Tesla's Semitruck Unveil: A Preview

After having delayed the debut of its semitruck to focus on Model 3 hiccups and Puerto Rico’s energy needs, Tesla Inc TSLA will unveil the electric truck Thursday.

But it may not drive the sales investors want, according to Bernstein. 

The Rating

Bernstein analysts Toni Sacconaghi Jr. and David Vernon, who respectively cover the technology sector and logistics and transportation stocks, maintained a Market Perform rating on Tesla with a $265 price target.

The Thesis

Expecting a Class 8 truck with a 300- to 450-mile range, Bernstein considers Tesla’s addressable market limited to less than half of the 940,000-unit-per-year semi market. Many drivers log 600 miles per day and may be disincentivized to delay deliveries with charging interruptions, the analysts said. A doubling of range would expand Tesla’s TAM to 100 percent, according to Bernstein. 

Tesla may also face headwinds in relatively low fuel prices and uncertainty around charging rates, charge cycles and the role of autonomy, but its net present value may lend an edge, Sacconaghi and Vernon said. 

Based on initial performance expectations, Bernstein projects a 3-percent market share over five years to contribute 7 percent of Tesla’s 2025 revenue forecasts.

“On net, despite a potentially compelling value proposition, we do not see the Tesla Semi opportunity as a thesis changing initiative for the company, at least initially,” Sacconaghi and Vernon said, proposing a release date in mid-2019. “It is somewhat unclear why the company needs another major initiative (beyond Model 3, forthcoming Model Y, battery production, solar roofs and energy storage) on its already full plate.”

Price Action

Tesla is up 60 percent year-over-year but down 16 percent month-over-month. The firm posted a bottom-line quarterly miss Nov. 1 and has been dragged by Model 3 mishaps and EV tax credit uncertainties.

At the time of publication, shares were trading up 1.3 percent at $307.

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Photo courtesy of Tesla.