Image: Morgan Stanley Research
Morgan Stanley is confident that Tesla will enter the Electric Vertical Take-Off and Landing/Urban Air Mobility (eVTOL/UAM) market and published the analysis in a 17-page report titled "Tesla Aviation: Not 'If' But 'When'? Analyst Adam Jonas says the potential skills transferability and network adjacencies are too strong to ignore.
Although Tesla's management openly denies rumors that they want to enter the eVTOL/UAM industry, a number of important factors indicate that this is not the case, Morgan Stanley is sure. So, What 'Chops' Required for E-Aviation?
Tesla has long vertically integrated its electric motor technology and makes well over one million e-motors per year (annualized) today. Tesla is known for its highly efficient designs of both permanent magnet and AC induction motors that contribute to industry-leading ranges for its vehicles. Tesla vehicles carry between one and three motors per unit and the company’s 2030 e-motor production volume could reach on the order of 10 million units per year.
Skills transferability: High. eVTOL designs have between six and 12 electric motors in DEP (distributed electric propulsion). Energy efficiency, compact design (power-to-weight) and cost are important attributes for eVTOL.
Tesla is one of the largest battery manufacturers in the world and is taking an increasingly vertically integrated approach. Competency includes cell architecture/design, materials, chemistry, supply chain, software, thermal, BMS and other capabilities. Tesla vehicles demonstrate industry-leading energy density in gravimetric and volumetric terms for high volume automotive-grade production. Tesla designs and manufactures its own cells and is pioneering next-gen manufacturing technology to achieve industry-leading output from its Giga factories with the company targeting several TWh of battery capacity by 2030. Morgan Stanley estimates Tesla battery production to be in the range of 500GWh to 1TWh by 2030.
Skills transferability: Very High. eVTOL designs will require potentially several hundred KWh of battery capacity in a redundant layout, allowing for substantial safety reserve power. Power to weight optimization is key. The energy density of 500 Wh / Kg or more opens up significant short-haul use cases for passengers and freight. Tesla's narrowing of the gap to 1KWh / Kg density is a key capability vector for aviation. Elon Musk stated in 2019 that battery-powered flight would require energy density of at least 400KWh/Kg...a level Tesla expects to achieve well before mid-decade.
Tesla is arguably the most vertically integrated automotive manufacturer in the world. The company is on track to manufacture over 800k light vehicle units this year and estimate nearly six million by 2030, and potentially up 12 or 15 million by 2040 with manufacturing in every major region of the global auto market. Morgan Stanley looks at the opening of manufacturing in Berlin and Austin as an opportunity to demonstrate how much more efficient their manufacturing process can be compared to Fremont and even compared to Shanghai.
Skills transferability: High. The economic model promised by eVTOL networks requires efficient manufacturing with the highest quality/tolerances at scale. The industry forecast of the firm envisions many hundreds of thousands of aircraft (eventually millions) made annually.
Based on Morgan Stanley discussions with OEMs, suppliers and technology partners, Tesla is among the most capable players in vehicle autonomy at scale. 100 percent of its cars are connected with OTA update capability. Tesla has formidable in-house/full stack resources in compute / silicon design, software, and AI / neural net training.
Skills transferability: Very High. Autonomy for aircraft control, navigation / ATC, and networking are highly software dependent. Sensor fusion from camera, radar, LIDAR, and other sensors is also critical. Tesla's leadership in autonomous applications positions the company well for a variety of eVTOL missions. Some experts in the field have argued that autonomy for cars is even more challenging than for aircraft due to the complexity and unpredictability of the road environment, especially in dense/urban areas.
Networking / Infra
Tesla's vehicles are connected with their internally developed OS and OTA updates help to improve performance and safety. Tesla is increasingly offering a range of software-enabled and software-derived services to its users including driver-assist/navigation, performance upgrades, insurance, charging services, and content/experiences.
Skills transferability: High. The economic model of eVTOL is based on fleet management and services. In the vast majority of use cases, Morgan Stanley does not expect consumer-owned eVTOL. Instead, the firm sees it as a fractional use case akin to ride-share. Connected vehicles supported by physical and digital infrastructure, as Tesla does with its fleet, is critical to running a profitable eVTOLfleet.
Like today’s aircraft, eVTOLs will rely on a variety of advanced communication networks for the safe and efficient execution of missions. Morgan Stanley's work with the MS Telecommunications and Sat-Comms team suggests the growing importance of LEO satellite downlink for redundant and resilient comms in a variety of altitudes, regions, and weather conditions.
Skills transferability: Very High. The firm has long noted the many strategic advantages of the Tesla/SpaceX relationship including knowledge sharing, talent/capability overlap and, increasingly, the business model. The Starlink LEO satellite constellation may, over time, emerge as an important strategic partner to the Tesla ‘Internet of Cars’ ecosystem while Tesla could emerge as a strategic customer to Starlink, enabling its path to scale beyond providing broadband services to homes.
Regulation/Certs / FAA
UAM and eVTOL aircraft, manufacturing, flight rules, and services will all be subject to stringent regulatory forces, most of which are unique to aviation. While cars must also pass a range of important traffic safety and crash tests, the margin for error and safety benchmarks for aircraft is on a different level.
Skills transferability: Moderate.
Morgan Stanley's study made available via Sawyer Merritt/Twitter
NEWS: Adam Jonas Just Put Out An Extensive 17 page Research Report on $TSLA Aviation:— Sawyer Merritt 📈🚀 (@SawyerMerritt) July 15, 2021
"The chance that Tesla doesn't ultimately offer products & services to the eVTOL/UAM market is remote. The potential skills transferability & network adjacencies are too strong to ignore"
© 2021, Eva Fox. All rights reserved.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.