Make us your home page
Instagram

Analyst: Tesla might be world's most important automaker

Tesla is spurring new manufacturing jobs and changes in the automotive industry, but the company might suffer if incentives for buying electric cars are reduced.

Associated Press

Tesla is spurring new manufacturing jobs and changes in the automotive industry, but the company might suffer if incentives for buying electric cars are reduced.

Could Tesla Motors be the world's most important car company?

Morgan Stanley Research analyst Adam Jonas makes that argument in a new report to investors.

"Not even two years after the delivery of the first Model S, Tesla Motors has transformed from fledgling startup to arguably the most important car company in the world. We are not joking," Jonas wrote. "Tesla is also emerging as an emblematic force in America's effort to foster high-tech manufacturing job growth."

Here's why:

• Tesla has gone from zero to hero with automotive suppliers, which once shunned the Palo Alto, Calif., car company.

Jonas recently dined with a senior executive at one major supplier who talked about what Tesla does differently in terms of electrification, connected cars and autonomous vehicles. Now suppliers are considering developing dedicated lines and facilities just for Tesla's business.

Rival automakers derided now-failed startups such as Fisker and Coda, but they see Tesla as a true competitor.

General Motors has a "Team Tesla" devoted to the development of long-range electric vehicles like Tesla's Model S sedan, Jonas said.

"A BMW engineer recently explained to us how Tesla's presence has helped reinvigorate the spirit of automobile innovation that was beginning to run stale, further testifying that BMW will be a stronger company longer term because Tesla is around," he said.

• Tesla is having a positive effect on the U.S. economy.

Five states are developing incentive packages to land Tesla's proposed giant $5 billion "gigafactory" battery facility, a project that could create 6,000 manufacturing and technical jobs, Jonas said.

A "governor would need a very good reason to say no to a Tesla factory," Jonas said.

Including the battery factory and expanded auto production at its factory in Fremont, Calif., Jonas sees Tesla's U.S. employment rising from about 6,000 workers today to as many as 20,000 within seven years.

That would indirectly support more than an additional 100,000 U.S. jobs.

It's "GDP-moving stuff," Jonas said.

• Tesla is uniquely American.

Tesla also is establishing itself as the "most American-made car on the road, pushing 90 percent U.S. content," Jonas said. That's more than such American standards as the Ford F-150 and Chevrolet Silverado pickup trucks, he said.

This all means that investors should look at Tesla as more than a traditional auto company.

• There are risks.

Tesla is guaranteeing the value of its Model S in a lease-finance transaction. If the price of used Teslas fall short of the company's estimates, it could lose a lot of money.

Tesla remains dependent on key government programs such as environmental credits and federal and state incentives for people who purchase electric cars.

Those could go away. Lawmakers might decide not to give wealthy consumers as much as $10,000 in federal and state benefits to purchase a car that starts around $71,000 and easily crosses the $100,000 range, depending on options and features.

Analyst: Tesla might be world's most important automaker 06/20/14 [Last modified: Friday, June 20, 2014 8:40pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Tribune News Service.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. 'Road to Nowhere' is back: Next phase of Suncoast Parkway coming

    Roads

    Despite intense public opposition and dubious traffic projections, the Florida Department of Transportation has announced that construction of the toll road known as "Suncoast 2" is expected to start in early 2018.

    The Suncoast Parkway ends at U.S. 98 just south of Citrus County. For years residents have opposed extending the toll road, a project dubbed the "Suncoast 2" into Citrus County. But state officials recently announced that the Suncoast 2 should start construction in early 2018. [Stephen J. Coddington  |  TIMES]
  2. A sports rout on Wall Street

    Retail

    NEW YORK — Sporting goods retailers can't shake their losing streak.

  3. Grocery chain Aldi hosting hiring event in Brandon Aug. 24

    Retail

    BRANDON — German grocery chain Aldi is holding a hiring event for its Brandon store Aug. 24. It is looking to fill store associate, shift manager and manager trainee positions.

  4. Lightning owner Jeff Vinik backs film company pursuing global blockbusters

    Corporate

    TAMPA — Jeff Vinik's latest investment might be coming to a theater near you.

    Jeff Vinik, Tampa Bay Lightning owner, invested in a new movie company looking to appeal to a global audience. | [Times file photo]
  5. Trigaux: Look to new Inc. 5000 rankings for Tampa Bay's future heavyweights

    Business

    There's a whole lotta fast-growing private companies here in Tampa Bay. Odds are good you have not heard of most of them.

    Yet.

    Kyle Taylor, CEO and founder of The Penny Hoarder, fills a glass for his employees this past Wednesday as the young St. Petersburg personal advice business celebrates its landing at No. 25 on the 2017 Inc. 5000 list of the fastest growing private companies in the country. Taylor, still in his 20s, wins kudos from executive editor Alexis Grant for keeping the firm's culture innovative. The business ranked No. 32 last year. [DIRK SHADD   |   Times]