Here's Why Wall Street Can't Agree on Tesla's New Semi Truck

Bloomberg’s Tom Randall reports on Tesla’s Semi and Roadster unveiling.

The features of Tesla Inc.’s new Semi truck steamrolled Wall Street expectations, with an estimated 500-mile driving range that was almost double what analysts had modeled. However, Thursday’s new product event -- where Tesla also unveiled a new high-end car -- broadened the rift between bulls and bears on the stock. Several analysts cautioned about the lack of pricing details, the lack of a production partner and the ever-growing shopping list of things Tesla needs to spend money on. Shares of Tesla rose as much as 4.5 percent, after rising sharply in pre-market trading when J.B. Hunt Transport Services Inc. said it reserved multiple Tesla Semi trucks for use in its two biggest business segments.

Morgan Stanley, Ravi Shanker & Adam Jonas

(Equal-weight, Price Target $379)
"A new age of trucking begins today."

"The Tesla truck appears to best current diesel truck performance in almost every measurable way.... Even fully loaded, the most important metric – the range – comes in at 500 miles, comfortably topping our expectations of 200-300 miles."

"We expect the Tesla semi to be more impactful for the trucking industry than Tesla itself. While we see Tesla Semi as a natural market adjacency to the personal transport model, we struggle seeing it worth more than 10% of the current market cap."

Evercore ISI, George Galliers

(In line, Price Target $307)
"The informal expectation going into the event was that the Tesla Semi range would be roughly half this, clearly longer range increases potential applications."

"Tesla’s Roadster performance stats are so far in excess of peers, at the comparable (or any) price point, that it is not unreasonable to argue that Tesla can become the market leader."

"Bears will also question Tesla’s ability to build both products and bring them to market on-time, given on-going Model 3 problems."

"Based off the all-in cost per mile data Tesla presented, and assuming a 30MPG equivalency, we estimate a base case list price of $199k."

RBC, Joseph Spak

(Sector Perform, Price Target $340)
"We believe the truck will sport a 600 kWh battery pack though it’s possible different configurations will be available."

Says the new Roadster "seems like Ferrari territory so revenue opportunity is probably ~$1.6 billion."

Goldman Sachs, David Tamberrino

(Sell, Price Target $205)
"Specs on the Class 8 did outpace investor expectations, though a lack of production partners was viewed negatively."

"Our focus remains on near-term production constraints on the Model 3, where we continue to forecast a much lower production ramp than the company." 

Cowen, Jeffrey Osborne

(Underperform, Price Target $170)
"Tesla’s glitzy reveal of the Semi truck was impressive, but didn’t answer many questions we had heading into the event.... Basics such as battery pack size, cost, and where the truck (available in 2019) will be sold and serviced were not offered."

"In essence, all last night’s event did was add to Elon Musk’s shopping list of things he needs to spend money on at a time when the company is having difficulty making its base vehicle (Model 3) and its equity and debt has traded off."

Baird, Ben Kallo

(Outperform, Price Target $411)
"While we think the Tesla Semi has potential to disrupt traditional trucking markets, we do not include any revenue from the truck in our model."

"Investors will likely continue to focus on the Model 3 production ramp, but TSLA remains a top pick as it continues to disrupt traditional transportation markets."

Consumer Edge, James Albertine

(Overweight, Price Target $385)
"We expect EV-powertrain adoption will start very slow but could accelerate dramatically to the degree truck manufacturers and fleet operators can work together to hone in on residual value expectations and gain more comfort around total operating cost per mile."

"We suspect the starting price of the Tesla semi-truck to be above our previously anticipated $75k-$125k per unit working estimate, which we based on a variety of Class 8 trucks currently on the market today from Freightliner, Western Star and Peterbilt brands."

"Tesla faces stiff competition from truck manufacturers (many of whom appear to be working on their own versions of an EV semi-truck) and an uphill battle to convince the industry that electric trucks are cost competitive with diesel trucks."

Bernstein, Toni Sacconaghi

"Tesla Semi exceeded expectations on virtually all fronts, with longer range (500 miles) and much shorter recharging times (30 minutes for 400 miles of charge) than anticipated."

"Tesla’s addressable market for Semi Trucks may be considerably larger than we had estimated – and could potentially amount to 15%-20% of our total projected company revenues in 2025."

Buckingham, Neil Frohnapple

"While we were skeptical that this could be disruptive to the Class 8 industry within the next few years, we were surprised by the unveil and think this will be a larger potential negative for (our commercial truck) coverage universe over the medium-term."

"The North American commercial vehicle industry is dominated by four major Class 8 OEMS - PACCAR (30% share), Navistar (11% share), Daimler (41% share), and Volvo (18% share). Obviously any share that Tesla captures would be a negative for these OEMs."

"Elon Musk specifically highlighted automatic emergency braking, automatic lane keeping, and forward collision warning which are all technologies that WABCO manufactures. Knorr-Bremes is the other supplier of this technology in North America (operates under Bendix), so this company could also be a potential supplier."

Melius Research, Rob Wertheimer

"Specs and price are two things that truck buyers tend to look for when buying a truck. The Tesla truck launch was a little light in these areas."

"Electric trucks are likely to work best in niches such as in-town medium duty small fleets."

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