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Shares of Tesla Inc. shot briefly back above the $800 mark on Monday, before pulling back, after Morgan Stanley said the tectonic shift to electric vehicles from internal combustion engines could be valued at $25 trillion over the next few decades.
Separately, Shanghai-based Nio Inc., referred by some as the Tesla of China, reported January sales that fell from a year ago, but said the results were “satisfactory” considering the “unfortunate” outbreak of the deadly coronavirus and the unfavorable timing of the Lunar New Year holiday.
Tesla’s stock TSLA, +2.46% ran up as much as 9.6% to an intraday high of $819.99, the first sight above $800 since the morning of Feb. 5, before paring gains to be up less than 1% in midday trading.
The stock was now trading 15% below its Feb. 4 record close of $887.06, and 22% below the all-time intraday high of $968.99 reached the same day. The stock has still more than doubled (up 124%) over the past three months, while the S&P 500 index SPX, +0.27% has gained 7.9%.
Morgan Stanley analysts, led by Adam Jonas, estimate that global electric vehicle penetration was currently around 2% to 3%. But amid Tesla’s recent rapid surge to become the most valuable U.S. auto maker — the market capitalization is over $135 billion — Jonas said many original equipment manufacturers “are accelerating efforts to flip internal-combustion propulsion systems to full battery electric vehicle architectures.”
Read more: Here’s what investors may be overlooking about Tesla.
Jonas expects EV penetration to more than triple to 11% by 2025, then reach 24% by 2030, 70% by 2040 and 82% by 2050.
“We believe over time the ~1 billion ICE cars emitting ~130 tons of CO2 per second will accelerate a replacement cycle from ICE to EVs, which could equal a total of ~$25 trillion,” Jonas wrote in a note to clients.
Given this backdrop, Morgan Stanley analysts said they were most bullish on “large cap, credible battery companies with a proven record.” Some of those companies include Contemporary Amperex Technology Co. Ltd. 300750, +3.16% , Samsung SDI Co. Ltd. 006400, +1.42% , Panasonic Corp. 6752, -0.20% and LG Chem Ltd. 051910, +0.13% .
See related: Opinion: Here’s the case for buying Ford, GM or Fiat Chrysler instead of Tesla.
Also read: Tesla shares’ ‘evening star’ chart pattern portends a reversal in progress.
Nio deliveries fall as coronavirus, calendar weigh
Separately, Nio NIO, -1.84% reported January deliveries of 1,598 vehicles, down 11.5% from a year ago. The company sales were negatively affected by the fact that the Lunar New Year holiday started in January this year as opposed to February last year, and the extended holiday due to the outbreak of the novel coronavirus out of Wuhan, China.
“We achieved satisfactory results in January despite the outbreak of novel coronavirus,” said Founder and Chief Executive William Bin Li. “Meanwhile, our teams strive to keep certain operations running during the extended Lunar New Year holiday, including necessary services and sales and marketing efforts through various forms of online sales channels such as our NIO App and other online live streaming platforms.”
Still, the company said it expects a decline in February production and deliveries from last year.
Last month, Nio reported December deliveries that increased 25.4% on a month-over-month basis, ahead of a record 8-session winning streak through Jan. 21.
Nio’s stock dropped 2.8% in midday trading, while trading in an intraday range of down 5.0% to up 2.6%. Trading volume swelled to 35.7 million shares, enough to make the stock the most actively traded on major U.S. exchanges.
The stock has nearly doubled (up 87%) over the past three months.
