Tesla’s energy unit gives Morgan Stanley reason to modify price target breakdown

Tesla’s energy unit was the talk of the second-quarter vehicle delivery report that was released last week.

The numbers Tesla reported for its energy storage deployments for Q2 have Morgan Stanley and its analyst Adam Jonas considering the division as more of a factor in its breakdown of the $310 price target it has put on shares.

“It’s no wonder that investors are starting to consider the real possibility 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 Tesla is much more than that. It builds cars and employs energy storage units on a massive scale; it could also be considered an AI, Robotics, and Software company.

Tesla Energy posts record 9.4 GWh of battery storage deployed in Q2 2024

While the Tesla stock price has soared since it reported a delivery beat of 6,000 units over Wall Street consensus estimates, perhaps the biggest shock and one of the reasons more analyst firms are boosting their price targets is because of the energy division’s performance.

The company saw a massive 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 GWh in Q1, but this was drastically overshadowed by the 9.4 GWh it reported in Q2. It all goes back to things CEO Elon Musk said years ago.

Musk said during the company’s Q3 2019 Earnings Call nearly five years ago that the Energy division of Tesla could be a much larger portion of the company than the automotive side.

“It could be bigger, but it will certainly be of a similar magnitude,” he said. “It would be difficult to overstate the degree to which Tesla Energy is going to be a major part of Tesla’s activity in the future…I think both, over time, will grow faster than automotive. I  think, especially, if you look at sort of — if you look at, like, year-over-year growth, it will be absolutely incredible … over the course of, say, a year, gigantic increase.”

Jonas believes the same. In fact, his $310 price target has been broken down in a way that reflects auto making up $284 of it, Reuters said. Previously, Energy only accounted for $36 of the $310.

Now, he is bumping it up to $50 per share. This also factored in Morgan Stanley’s reduction of 2030 auto sales for the company.

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