Tesla (TSLA) to Produce Semi Truck at Gigafactory Berlin
Tesla, Inc. TSLA plans to produce Tesla Semi, its electric semi truck, at Gigafactory Berlin. Elon Musk, CEO of TSLA, revealed this plan during his visit to Gigafactory Berlin following an arson attack on the factory, which resulted in a halt in production.
Tesla is currently manufacturing Model Y at Gigafactory Berlin.
Musk did not provide a specific timeline for the project. The company had not yet unveiled any new vehicle production programs for the factory beyond the Model Y.
The automaker’s announcement to produce the Tesla Semi at Gigafactory Berlin reflects Elon Musk’s commitment to expanding the European factory despite facing massive resistance from Grünheide locals.
Per the expansion plan, Gigafactory Berlin aims to build another plant to increase the annual production capacity of the factory to 1 million units from the current capacity of 500,000 units. Although Tesla Semi's contribution to Gigafactory Berlin’s 1 million unit goal would be limited, it suggests progress in the right direction.
Lars Moravy, the company's vice president of vehicle engineering, confirmed that the fleet of Tesla Semi has increased to around 100 units.
Per Moravy, TSLA has partnered with Pepsico, which is using Tesla Semi for delivery to monitor the durability of Class-8 trucks. The data provided by PepsiCo is crucial to enable the volume production of the Semis scheduled to commence this year.
Currently, Tesla Semi is in low-volume production in a plant outside Gigafactory Nevada. In January 2023, the EV pioneer announced its plan to expand Gigafactory Nevada to integrate the production of Tesla Semi trucks and 4,680 battery cells. The company also announced its plan to develop the factory to its originally intended size.
However, there was no progress reported on the expansion plan of Gigafactory Nevada for a year. In January 2024, the company started working on the project but is yet to start the volume production of semi trucks in the United States.
Regulatory Requirements to Make Semi Truck an Outlier
In Europe, regulations do not endorse big trucks. Long-nose trucks have been wiped out of European roads due to a current length limit of 18.75 meters. Utilizing valuable cargo space for the truck's engine is not productive, so cab over truck dominates the European market. Tesla Semi would be considered as an outlier, given the regulatory requirement unless the legislation states otherwise. Discussion is in progress to allow longer and more aerodynamic cabs without compromising cargo volume in case of electric trucks.
Per an ING report dated December 2023, the composition of European truck sales is set to transform in the next 10 years. Europe has been pushing auto manufacturers to decarbonize the continent’s fleet quickly because of which the manufacturers are scaling up the production of electric trucks.
Considering Europe’s efforts to decarbonize the auto sector, Tesla Semi would be a perfect choice for the continent. However, there’s no clarity on whether the automaker would revamp Tesla Semi for the European market.
Zacks Rank & Key Picks
TSLA currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are Modine Manufacturing Company MOD, General Motors Company GM and Allison Transmission Holdings, Inc. ALSN, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MOD’s 2024 sales and earnings per share (EPS) suggests year-over-year growth of 4% and 67.2%, respectively. The EPS estimates for 2024 have improved 22 cents in the past 60 days. The EPS estimates for 2025 have improved 12 cents in the past 30 days.
The Zacks Consensus Estimate for GM’s 2024 sales and earnings suggests year-over-year growth of 1.8% and 17.2%, respectively. The EPS estimates for 2024 and 2025 have improved 17 cents and 32 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for ALSN’s 2024 sales and earnings suggests year-over-year growth of 2.1% and 3.2%, respectively. The EPS estimates for 2024 and 2025 have improved 67 cents and 71 cents, respectively, in the past 30 days.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Motors Company (GM) : Free Stock Analysis Report
Tesla, Inc. (TSLA) : Free Stock Analysis Report
Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report
Modine Manufacturing Company (MOD) : Free Stock Analysis Report
