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

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“In our view, the low -height economy (LAE) may eventually exceed the size of today’s motor vehicle market,” Morgan Stanley analyst Adam Jonas wrote in a research note earlier this week.

The term refers to air commercial activities conducted within a mile of the Earth’s surface, the airspace now occupied by helicopters and small drones. Analysts expect artificial intelligence and progress in robotics to support the launch of new aircraft-with applications such as electric vertical tech-off and landing (EVTOL) vehicles-distribution, public safety and emergency services, tourism, urban traffic and intercity transportation.

Morgan Stanley estimates that the total addressable “Urban Air Mobility” (UAM) market will cost $ 1 trillion by 2040 and $ 9 trillion by 2050. Not everyone is. Bofa hopes that at least that year will remain relatively slow by the year when it estimates the economies of scale and battery technologies to improve EVTOL cost and access.

Whatever the size of the pie, the dying companies for its slices include upstarts such as Archer Aviation (ACHR), which is currently testing an Evtol model and partnership with defense contractor Enduril to develop military applications, and in the process of their air taxi proof for passenger riding.

Tesla may dominate home in low-high economy

Jonas of Morgan Stanley feels that those companies may face malignant competition from Tesla (TSLA). The EV manufacturer has not announced any intentions to develop EVTOLS, but CEO Elon Musk has discussed the need for a domestic low altitude economy in the US.

When Tesla’s most recent earning calls Jonas asked Musk to Musk for his views on AI and Robotics rivalry of America and China, Musk expressed concern about America’s limited drone manufacturing capabilities. “Any country that cannot manufacture its own drone is the vassal situation of any country that can,” he said, X, quoted the user as “@naval.” “And we can’t. America cannot currently manufacture its drone.”

Tesla, Jonas, says, “Commercial and military LAE is a host of relevant skills to be a factor”, including manufacturing, autonomy, electric motors and its functions in batteries and robotics. Jonas estimates that Tesla’s share in the future may add $ 100 and $ 1,000 to the price of its share to the $ 9 trillion UAM market.

Tesla’s work on autonomous vehicles can give it a leg on LAE contestants. “Any advancement in science of autonomous cars accelerates the advancement of autonomous air drones,” Jonas wrote. Tesla is expected to start its first robotax operation in Austin, Texas later this month.