Tesla’s Next Big Thing Could be Electrifying Air Travel, Says Morgan Stanley

Tesla has successfully established itself as a global leader in the electric vehicle (EV) space, but where will the company’s journey of electrification take it next? Morgan Stanley analyst Adam Jonas believes that one likely possibility is electric aircraft — reports Yahoo Finance.

In fact, Jonas thinks Tesla’s entry into the short-haul air transport space is an eventuality rather than a possibility, for both passenger and cargo carriage.

“In our view, the chance that Tesla does not ultimately offer products and services to the eVTOL [electric vertical takeoff and landing aircraft]/UAM [urban air mobility] market is remote. The potential skills transferability and network adjacencies are too strong to ignore,” Jonas said in a new research note.

Jonas pitched ‘Tesla Aviation’ as a possible name for the new segment, which would be a logical evolution of the company’s expertise and experience in building EVs.

Earlier this week, Jonas toured Tesla’s Fremont factory and test drove several of the EVs the company produces at the facility, leaving impressed.

The eVTOL and UAM markets are focused on providing affordable and viable aerial transport solutions, along with on-demand (and sometimes automated) passenger and cargo transportation services.

Morgan Stanley estimates the total addressable market (TAM) for the eVTOL industry in the U.S. could reach $12 billion by 2030. Globally, the investment bank forecasts the eVTOL market will hit $9 trillion by 2050 as governments seek eco-friendly solutions to road congestion.

Jonas thinks all-electric air travel could end up being one of the goals Tesla CEO Elon Musk outlines in part three of his ‘Master Plan’ for the company, which is expected soon.

“We see Part 3 [of Tesla’s story] as mass industrialization, a network flywheel and ‘connecting the dots’ across adjacent TAMs,” added Jonas.

The eVTOL market is just one of several areas Tesla will venture into in the decades to come, said the analyst. Other promising projects for Tesla’s automotive operations could be collaborations with Musk’s other companies, such as The Boring Company (think city-spanning tunnels with Tesla robotaxis ferrying people to and from stations) and SpaceX.

Back in January, Jonas upgraded his Tesla price target to $1,300 USD per share from a previous target of $1,200. At the time of writing, Tesla stock is trading at $898.39 USD per share, up 3.07% in Friday trading.

Could electric aviation really be built into part three of Tesla’s Master Plan, which Musk said on Thursday he is currently working on? Let us know in the comments below.