Tesla Could Play a Big Role in Restructuring the US Energy Grid, Says Morgan Stanley

Recently, Elon Musk tweeted that he is "Working on Master Plan Part 3." Following which, Morgan Stanley’s Adam Jonas made a long list of what this could entail, and now the analyst has added another possibility – a reworking of the US’ energy grid.

“If it wasn’t already clear to investors, events of the past month have reinforced the relationship between energy security and national security. Energy Security = National Security,” noted the 5-star analyst.

And according to Jonas’ colleague, analyst Stephen Byrd, in its present state, the US electricity grid is in no way ready for mass adoption.

A White Paper by Edison International, titled Mind the Gap: Policies for California's Countdown to 2030, states, "To provide supporting infrastructure for 7.9 million ZEVs by 2030, a funding gap of $10 billion exists for the remaining 900,000 chargers."

So, how does Tesla (TSLA) fit in here? Jonas explained, “In our view, Tesla is uniquely positioned to accelerate necessary re-architecting of the US grid including making the entire vehicle population (or ‘parc’) an essential ingredient of the distributed energy ecosystem.”

Car included, Jonas imagines a “mobile, connected/crowdsourced, distributed grid” which could have a huge effect on the future of energy architecture, renewables and economics and then wonders whether that could usher in “The dawn of IOP (Internet of Power)?”

It’s possible, and Jonas would not consider it a shock if at some point in the future, vehicle to grid (V2G)/bi-directional charging capability becomes a “requirement for all vehicle sales.”

While so far investors have focused their attention primarily on BEVs, given the role it stands to play in “enabling renewable generation and greatly reducing dependency of power generation from fossil fuels,” Jonas anticipates grid-level stationary storage will soon start receiving a lot more attention.

Turning our attention to Jonas’ outlook for Tesla stock, the analyst sticks with an Overweight (i.e., Buy) rating backed by a $1,300 price target. The figure provides room for ~30% growth from current levels. (To watch Jonas’ track record, click here)

The Street’s average target is more modest. At $1,063 and change, the figure suggests shares will appreciate by 6% in the year ahead. Overall, the analyst consensus rates this stock a Moderate Buy, based on 16 Buys, 5 Holds and 6 Sells. (See Tesla stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.