In a note to investors yesterday, Morgan Stanley analysts detailed reasons for Tesla, Inc. (TSLA) to get into the trucking industry. According to them, the electric car maker's primary motivations for getting into the trucking business have to do with developing a services business. Tesla will unveil the Tesla Semi, its electric truck, in September.
According to Morgan Stanley, Tesla's September move will help the company garner additional revenue and a foothold in the commercial truck industry. The analysts have surmised that Tesla will produce original equipment manufacturer (OEM) Class 8 trucks, such as tractor trailers, with an average selling price of $100,000 and a range of 200 miles to 300 miles on a single charge. (See also: Investors Should See Tesla as a Transportation Company: Analyst.)
For context, other class 8 trucks have selling prices that range between $113,000 and $125,000. Using the estimated selling price for the Tesla Semi as a base for calculation, analysts at Morgan Stanley estimate that Tesla's foray into the industry could yield $2.5 billion in annual revenue if the company garners a 10 percent share of the market. The company could further sweeten the deal by offering battery-swapping facilities (that will enable quick recharging of batteries) for the trucks. (See also: Who Are Tesla's Main Competitors?)
"We estimate that if Tesla charges $0.25/mile to lease the battery, this could be a big win for both trucking carriers and Tesla. 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," the analysts write. Estimating a 10 percent share of the market and 300,000 Tesla trucks navigating highways, the analysts calculate $7.5 billion in annual revenue from such a business.
Tesla's Autopilot feature, which caused much controversy last year, may also be integrated into its truck. "We estimate an autonomous, electric truck could be 60 percent to 70 percent cheaper to operate than a regular truck today due to lower driver, fuel, maintenance and insurance cost," they write. (See also: Tesla Autopilot Enables Faster Speeds, Sketch Pad.)