Morgan Stanley on Thursday hailed plans by Tesla Inc (NASDAQ: TSLA) to unveil a prototype of a self-driving semi-truck this September as a part of a plan to branch into the commercial transport industry.
The firm said entering the market for Class 8 trucks — typically 18-wheelers — “make[s] a lot of sense — maybe even more sense than passengers cars.”
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“The total addressable market is also quite large — if Tesla were to garner 10 percent of the new truck market in the US, we estimate it would be worth $2.5 billion in annual revenue or as many as 70,000 base Model 3s.”
Trucking would also allow Tesla to enter the product services markets, perhaps even leasing the batteries.
“Carriers would benefit by cutting their current fuel spend in half (from $0.50/mile today) in addition to significantly lower purchase costs and not taking residual risk for the battery.”
Morgan Stanley also said Tesla already has most of the technology it needs.
“We estimate that much (but not all) of the battery and autonomous driving technology needed for the truck could be shared with the passenger car division. The low production run rate (only 25,000 units per year at 10 percent share) should allow this to fit into existing facilities without too much incremental investment.”
The firm estimated Tesla could build a new network of 1,500 battery-swapping stations costing only about $750 million.
“We believe the Tesla truck opportunity is real and is a natural market adjacency to the personal transport model, but we don't see it being worth more than 10 percent of market cap.”
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