Tesla Inc.‘s primary business (NASDAQ: TSLA) core electric vehicle is facing some challenges. As the company that makes these electric cars encounters difficulties, analysts are shifting their attention. Analysts who work for companies that sell stocks are starting to pay more attention to other things Tesla is doing. Recently, an analyst from RBC Capital Markets made an observation. He highlighted one specific area that might become even more successful than Tesla’s car business.
After visiting a “Battery Storage Facility,” RBC analyst Tom Narayan got an idea. He highlighted how valuable Tesla’s Megapack utility-grade battery storage business could be. He emphasized that the battery storage business might be even more valuable than Tesla’s car business.
The analyst says Tesla believes that by the year 2040, there will be a huge demand for big batteries to store electricity. “Tesla predicts a need for 2 Terawatt-Hours of annual battery storage by around 2040. The demand would be on a very large scale,” he stated.
Narayan thinks that the whole battery storage industry could make about $600 billion each year, and Tesla could make $90 billion of that if they have 15% of the market share.
He explained that if you use a certain way to calculate value, Tesla’s Megapack business could be worth a whopping amount of money. However, he said when you bring it back to the present from the future, it’s about $120 billion. In his words, Tom Narayan said. “Applying a 15x cap goods EBITDA multiple results in a $345 billion EV for Tesla’s Megapack business, and discounting this back to 2024 from 2040 results in a $120 billion valuation,” he said.
Even though the battery storage business looks very promising, Narayan still has another opinion, he still thinks that self-driving technology is the most essential thing for Tesla. He restated that autonomy remains critical to Tesla’s investment case. He believes that when Tesla starts making a new affordable car in late 2024 or 2025, it could make Tesla’s stock go up even more.
Tom Narayan still thinks Tesla stock will do better than average. He predicts that it could reach $297 per share. This outperforming rating made by Narayan is essential. It is crucial because Tesla’s automotive sector has been under a lot of pressure over the past year. Not as many people are buying electric cars. This is because people are being careful with their money as they are not sure about the economy. Tesla has been lowering prices aggressively in a bid to gain market share. The company is trying to sell more cars, but it’s making things even more complicated.
Analyst Alexander Potter from Piper Sandler highlighted some things. He pointed out that revenue from batteries is becoming more and more crucial for Tesla’s overall success. He thinks Tesla will sell more batteries for things like storing electricity by 2024, mainly because of the big factory they have in Lathrop, California.
Potter further estimated that by the 2030s, Tesla’s energy business could make more. He believes it would make ten times more money than what people think Cybertrucks will bring in. He also suggested that more than half of the net profit Tesla makes between 2023 and 2025 could come from selling stationary batteries.
Tesla’s stock price ended Thursday’s trading slightly lower at $201.88, as reported by Benzinga Pro.