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Tesla's (TSLA) GigaFactory May Be Worth Double the Current Market Cap - Analyst

January 20, 2015 1:26 PM EST
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Global Equities Securities analyst Trip Chowdhry was out with an extensive report on Tesla Motors (NASDAQ: TSLA) after evaluating the value of the company's GigaFactory. Chowdhry believes Tesla's GigaFactory may be worth $50 billion, which is more than double the current market cap of the entire company.

While some might believe Chowdhry is "drinking its own Kool-Aid", the analyst said not so fast and said this scenario has played out many times before, explaining that GigaFactory is a new Industry Creation activity.

He highlighted the following examples:

  • MSFT vs. GM: In early 1990's MSFT Market Cap exceeded GM, and at that time there was a huge debate, how can a newly minted company MSFT be more valuable than GM ... nobody questions that today
  • In late 1990's: AMZN Market Cap exceeded that of both Barnes and Noble and Borders, and at that time also there was a huge debate, how can an upstart be more valuable than time and tested companies like Boarders and Barnes and Noble ..."Books are an experiential product ... people like to touch a book, flip through the pages etc" ....today we all know what has happened to Barnes and Noble and Borders
  • In late 1990's: There was again a huge debate, How can PCLN be more valuable that Delta, American Airlines and United Airlines taken together ... today nobody questions it
  • In late 2000's: Both IBM and ORCL were shouting at top of their voice ...What does a book seller know about Enterprise Computing ...fast forward ... Today AMZN with its AWS is setting the tone of the Enterprise Computing, and both ORCL and IBM are trying desperately to catch up to AMZN AWS
  • By the same token GigaFactory, when completed, by itself may be valued at around $50 Billion...its impact will be huge, that many of us in 2015 cannot see .. but the ingredients of creating a completely new industry are perfectly in-place ...just like MSFT created the Software Industry, AMZN created the E-Commerce Industry, and then later Cloud Computing Industry.....Tesla is creating an Energy Storage Industry with GigaFactory

Global Equities Securities issued an lengthy report entitled "Introduction to Battery Technology," to support its Tesla GigaFactory thesis. The firm maintained an Overweight rating and price target of $385 on Tesla. Below is the executive summary and table of contents:

Executive Summary

A battery is a device consisting of one or more electrochemical cells that convert stored chemical energy into electrical energy. When a device is connected to a battery, a reaction occurs that produces electrical energy. This is known as an electrochemical reaction.

Italian physicist Count Alessandro Volta first discovered this process in 1799 when he created a simple battery from metal plates and brine-soaked cardboard or paper. Since then, scientists have greatly improved upon Volta's original design to create batteries made from a variety of materials that come in a multitude of sizes and kinds

Primary (single-use or "disposable") batteries are used once and discarded; the electrode materials are irreversibly changed during discharge. Common examples are the alkaline battery used for flashlights and a multitude of portable devices.

Secondary (rechargeable batteries) can be discharged and recharged multiple times; the original composition of the electrodes can be restored by reverse current. Examples include the lead-acid batteries used in vehicles and lithium ion batteries used for portable electronics

Tesla primarily uses small size Lithium-Ion batteries for its cars, which provide them with a good range, and with a good balance of Power Density, Energy Density and Specific Gravity. Tesla is currently working on its $5 billion worth Gigafactory which would produce lithium ions for the upcoming Tesla cars. Tesla has also been granted a patent on Metal Air batteries

TABLE OF CONTENTS:

  • What is a Battery
  • Mechanism of a Battery
  • Non - Rechargeable Batteries
  • Rechargeable Batteries
  • Battery and Current
  • Lead–Acid Battery
  • Nickel Metal Hydride Batteries
  • Lithium-ion Battery
  • Metal Air Batteries
  • Tesla Li-Ion Battery Technology
  • Tesla hybrid Battery Technology
  • Tesla Gigafactory
  • GLOSSARY OF TERMS

For an analyst ratings summary and ratings history on Tesla Motors click here. For more ratings news on Tesla Motors click here.

Shares of Tesla Motors closed at $193.07 yesterday.



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