Analyst's Perspective: Tesla Leadership in the Near-Earth Economy Sector
It's no secret that the future of transportation could be taking flight, and some analysts predict the skies will be buzzing with more than just birds.
In a recent report, Morgan Stanley analyst Adam Jonas paints a picture of a not-so-distant future where our inboxes might be buzzing with a new type of message: "Look up, your ride has arrived." This vision is of what they call the low altitude economy (LAE), a term referring to commercial activities operating within one mile of the earth's surface. Currently, this airspace is sparsely populated by helicopters and drones. However, advancements in artificial intelligence and robotics are expected to pave the way for new aircraft, notably electric vertical take-off and landing (eVTOL) vehicles. These could revolutionize industries including logistics, public security, tourism, urban commuting, and intercity transport.
Morgan Stanley forecasts the total addressable "Urban Air Mobility" (UAM) market could reach a staggering $1 trillion by 2040 and a colossal $9 trillion by 2050. While these figures might seem like the stuff of science fiction, even more conservative estimates put the market value at $23 billion by 2035. Adoption is expected to be relatively slow until 2035, with economies of scale and improvements in battery technology making eVTOLs more accessible.
Some of the companies jockeying for a piece of this sky-high market include upstarts like Archer Aviation and Joby Aviation. Yet, Morgan Stanley's Jonas believes these companies could face stiff competition from an unexpected player: Tesla.
Although Tesla has yet to publicly announce its intentions for the UAM market, CEO Elon Musk has shown concern about America's limited drone manufacturing capabilities. In a recent earnings call, Musk expressed his apprehension about the U.S. falling behind in AI and robotics, stating, "Any country that cannot manufacture its own drones is doomed to be the vassal state of any country that can." Musk suggests Tesla, with its expertise in manufacturing, autonomy, electric motors, batteries, and robotics, could play a significant role in the commercial and military LAE.
Tesla's foray into autonomous vehicles could give it an edge over competitors. Jonas posits that any advancement in the science of autonomous cars accelerates the development of autonomous aerial vehicles, and Tesla's impending launch of its first robotaxi operation in Austin, Texas, later this month, further solidifies this advantage.
Now, here's where the rubber meets the sky - could Tesla dominate the U.S. home LAE? Morgan Stanley's Jonas believes so, with Tesla's entry into the UAM market potentially adding between $100 and $1,000 to its share price. It's a high-flying idea, but only time will tell if Tesla decides to take the plunge into the low altitude economy.
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(Enrichment Data Used: Tesla's potential technological advantage, market potential, regulatory challenges, and strategic positioning in the UAM market)
- The low altitude economy (LAE) market, predicted to reach trillions of dollars by 2040 and 2050, could see Tesla as a significant player, thanks to its expertise in artificial intelligence, robotics, and autonomous vehicles.
- If Tesla decides to enter the Urban Air Mobility (UAM) market, it could potentially boost its share price by $100 to $1,000, as predicted by Morgan Stanley analyst Adam Jonas.
- With Tesla's impending launch of a robotaxi operation and the company's expressed concern about America's drone manufacturing capabilities, some analysts are envisioning Tesla dominating the domestic low altitude market.
