Why One Analyst Thinks Tesla Could Dominate the ‘Low-Altitude Economy’

Analysts are increasingly drawing attention to what they describe as the “low altitude economy” (LAE)—a burgeoning sector that could shape the future of transportation and logistics. In a recent note, Morgan Stanley analyst Adam Jonas shed light on this concept, predicting that LAE could eventually dwarf the existing automotive market. This sector includes aerial activities taking place within one mile of the earth’s surface, primarily involving helicopters and emerging technologies like electric vertical take-off and landing vehicles (eVTOLs).

### The Promise of the Low-Altitude Economy

According to Jonas, the low altitude economy is expected to undergo rapid growth, driven primarily by advancements in artificial intelligence (AI) and robotics. These technological improvements will empower the development and deployment of eVTOLs, which hold promise across various domains, including logistics, public safety, urban commuting, tourism, and intercity transportation.

The market potential is enormous; Morgan Stanley estimates that the total addressable “Urban Air Mobility” (UAM) market could value at a staggering $1 trillion by 2040 and rise further to $9 trillion by 2050. While not all analysts share the same optimism, differing forecasts still highlight a significant opportunity. For instance, Bank of America has projected a more conservative market size of $23 billion by 2035, citing that the adoption of these technologies will likely take time to gain traction.

### Competition and Key Players

As interest in the low altitude economy heats up, various companies are vying for a stake. Notable players in this space include Archer Aviation and Joby Aviation. Archer is actively testing eVTOL models and exploring partnerships with defense manufacturers for military applications. Joby, on the other hand, is in the certification process for its air taxi service geared toward transporting passengers.

Despite the competition, Morgan Stanley believes that established firms like Tesla could dominate the market. Tesla has yet to announce any intentions regarding eVTOL development; however, CEO Elon Musk has articulated the need for a robust domestic low-altitude economy in the U.S. During a recent earnings call, Musk expressed concerns about America’s current limitations in drone manufacturing capabilities.

### Tesla’s Potential Influence

Jonas posits that Tesla possesses many relevant skills that could allow it to emerge as a significant player in the low altitude economy. The company’s expertise in manufacturing, autonomy, battery technology, and electric motors places it in a strong position to innovate within this sector. In fact, Jonas suggests that Tesla’s potential share of a $9 trillion market could substantially elevate its share price, with estimates ranging from $100 to $1,000 per share.

The excitement around Tesla’s endeavors in autonomous vehicles can also be advantageous in establishing its foothold in the low altitude economy. Jonas noted that advancements in autonomous vehicle technology will directly benefit innovations in autonomous aerial drones. This interconnectedness could give Tesla a competitive edge over rivals in the LAE.

### Upcoming Developments

Tesla is set to launch its first robotaxi operation in Austin, Texas, later this month. This development not only marks a significant milestone for the company but also serves as a stepping stone toward the future of autonomous aerial transportation. By pioneering advancements in self-driving technology within the vehicular space, Tesla aims to create a blueprint for what autonomous aerial systems could look like.

### Conclusion

The low altitude economy presents a wealth of opportunities but also comes with its share of uncertainties. While analysts predict varied growth trajectories, the general consensus is that advancements in technology will pave the way for a new era of transportation. With Tesla’s established reputation and skills in pertinent sectors, it stands to reason that the company could become a formidable player in this exciting new market.

As we look to the future, it’s essential to monitor how these developments unfold and how they might reshape the way we view transportation and logistics. Whether through traditional cars, autonomous vehicles, or eVTOLs, the journey ahead may be marked by significant transformation. The question is no longer if the low altitude economy will emerge, but when it will redefine the landscape of mobility as we know it.

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