Stock analyst Trip Chowdhry of Global Equities Research has a crazy idea: the Tesla Gigafactory might be worth $50 billion. If that number seems extreme, know that you're not crazy, because it is. The highest cost estimates for the battery-producing Gigafactory point to a $5 billion price tag. But Chowdhry isn't basing his valuation of the under-construction Nevada factory on its actual material and labor costs — he's looking at what it might be worth to the business of Tesla.
As Tesla CEO Elon Musk has said on several occasions, high capacity batteries like those the Gigafactory will produce for Tesla cars as well as Tesla's Powerwall and Powerpack facility storage products are a potentially enormous market for Tesla — one that the Gigafactory will allow them to capitalize on. With the decreasing cost of solar power generation leading to gluts of daytime energy, the need for batteries to capture that energy for nighttime release (and it just so happens that Musk is Chairman of leading solar panel provider SolarCity).
Chowdry is so bullish on the market for Tesla's power storage products that he expects the Gigafactory will generate $100 billion in revenue for Tesla over the next two decades. It's worth noting that right now Tesla is valued by the stock market at a mere $32 billion, so Chowdry is saying the Gigafactory is so valuable as a catalyst for Tesla that it's actually going to be worth more than the entire company is right now. He calls the Gigafactory a moment of "new industry creation activity," analyst speak for seeing potential revenue far greater than others might realize.
Tesla's building the Gigafactory in the short-term to satisfy the demands of the company's car business — with some 373,000 reservations for the Tesla Model 3 they're going to have to dramatically ramp up battery production capacity to meet that demand. And while electric vehicle sales are expected to grow dramatically with the introduction of cars like the Model 3 and the Chevy Bolt, the potential for large scale home, corporate, and industrial power storage needs reveals the real long-term play for Tesla — they're a battery company that happens to make cars.