In a striking turn of events, Tesla's Supercharger network — the globe's sole fast-charging infrastructure for electric vehicles — has been appraised by industry analysts to exceed $100 billion potentially. This evaluation, by one of the top Tesla experts, sends ripples across the EV charging business, marking a critical point for Tesla and the wider industry.
North American Standard NACS Connector Boosts Tesla’s Lead
Initially, Tesla's Supercharger network was meant as a perk for Tesla car owners, not a profit center. However, a fully developed EV charging market didn't materialize as expected, particularly in North America. Thus, automakers like GM and Ford have jumped on board, adopting Tesla’s NACS connector to provide their EV buyers access to Tesla’s Supercharger network. This is set to consolidate Tesla's position in the EV charging business, particularly in North America.
Morgan Stanley Forecasts and Scenarios for Supercharger Network
Adam Jonas, a highly regarded Tesla analyst at Morgan Stanley who also recently downplayed the Cybertruck, has extrapolated the potential value of the Supercharger business to Tesla. Jonas's team envisages a future where Tesla produces and stores its solar electricity to power Superchargers. By crunching the numbers, including assumed percentages of US electric vehicle miles in 2030, Supercharger market share, miles per kWh efficiency, and kWh revenue, several future scenarios emerged.
Understanding the Role of NOPAT in Tesla's Valuation
An important element in these scenarios is the Net Operating Profit After Tax (NOPAT) concept. NOPAT is a company's potential profit after taking out the costs of goods sold and operating expenses before deducting interest and taxes. It's used to gauge operating efficiency and profitability without considering the effects of the company's capital structure or debt.
To break it down, Jonas presents four unique cases:
The "reasonable case" estimates a 10% penetration of EV miles, Tesla's Supercharging capturing 50% of the market, and a 30% NOPAT margin. This scenario pegs the net present value at $3 per share.
The "plausible case" forecasts 20% penetration, Tesla capturing 70% of Supercharging, and a 50% NOPAT margin, resulting in a net present value of $14 per share.
The "dominant case" anticipates a 30% EV miles penetration, an 80% Tesla Supercharging share, and a 70% NOPAT margin, culminating in a net present value of $33 per share.
Lastly, the "monopoly case" foresees 50% EV miles penetration, Tesla seizing 100% of Supercharging, and an 80% NOPAT margin, leading to an astounding net present value of $78 per share.
Given Tesla's massive number of shares, surpassing 3 billion, the Supercharger network's valuation crosses $100 billion at a per-share price of $33.
This hefty valuation of Tesla's Supercharger network underscores the substantial profit potential waiting to be unlocked in the EV charging infrastructure. It also signifies the unyielding lead Tesla has carved out in the EV market, not just with their electric vehicles but also their charging network. As more automakers pivot towards Tesla's charging standard, this $100 billion valuation may indicate more seismic shifts in the EV industry.
