Should Tesla (TSLA) be Considered an Energy Stock?

Should Tesla (TSLA) be Considered an Energy Stock?

Should Tesla (TSLA) be Considered an Energy Stock?

Tesla stock has rocketed to the moon (maybe even Mars) over the past 5 years. The real question is, what is driving the stock price? It can’t simply be electric vehicle production, because both Ford and GM do that as well. Is it technology? Is it green energy? One could argue that it is a combination of all of these. Let’s take a look at how Tesla actually generates revenue, to better understand this company.

How Does Tesla Make Money?


As you can see above, Tesla is certainly focused on automotive sales currently, but roughy 12% of their total revenue is generated from energy storage, generation, and other services. These revenue streams could grow substantially under the right circumstances. The need for green energy and specifically energy storage will increase tremendously over the next decade if the emissions targets for many countries are accurate. As stated in a previous article, the demand for metals needed for battery production like copper could skyrocket. Tesla currently has 6 gigafactories around the world focusing on energy storage production. They also have residential solar energy products including solar shingles that could allow home owners to generate their own energy, separate from their local energy grid.

Is Tesla an Energy Stock?

When you consider TSLA for client portfolios, you can’t just consider them as a vehicle manufacturer, due to their energy involvement, but you also can’t label them solely an energy stock at the current time. Elon Musk has demonstrated that although he is a green energy proponent he is also a capitalist and does seek to generate profit through his companies. It is very probable as energy production and storage become more profitable, he will not hesitate to ramp up production in those verticals and shift focus towards energy. If your client has high exposure to the oil and gas industry, you might consider TSLA as a green energy alternative to diversify those holdings.

Regardless of the next steps for Tesla, it will be interesting to see where the company and their stock price go in the future.

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