Tesla’s energy division, previously overshadowed by its automotive division, has recently become a significant factor in the company’s valuation. According to recent analysis by Morgan Stanley, the energy division is now estimated to be worth $50 per share, a significant increase from the previous $36. This has led to an overall price target of $310 for Tesla stock, with $284 attributed to the automotive division.Tesla’s energy division, previously overshadowed by its automotive division, has recently become a significant factor in the company’s valuation. According to recent analysis by Morgan Stanley, the energy division is now estimated to be worth $50 per share, a significant increase from the previous $36. This has led to an overall price target of $310 for Tesla stock, with $284 attributed to the automotive division. Tesla’s strong performance in the energy sector is reflected in its second-quarter energy storage deployment numbers, which saw a 132% increase over the previous quarter. This growth is attributed to increasing demand for renewable energy solutions and Tesla’s expanding product offerings, including the Powerwall home battery system and the Megapack utility-scale battery. The growth of Tesla’s energy division aligns with CEO Elon Musk’s long-held belief that it could become a major part of the company’s business. Musk has previously stated that both the energy and automotive divisions have the potential to grow faster than the automotive business in the long term. Analysts believe that Tesla’s energy division has the potential to be highly profitable and could contribute significantly to the company’s overall financial performance. The division has already secured several major contracts for utility-scale energy storage projects, and it is expected to continue to grow in the coming years.
Tesla’s energy division was the talk of the town in its second-quarter vehicle deliveries report released last week.
Tesla’s second-quarter energy storage deployment numbers have led Morgan Stanley and analyst Adam Jonas to consider the division a factor in the company’s $310 price target for its stock.
“It’s no wonder investors are starting to consider that Tesla Energy may be worth more than Tesla Auto,” Jonas said in a note to investors.
In the grand scheme of perception, most see Tesla as a car company. The reality is that Tesla is much more than that. It builds cars and uses energy storage units on a large scale; it could also be considered an AI, robotics, and software company.
While Tesla’s stock has risen since reporting a 6,000-unit delivery surplus above Wall Street consensus estimates, the biggest shock may be the performance of its energy division. It’s also one of the reasons analyst firms are raising their price targets.
The company saw a huge increase in energy deployments in Q2, setting a company record, and not in a modest way. Tesla saw a dramatic 132 percent increase over Q1, which was a company record at the time it was reported.
Tesla reported deployments of 4.053 MWh in Q1, but that was drastically eclipsed by the 9.4 GWh it reported in Q2. It all goes back to things CEO Elon Musk said years ago.
Musk said nearly five years ago during Tesla’s third-quarter 2019 earnings call that Tesla’s energy division could become a much larger part of the company than its automotive division.
“IT could be are bigger, but it will Certainly are of a comparable “I think Tesla Energy is going to be a significant part of Tesla’s business going forward,” he said. “It would be hard to overstate the extent to which Tesla Energy is going to be a significant part of Tesla’s business going forward… I think both of those, over time, are going to grow faster than the automotive business. I think, particularly if you look at sort of — if you look at, like, year-over-year growth, it’s going to be absolutely incredible… over the course of, let’s say, a year, a monumental increase.”
Jonas believes the same. In fact, his $310 price target is broken down in a way that reflects auto making up $284 of that, Reuters said. Previously, Energy was only worth $36 of the $310.
Now he’s raising it to $50 a share, which also takes into account Morgan Stanley’s cut in auto sales for the company in 2030.
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