Tesla, the electric-car and energy-storage company, could become the next big music-streaming service.
Last week, a representative told Business Insider that it was important for its customers to “listen to the music they want from whatever source they choose.” The comments followed a report suggesting the company was working on a music-streaming service.
And according to Adam Jonas, an equity strategist at Morgan Stanley, this would make sense.
Silicon Valley is interested “in the potential multi-trillion dollar opportunity selling data, content, and experiences unfamiliar to today’s auto firms,” Jonas said in a note on Tuesday.
“The potential total addressable market of such a bundled mile (utility + content + data) dwarfs some of the major end markets (PC, smartphones) that Silicon Valley currently services.”
By 2030, Jonas forecast, Tesla Mobility – an on-demand service similar to Uber – would have about 2 million cars, and there would be about 7 million privately owned Teslas.
“Tesla wants to be more than a ‘dumb pipe’” that moves people around, Jonas said.
The auto industry would be a “money loser” by 2030, Jonas said. However, Tesla would be able to monetize the time that people are spending in their cars, as it and other companies develop what he described as a “living room on wheels.”
“These firms could cede 100% of the value of content to the likes of Apple, Alphabet, Pandora, Sirius, or Netflix,” Jonas said. “On the other hand, they could say: ‘Wait a second. This is our venue. Our OLED screen. Our speakers. Our HMI. Our seats. Our software. Let’s at least give the customer a choice of using our own apps before we too quickly go the way of the pure handset manufacturers.’”
Additionally, the buying power of people who own Tesla’s electric cars could be well-suited to the market for paid premium content.
Jonas expects that Tesla’s peers entering the self-driving and ride-hailing space, including Alphabet and Apple, could also explore original content for their cars’ passengers.
But these competitors are bigger and better capitalized than Tesla, meaning they could provide ride-hailing services at a loss and at Tesla’s expense, Jonas said.
Music streaming is worth about $50 million in enterprise value to Tesla, Jonas estimated.
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