Why Tesla’s drone future may outpace its EV past—and what it means for the next industrial leap

[WORLD] A trillion-dollar industry is forming just above our heads, and Elon Musk may already be circling it. Morgan Stanley’s Adam Jonas calls it the low altitude economy—a near-Earth frontier of urban air mobility (UAM) powered by electric vertical take-off and landing (eVTOL) aircraft. While companies like Archer and Joby are building flying taxis and defense drones, Tesla remains conspicuously silent. Yet, according to Jonas, the EV giant may have the deepest strategic toolkit to dominate this airspace—from autonomy to batteries to robotics. If the bet pays off, Tesla’s second act may not be on roads, but in the skies. The UAM race, in other words, could be Tesla’s drone moment.

Context: The Low Altitude Economy Takes Flight

The LAE, or low altitude economy, refers to all commercial aerial activities within one mile of ground level—everything from cargo drones and air taxis to surveillance and emergency response aircraft. While this airspace is largely empty today, advances in robotics, lightweight materials, and battery efficiency are setting the stage for a new era of air-based transportation and logistics.

Morgan Stanley forecasts the UAM market could balloon to $1 trillion by 2040, and eventually hit $9 trillion by 2050, assuming infrastructure, regulation, and technology scale in tandem. Other projections are more conservative—Bank of America puts the number at just $23 billion by 2035—citing challenges in cost, regulation, and consumer readiness.

Nonetheless, the key players are already moving. Joby Aviation is currently undergoing FAA certification for passenger flights. Archer Aviation is developing eVTOL vehicles for both civilian and military use in partnership with Anduril. But perhaps most significant is that none of these startups have the industrial scale, autonomous stack, or vertical integration of Tesla.

Strategic Comparison: Tesla Is Already Ahead—It Just Hasn’t Declared It

Despite no public commitment to the LAE, Tesla may already have the most complete infrastructure to dominate it. Its proven supply chain for electric motors, battery innovation, autonomous navigation, and AI training infrastructure uniquely position it to leap into aerial applications. “Tesla has a host of relevant skills to be a factor,” Morgan Stanley’s Jonas argues. The company’s Dojo supercomputer and robotics initiatives could be retooled for aerial control systems, and its robotaxi project—launching in Austin this month—serves as a real-world autonomy testbed.

There’s also a geopolitical angle. On Tesla’s latest earnings call, Musk warned: “Any country that cannot manufacture its own drones is doomed to be the vassal state of any country that can.” The U.S. currently lags China in drone capabilities. Tesla’s entry into this space could therefore serve not just a commercial goal, but a national security imperative.

In contrast, startups like Joby and Archer are still figuring out basic certification, production, and go-to-market models. Tesla has already solved these puzzles—at road scale—and now sits at the intersection of defense, logistics, autonomy, and consumer mobility. If it chooses to enter, it could leapfrog competitors in both the commercial and military domains.

Implication: The Next Industrial Leap May Happen in the Air

For investors and regulators, the message is clear: watch the skies. If Tesla makes even a partial pivot into the LAE, it could redefine both its valuation narrative and America’s manufacturing posture. Jonas speculates that Tesla’s UAM entry could add $100 to $1,000 per share to its stock—an astonishing claim, but one grounded in the size of the potential market and Tesla’s edge in scale AI and autonomy.

This also reframes Tesla’s future. The company isn’t merely about EVs anymore; it's a platform for autonomous mobility, whether that happens on roads, in factories, or across cities from above. The LAE may be the first trillion-dollar market where software eats airspace, and Tesla is one of the few firms with the appetite—and means—to make that real.

Our Viewpoint

Tesla’s silence on the low altitude economy shouldn’t be mistaken for absence. All the ingredients are in place: AI, autonomy, batteries, and a geopolitical tailwind. If the company decides to fly, it could redefine the competitive map—not just in mobility, but in aerospace, defense, and urban infrastructure. The LAE is shaping up to be the next major industrial frontier. Whether Tesla enters it by design or demand, its participation seems less a question of if, and more of when.