Tesla May Win “Monopoly”

Originally published on Gas2.

Financial investment company Berenberg has completed an analysis of Tesla and concluded its stock, currently priced at about $380 per share, could surge another 30% in the next 12 months. In fact, the analyst team, headed by Alexander Haissl, claims the company could soon have a near monopoly in the market for electric cars.

Why are Haissl and his confreres so bullish on Tesla? Primarily because, among all the world’s automakers, Tesla is the only one fully committed to pushing the electric car segment forward. All the others are pursuing a “low risk, low investment” strategy that will ultimately leave them ill prepared to compete against Tesla.

In a note to investors this week, Haissl and his team wrote, “With no clear pathway to high-volume EV production for these OEMs before the mid-2020s, Tesla will be given a near-monopolistic opportunity to gain market share and outcompete the incumbent automotive industry.”

Tesla plans to invest almost $33 billion in electric vehicle projects over the next 5 years. That figure dwarfs what Mercedes and Volkswagen plan to spend over the same period. In fact, it is 40% more than those two companies combined and nearly 10 times what Ford’s former CEO Mark Fields said his company would spend before he was fired.

The analysts were also impressed by Tesla’s partnership with Panasonic. “Tesla/Panasonic continue to exhibit a clear advantage on cell and pack technology compared to all peers, on chemistry, cooling and cost. Tesla’s small and actively tube-cooled cells, which are not currently replicated and are unlikely to be so by competitors, drives significantly better residual values and cost-of-ownership advantages.”

Traditional carmakers are taking a timid approach, but, unlike Tesla, they are constrained by the requirement that they make money for their shareholders, whose eyes are on the next dividend check, not what might happen in the next decade. Tesla investors are focused on the rewards they expect to come in 5 to 10 years. That is a critical difference for the upstart automaker from Silicon Valley.

Source: CNBC | Image by Kyle Field