Is Tesla Motors Inc. the Most Important Car Company in the World?

Tesla stock jumped again today. The backstory begins with a bold statement about the company's position in the automotive market.

Jun 23, 2014 at 2:33PM

In 2011, when Tesla Motors (NASDAQ:TSLA) was trading at around $26, Morgan Stanley analyst Adam Jonas put a $70 price target on the electric-car maker. The absurd target shocked the Street. Fast-forward a few years later: Jonas made a similar dramatic change to his target, raising it from $153 to $320 earlier this year.

And now Jonas is speaking up again. While he isn't boosting his price target this time, his latest note to investors regarding Elon Musk's Tesla Motors is, once again, unashamedly optimistic. But considering the stock's 4% jump Monday, at the time of this writing, the market doesn't seem to think he is crazy.

Model S Snow

Model S. Image source: Tesla Motors.

Jonas' latest thoughts on Tesla
With glimpses of the report shared by the LA Times, Jonas is still a Tesla believer:

Not even two years after the delivery of the first Model S, Tesla Motors has transformed from fledgling start-up to arguably the most important car company in the world. We are not joking.

How so? Jonas points to several areas where Tesla is becoming increasingly important.

1. Automotive suppliers. Suppliers are considering building dedicated lines and facilities for Tesla alone, according to Jonas (citing a senior executive at a major auto supplier). The supplier recounted how Tesla operates uniquely "in terms of electrification, connected cars and autonomous driving."

2. Competitors. General Motors has a team dedicated solely to studying Tesla and developing long-range electric vehicles that will hopefully be just as successful as the Model S, Jonas notes. And a BMW engineer explained to Jonas that Tesla has "helped reinvigorate the spirit of automobile innovation," he says.

3. The U.S. economy. Tesla's $5 billion Gigafactory project to build the world's largest factory for lithium-ion battery production is the beginning of an influx of new jobs for the U.S. The Gigafactory alone will not only create thousands of jobs, but Tesla's rise to prominence over the next seven years could create as many as 100,000 jobs from indirect support, Jonas believes.

Tesla Fremont Factory

Tesla's Fremont factory. Image source: Tesla Motors.

And perhaps more interesting, Jonas notes that Tesla is the "most American made car on the road." Jonas asserts that Tesla's vehicles have about "90% U.S. content," beating out the Ford F-150 and the Chevy Silverado.

But $320?
With Tesla stock trading at about $238 today, and up about 140% in the past 12 months, it's difficult to imagine the stock reaching $320 in the near future.

How does Jonas arrive at such a bullish target? He predicts Tesla will achieve enough scale to capture slightly less than 1% of the global auto market by 2028.

While this prediction for market share seems reasonable, investors should keep in mind the enormous risk associated with investing in stocks with so much of the stock price based on extremely forward-looking assumptions.

Warren Buffett's worst auto nightmare (Hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.

Daniel Sparks 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.

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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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