Morgan Stanley analyst really wants Tesla to get out of the car business
"Over the past year, the market has seen how expensive it is to launch a car company from the ground up and how much cash can be consumed when launching all-new vehicles to the market," Jonas wrote.
Of course, the market should have seen this coming. Established automakers routinely burn billions per quarter to sustain operations. And Tesla CEO Elon Musk did announce earlier this year that Tesla would be spend a staggering amount of cash to expand production and bring the massive Gigfactory battery plant online on Nevada.
Jonas also recalled an amusing exchange between himself and Musk from Tesla's third-quarter earnings call:
Jonas then explained why he asked the question, which on the call elicited some chuckles from Musk,who by now is accustomed to Jonas' out-there inquires:
So what is Jonas on about here?
For starters, although he's a major Tesla bull, with a target price of $450 on the stock (it's been trading around $220 of late), Jonas has been early to the game of assessing Tesla's prospects as a car maker. Musk might aspire to selling 500,000 cars per year by 2020, but Jonas thinks a niche, luxury, high-performance, high-sticker-price future is more realistic.
But he hasn't limited his analysis of Tesla to the company's future as a builder of automobiles. Rather, he see Tesla as being one of several companies on the leading edge of a revolution in mobility (other include Google, Uber, and maybe even Apple, with its secretive Apple Car project).
In support of that thesis, he's making a bold prediction: that the forthcoming Model 3 mass-market vehicle, slated for 2017, will be much more expensive than anticipated: $60,000 versus $35,000. Over time, however, the Model 3, along with Tesla's current vehicles - the Model S sedan and the Model X crossover - will cease to be cars sold predominantly to individual owners and become nodes in a fleet of technologically enabled smart vehicles, managed by software.
Customers won't buy a car. They'll buy miles, according to Jonas.
Tesla might not ultimately be all that enthusiastic about this disruptive idea. After all, if Musk wants to get money in the door, selling very expensive cars and aiming for a juicy profit margin is a good way to do it. Then again, Musk is no stranger to disruption, having helped create PayPal, which has redefined banking and financial transactions.
So as much as he's now trying to manage a car company, he also needs to practice that distinctive Silicon Valley skill of imagining what the world will be like in 10 or 20 years.