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Tesla Inc TSLA

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Morningstar’s Analysis

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Tesla's Battery Day Does Not Meet Its Hype but Lays Out a Path to Fight Climate Change

Analyst Note

| David Whiston, CFA, CPA, CFE |

Given Tesla’s stock's incredible runup, we were skeptical that its long-awaited Sept. 22 Battery Day event would meet market expectations and the stock fell about 7% in afterhours trading. We liked what we heard, though, and new products, such as Plaid Mode for the Model S due in late 2021 and a $25,000 vehicle in about three years, bring opportunities for more volume. CEO Elon Musk said he expects 2020 delivery growth of 30%-40%, which puts 2020 deliveries close to or over 500,000 versus the 400,000 we model. Based on continued strong demand for Tesla’s vehicles, we are increasing volume deliveries for 2020-29 by about 10%. This increase along with battery cost reductions outlined at Battery Day led us to increase modeled revenue for the energy storage business across 2020-29 by about 33%. As a result, we expect to increase our fair value estimate by about 13%.

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Company Profile

Business Description

Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. It sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. It also makes solar roofs and plans to enter the HVAC market. The Tesla Roadster debuted in 2008, Model S in 2012, Model X in 2015, Model 3 in 2017, and Model Y in 2020. Global deliveries in 2019 were 367,656 units. Tesla went public in 2010 and employs about 50,000 people.

Contact
3500 Deer Creek Road
Palo Alto, CA, 94304
T +1 650 681-5000
Sector Consumer Cyclical
Industry Auto Manufacturers
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 48,016

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