Tesla Is More Than An Automaker

Tesla Is More Than An Automaker News: Morgan Stanley's Adam Jonas Releases New $TSLA Note:

"Many investors are still arguing about Tesla's advantages of being 'more than a car company'. Tesla is definitely a car company, we think. It's also an AI company. Think of 'and' rather than 'or'.

"Here are other thoughts and events (other than the core automotive business) that may be relevant to the $TSLA next year:

- Optimus: Tesla's AI Day (1H24?) will be an important catalyst in introducing and developing newfound proximity to Tesla's technology. Optimus targets the $30 trillion global labor market and runs on the same software architecture as FSD.

- Dojo: We believe that the driving force behind AWS's ability to reach 70% of AMZN's total EBITDA will also work at Tesla, pioneering a new market that has expanded beyond selling vehicles at a fixed price. What is the catalyst? It is Dojo, a customized supercomputing project that Tesla has been working on for the past five years. The recent departure of Tesla's AI team management has brought the project into the spotlight. What are the milestones for Dojo to contribute to Tesla in a positive way in 2024?

- Edge AI: The next generation of software-defined vehicles could push the boundaries between the car and mobile device markets. Can car keys do more than just open doors? Could some of the cars be 'with you'? Tesla vehicles are roboticized edge computers. Could there be room for 'cyberphones' on the edge of Edge?

- EV Infrastructure: Tesla's EV production scale is positioned advantageously to industrialize the manufacturing standards and supply chain architecture needed to commercialize EVs at affordable prices, mitigating national security risks. The Corpus Christi lithium refining effort will continue to grow through 2024. In May, Ford adopted Tesla's charging standards, and about a dozen other competing OEMs followed suit. With existing OEMs rolling back on in-house vertically integrated EV plans, we believe Tesla is positioned to create significantly greater value than its industry competitors in software/FSD, battery hardware, operating systems, 48-volt electric architecture, and more.

- SpaceX/Starlink's 'luminescence effect'. In discussions with investors about Tesla, SpaceX (particularly Starlink) is seen as an important component within Muskonomy and potentially interrelated with Tesla itself. The automotive internet and its supportive computing will rely on a redundant and resilient communications 'mesh network'. Starlink is commercializing an entirely new communications network.

"Why should we still retain OW Tesla despite the risk of negative revisions from safety recalls and slowing EV markets?"

- Tesla is, in our opinion, more than an automaker. Of the $380 target price, the "core" car business is worth $86 per share, with the remaining 77% derived from network services, mobility, third-party battery/FSD licenses, energy, and insurance. We received significant backlash from customers for including non-automotive revenue streams in our valuation. Our OW logic relies heavily on these business segments to become much greater revenue drivers through clear milestones/evidence points supported by financial disclosures.