Morgan Stanley analyst and Tesla Inc TSLA supporter Adam Jonas predicts that Tesla’s energy revenue will grow this year, while the company’s core electric car business will experience a drop in revenue.
What happened: Jonas values Tesla Energy at $36 per share from his $310 price target for the company. The insider is bullish on the segment and expects it to add more than $1 per share to the company’s earnings by 2030, excluding incentives.
Acceleration in generative artificial intelligence will lead to an increase in energy demand that Tesla will be well-positioned to benefit from, the analyst said in a statement on Tuesday.
“We believe that Tesla’s ability to distribute energy generation (solar) and storage (Powerwall/Megapack) could be a significant factor in the evolution of the US grid as computing and data energy consumption increases,” Jonas wrote, adding that he expects Tesla’s energy segment to will generate $7 billion in revenue in 2024, up nearly 20% from 2023. Auto revenues will still decrease, the analyst predicted.
Jonas also expects Tesla Energy’s profit margins to beat Tesla Auto’s this year.
In January, the company said it expected the growth rate and revenue of its energy storage business to surpass that of the automotive sector in 2024. Deployments will be volatile and affected by logistics and global product distribution, the company said in a statement, adding that it still expects continued growth over the twelve months.
In the first quarter, Tesla revealed that it deployed 4,053 MWh of energy storage products, its largest quarterly deployment to date and a 4.2% increase over the previous year.
In April, Musk said demand for the company’s stationary energy storage products was “very high” and suggested the company could make more batteries for energy storage than for cars in the long term.
“I think Tesla could produce more total joules in stationary than mobile products in the long term,” Musk said.
Earlier this month, at Tesla’s annual shareholder meeting, Tesla CEO Elon Musk said the company was on track to complete a “massive number of energy deployments.”
“We look to be on track to achieve about 200 to 300 percent year-over-year growth in energy storage deployments and stationary packages. It’s huge. And the limiting factor is really the ability to build more Megapacks and more Powerwalls,” Mask said.