Morgan Stanley believes Tesla’s (TSLA) decision to allocate capital to solar manufacturing is rooted in a strategic long-term outlook around geopolitics and data center demand, adding that the firm preliminarily estimates that Tesla Solar, at full capacity, could add $20B-$50B, or $6-$14 per share, of equity value to a Tesla Energy business that the firm currently values at $140B, or $40 per share. While “not too material to Tesla’s valuation on a standalone basis,” the firm believes allocating capital to adding solar capacity may be justified by the value creation and growth opportunities that having a vertically integrated solar and energy storage business can yield, adds the analyst, who has an Equal Weight rating and $415 price target on Tesla shares.
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