Morgan Stanley: Tesla's biggest advantage has nothing to do with cars

Tesla's biggest advantage over its competitors isn't its sleek new Model 3, or even its two previous electric cars. Rather, the company's supercharger network that has been slowly making its way across the country, will keep Tesla on top.

"There has been a flurry of OEM announcements regarding accelerating electric vehicle introductions, but most offer little detail on charging and battery manufacturing strategy," Morgan Stanley analyst Adam Jonas said in a note Tuesday morning. "We see Tesla's rapidly growing infrastructure footprint as a key differentiator."

The bank raised its price target for Tesla shares to $379 from $317 — 7.92% above where the stock was trading Tuesday morning.

Tesla said in its May shareholder letter that it expects to have 10,000 superchargers online by the end of the year. Morgan Stanley estimates that the count currently stands at 6,246 as of August.

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"The importance of infrastructure in achieving EV penetration levels increases over time with the prevalence of larger and more sophisticated populations of EVs in use," said Jonas.

Investing in its robust supercharger network makes Tesla unique. The company has invested millions in the network, while taking a hit on its bottom line. This is a big deal because no other car company has to spend millions on fueling infrastructure. Traditional automakers like GM, for example, don’t do gas stations.

"Compared to other OEMs, Tesla has made the biggest proprietary investment in superchargers and destination chargers globally," said Jonas. "In most communities, we believe this infrastructure is larger than it needs to be in preparation for the expansion of the serviceable and charge-thirsty fleet."

Tesla is expected to report third-quarter earnings on November 1, when Wall Street analysts are expecting a loss of $2.31 a share, according to Bloomberg.

Shares of Tesla are up 1.86% in trading Tuesday and 61.9% in 2017.

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