Tesla Motors Inc., Adam Jonas, and the Gigafactory

It’s March 2011, Tesla Motors, Inc. is trading at $22, and you just bought in.

Mar 3, 2014 at 8:00PM

Let's say you had the opportunity to add Tesla Motors, (NASDAQ:TSLA) to your portfolio before it blows up again? The guy who thought that the electric-car company would grow exponentially in 2011 is predicting something equally as enticing today, and you should consider getting in on it. 

Time travel
Adam Jonas and Tesla have a long and loyal history. In 2011, the Morgan Stanley analyst was bullish enough to advise an overweight position on a company that offered a single very expensive car, the Roadster. Jonas had this to say about Tesla at the time:

The confluence of structural industry change, disruptive technology, changing consumer tastes and heightened national security creates an opportunity for significant new entrants in the global auto industry. California dreaming? We don't think so. In our view, the conditions are ripe for a shake-up of a complacent, century-old industry heavily invested in the status quo of internal combustion. The risks are high. So is the opportunity. Enter Tesla.

He went further, he valued Tesla (which was trading around a measly $26) at a whopping $70, a whole 148% increase. 


Roadster. Source: Tesla Motors

Now look what's happened
Okay, back to reality where Tesla now trades around $250 and the "Gigafactory" has just been announced. Jonas now says that he thinks the stock should actually be trading at $320. What do you do? You listen and strongly consider buying.

Here's what he had to say on Feb. 25:

Tesla's quest to disrupt a trillion $ car industry offers an adjacent opportunity to disrupt a trillion $ electric utility industry. If it can be a leader in commercializing battery packs, investors may never look at Tesla the same way again ... Tesla says it will team up with partners to build the world's largest Li-ion battery pack facility in the US. We reflect the potential for lower battery costs through higher sales volume nearly doubling Tesla's share of the global car market to 90bps by 2028, driving our target increase.

What does that mean? We're not in Kansas anymore folks, Tesla has its sights set beyond cars. 

Where is Tesla going?
Batteries. By 2020 Tesla and Panasonic will be able to produce 30 gigawatt hours per year. To put that in perspective, that's more than the entire world produced in 2013.

We're talking a huge chunk of Tesla's supply chain being internalized. Targeted to start manufacturing in 2017, the Gigafactory will manage everything from processing raw materials to the assembly of the batteries. 

Grey S

Tesla Model S. Source: Tesla Motors

Is Tesla worth the premium?
Yes. Very much so, yes. Sure there are a number of risk factors to be considered when talking about taking on such a huge endeavor. But Panasonic doesn't seem to have any reservations, as the Tesla partner is inviting Japanese materials makers to sign on to back the deal. The expected total investment in the facility will be in the ballpark of $4 billion-$5 billion. 

With great power
So what does this mean for for the Model S maker? It means that Tesla can continue to focus on how to get it's third-generation car into as many hands as possible as quickly as possible. It means that Tesla exepmlifies innovation and opportunity. It means that Tesla has been and will continue to be a great buy. 

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Leah Niu owns shares of Tesla Motors. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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