Morgan Stanley outlined a strategic rationale this week for Tesla's announced aim to develop 100 GW of solar manufacturing capacity, saying the move is shaped by geopolitical considerations, supply-chain risk and rising power demand from advanced data centers.
Analyst Andrew Percoco told clients that Tesla's decision to allocate capital to solar manufacturing "is rooted in a strategic long-term outlook around evolving geopolitics and data center demand." The note argues that deeper vertical integration could also fortify Tesla's broader energy business.
The bank quantified the potential upside to Tesla Energy, saying the solar manufacturing program could add between $25 billion and $50 billion of equity value - roughly $6 to $14 per share - to a business Morgan Stanley currently values at $140 billion.
Once scaled, the firm estimated Tesla Solar could generate about $25 billion of revenue and produce an additional $3 billion to $4 billion of EBIT. Those operating results would come after a substantial manufacturing roll-out that Morgan Stanley said would likely be costly to execute.
Morgan Stanley's note places the expected capital requirement for the 100 GW build-out in a wide range - between $30 billion and $70 billion - and underlines that this investment is not included in Tesla's capital expenditure guidance for 2026.
Despite the scale of the investment, the bank argued the long-term strategic advantages may justify the cost, especially because of the close connection between solar generation and the company's energy storage business.
Importantly, Percoco told clients the bank expects a significant share of the 100 GW capacity will be dedicated to powering data centers in space, with a smaller portion allocated to facilities on Earth. The note linked that allocation to Elon Musk's stated objective "to send a significant amount of solar-powered data centers into space," framing the capacity plan as a way to avert energy bottlenecks that could impede Tesla's broader goals.
Although the global solar market currently shows a surplus, Morgan Stanley said it expects Tesla's planned capacity to be largely set aside for these specialised, non-traditional applications, insulating much of the output from standard supply-demand cycles.
Context limitations - The note reflects Morgan Stanley's internal analysis and projections. The capital estimates, revenue and EBIT figures represent the bank's expectations and are not included in Tesla's 2026 capital guidance.