Morgan Stanley estimates that even a small share in the trucking market could lead to big money for Tesla.
Tesla seems to be extending its reach in many different markets. What started as a manufacturer of high-end electric vehicles, is now drifting into mid-range cars with the Model 3, and the energy business with their solar efforts and energy storage battery farms. However, Morgan Stanley analyst Adam Jonas believes there’s another market in which Tesla stands to make billions of dollars: The trucking industry.
In a research note presented by Jonas last Thursday, he outlines several hypothetical scenarios in which Tesla could enter the market as a manufacturer, service provider, or both, stating that entering the autonomous electric truck business makes “a lot of sense — maybe even more sense than passenger cars.” Jonas estimates that even by capturing a fraction of the American trucking market, they stand to earn a huge amount of revenue.
In one hypothetical example, Jonas entertains the thought of Tesla becoming a truck manufacturer. If the company could capture just 10% of the new truck market by selling 25,000 vehicles a year, they would add some $2.5 billion in revenue, the equivalent of shipping 70,000 Model 3s at base price. An alternative business model may involve selling trucks without the battery, lowering initial costs, and then offering a battery swapping service as an option to charging. This wouldn’t be a completely new idea either; Tesla themselves started a battery swapping pilot program for their cars as a way to circumvent having to wait for their vehicles to charge(though it’s been a while since the company spoke about this program). Jonas believes a battery-swap truck business could earn the company as much as $7.5 billion a year.
Jonas didn’t pull these ideas out of the blue, of course. His analysis comes just days after Tesla announced that they will be revealing a Tesla semi-truck in September. Shifting the trucking industry towards electric may at first seem like a long and difficult road, but it may save trucking companies a lot of money. Some estimates suggest truckers may save 60-70% of their costs due to lower fuel and maintenance costs. If Tesla leased batteries at 25 cents per mile for example, costs would drop by about 50%. All the companies would really need to be convinced then, is for the trucks to have a decent range.