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Tesla's growth is about renewable energy components, not electric cars: Chamath Palihapitiya

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Published on Jul 23, 2020
Social Capital CEO Chamath Palihapitiya told CNBC on Thursday that Tesla's growth is no longer about its electric cars, but its renewable energy components. That could make Elon Musk's company worth trillions, he added. Subscribe to CNBC PRO for access to investor and analyst insights on Tesla and more: https://cnb.cx/2BT2E7y

Social Capital CEO Chamath Palihapitiya told CNBC on Thursday that Tesla’s growth is much more than about electric cars: Its renewable energy components could make Elon Musk’s company worth trillions.

“It is the leading hedge when it comes to electrification and decarbonization. This is no longer about cars, that’s the first wave of growth. I think people are pricing in the evisceration of traditional autos and an enormous shift to [electric vehicles], of which Tesla will get the disproportionate share,” Palihapitiya said in a “Squawk Box” interview. “This is worth trillions of dollars.”

Palihapitiya is a long-time Tesla investor.

Tesla has been on a tear. A year ago, Tesla’s shares were trading around $260. Now, they’re above $1,500. Earlier this month, Tesla became the world’s most valuable automaker when its market cap surpassed Toyota’s for the first time. On July 1, Tesla had a market cap of $206.5 billion compared with Toyota’s $202 billion. As of Thursday morning, Tesla’s market cap is $295.3 billion.

The company also just reported its first full year of profitability on a GAAP basis.

Tesla’s energy businesses so far have taken a back seat when compared with its key autos unit, but Musk has been pushing toward growth. In its second-quarter earnings report, Tesla said its energy storage business Megapack generated a profit for the first time.

“What Tesla is going to do with their battery packs and software will all of a sudden allow each of us to be in the energy business, as well,” Palihapitiya said.

“Again, people will get angry, they will not understand, they will try to push back, and they will be wrong. And what’s going to happen is this stock is now going to represent the totality around decarbonization and sustainability, so it was really great to own this thing around cars for the first few years, I get it. But now I underwrite this stock as a push toward decarbonization, towards unregulated energy, and towards the ability for all of us to become our little micro utilities.”

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