch of residential and commercial energy storage products, investors appear more willing to include the electric utility TAM in the Tesla valuation discussion."

Morgan Stanley believes that Tesla's energy storage solution could completely overturn the multi-trillion-dollar worldwide motor vehicle sector, as well as the trillion-dollar electric utility sector. Following full deployment and consumer adoption, which the analysts believe could take 5-10 years, the product is likely to take the stock valuation to about $40-$90 a share.

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"Seen another way, each 1 million units of Powerwall sales (assuming a price $350/kWh, 30 percent gross margin, capitalized at 10x) would be worth around $10bn, $72 per TSLA share (145mm shares), or around 30 percent of Tesla's current share price," the analysts explained.

The company had, in the past, indicated that it intended to sell up to 30 percent of the annual output of its Gigafactory to the power sector.

"By 2029, we estimate Tesla's 6.4m unit global fleet will contain the stored energy capacity of 410 GW, a figure roughly equal to the entire daily electricity consumption of the nation of Mexico," Morgan Stanley added.