Tesla shares roar after upgrade

A Morgan Stanley analyst thinks electric cars could total 15% of all autos sold by 2025. Tesla will benefit from that, he adds. With video updates.

By Kim Peterson Mar 31, 2011 2:33PM
Shares of Tesla Motors (TSLA) soared as high as 19% Thursday after an analyst predicted the company will benefit from a shift to electric cars.

The analyst, Adam Jonas of Morgan Stanley, said he thinks electric cars could total 5.5% of worldwide car sales by 2020. Five years after that, electric cars could amount to 15% of cars sold, he added.

It could take Tesla a decade or more to go from a California startup to a global auto player, Jonas added, according to Bloomberg. But the company has a "viable opportunity to be a significant volume player" in the industry.

Post continues after this video analyzing Tesla's recent quarterly report:
Tesla shares zoomed after Jonas released his report, though by afternoon trading the stock had dropped to $27.35 -- a 15% gain from Wednesday's close.

Tesla is best known for making a $109,000 Roadster that is out of reach for most consumers, and it has delivered 1,500 of those models so far. The company is developing a lower-priced sedan, which it says will be available next year. Jonas thinks that by 2025, Tesla will have sold half a million cars.

Jonas upgraded his rating on the company to "overweight" from "equal weight" and gave the shares a target price of $70.

An industry expert at J.D. Power & Associated thinks Jonas' expectations may be a stretch, according to Bloomberg. J.D. Power thinks electric cars will total only 2% of global sales by 2020 -- far lower than the 5.5% Jonas predicted.

"The obstacles are high upfront costs of the vehicle, the limited driving range and the lack of infrastructure," said Mike Omotoso at J.D. Power. "All those obstacles are going to take 10 years or more to overcome, and there are a lot of other alternatives consumers have to reduce gas consumption."

Mar 31, 2011 5:59PM

The Best thing about Tesla as a company is the the US Federal Government has loaned the company 5 times what its worth with no collateral, and if the company fails, the American Taxpayer is on the hook, not the shareholders.  So in other words, It is Too Big to Fail.  I would sell now and then buy after it makes a short term plunge once Alternative energy stocks lose their luster.


There is no way that an average American can afford their cars, and until that happens, they will never compete.  I believe this report is merely speculation to drive prices up now.

Mar 31, 2011 5:33PM
My neighbor thinks I may be awesome in about 10 years. Why am I not getting anything?
Mar 31, 2011 5:09PM
Good time to short, if you think they will outdo the majors your wrong
Mar 31, 2011 4:50PM
Well, at least no one's recommending that you buy their cars...
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