The Tesla Semi: Citigroup's First Impression

Tesla Inc TSLA revealed its semi-truck Thursday, and while parts of the big rig remain in shadow, its capacity for disruption is clear.

Wall Street sees few positives for truck manufacturing rivals.

The Rating

Citigroup reiterated a Hold rating last week with with a $367 price target.

The Thesis

Citigroup analyst Timothy Thein said the Tesla Semi's price, back-end support, battery capacity, recharging infrastructure and maintenance availability remain unknowns.

Even some of the details Tesla explicitly outlined are uncertain, including its intended ability to charge for 7 cents per kilowatt-hour and to launch production in 2019, Thein said. 

“Given start-up issues with certain of its (less complex) car models, we question if that timeline slips." 

The Class 8 truck has “solid performance potential," such as a 500-mile range and quick acceleration ability, Thein said. 

Fellow Citigroup analyst Christian Wetherbee said widespread adoption of electric semi-trucks such as Tesla's is still far off. 

“Given the fragmentation of TL, we believe initial adoption could yield a margin advantage in certain lanes (drayage and other short haul applications), but if the technology was more widespread, we struggle to see the market maintaining price discipline and believe operators with lower cost bases would likely pass that along to shippers to drive market share,” Wetherbee said. 

Price Action

At the time of publication, Tesla was trading down 3.1 percent at a rate of $306.66.

Related Links:
Merrill Lynch: Tesla Semi Announcement Could Be A Reason To Buy Allison Transmission
Analyst: WABCO Could Get A Boost From Tesla’s Semi

Photo courtesy of Tesla.