Tesla Motors (NASDAQ:TSLA) counts Toyota (NYSE:TM) and Daimler (ETR:DAI) among its strategic partners, to whom it provides development services and sells powertrain components. Over the first three quarters of 2011, Tesla’s revenues from development services was almost four times that of last year while revenue from its powertrain component sales were more than three times than number last year. We believe that Tesla is poised to see increasing demand for its powertrain and development services as companies like Toyota and Daimler focus on developing a new fleet of electric vehicles. Revenues from Tesla’s sales to its partners are an important source of funds which in addition to money raised through the Department of Energy (DOE) loan facility and revenues from Roadster sales, will help Tesla continue on its vehicle development plans.
We currently have a price estimate of $41 for Tesla’a stock, which is about 20% above its market price.
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Revenues from powertrain component sales and development services to continue accelerating
Even though Tesla’s development services for Toyota RAV E4 will be completed by early 2012, Tesla has already entered into a powertrain component sales agreement with Toyota for RAV E4. Tesla expects to earn around $100 million in 2012-14 from this agreement for supplying electric powertrain systems, which includes the battery, charging system, inverter, motor, gearbox and associated software. We believe that the relationship between Toyota and Tesla will continue to grow over time, as Satoshi Ogiso, Toyota’s chief engineer, reveals Toyota’s conviction on clean technology here.
Tesla supplies components such as battery packs and powertrains for Daimler’s electric vehicles, primarily the Smart Fortwo and Daimler A-Class. Even though Tesla’s powertrain component sales to Daimler will be completed by the end of 2011 under current agreements, the two companies are already negotiating a development services agreement for Tesla to provide a full powertrain program for a vehicle in the Mercedes line.
We expect that Tesla’s revenues from powertrain component sales and development services offered to Daimler and Toyota will continue increase exponentially in the medium to long term as these companies continue to accelerate efforts to develop their own fleet of electric vehicles.
You can drag the trend lines in the modifiable charts above to see the impact of these trends on Tesla’s stock value.