Consumer Discretionary Tesla Inc (TSLA) Semi Can Have 10% Market Share

Tesla Inc (TSLA) Semi Can Have 10% Market Share

Published By News Desk at April 20, 2017 01:03 pm The energy storage company has an opportunity to gain only 10% of the market

Tesla Inc. (NASDAQ: TSLA) Model 3 has been the talk of the town for quite some time now after the pictures of the release candidate testing around Palo Alto were out. But ever since CEO Elon Musk has revealed that the company would unveil its Semi truck in September, the Model 3 is currently not in the limelight. Morgan Stanley analysts Adam Jonas and Ravi Shankar believe that the new venture can generate billions of dollars in revenue for the company.

The total addressable market for the truck industry is huge. Gaining a 10% market share in this industry in the US can bring in revenue of more than $2.5 billion to the carmaker. The income is equivalent to revenue of about 70,000 base versions of the Model 3, which shows why the company is so attracted towards the truck industry.

If Tesla could enter the market, it will be able to make huge revenues which may not be possible for it to do by selling its cars. It will have to sell thousands of cars every quarter, achieving similar revenue as it can do by selling the trucks. Another thing the automaker company could do is to move on to the services market, to earn additional revenue to the company.

Analysts said, “The company could conceivably sell a truck without a battery and offer battery swapping as an alternative to putting a large battery in the truck. If Tesla charges $0.25/mile to lease the battery, this would be a big win for both as carriers could cut their current fuel spend in half from the current $0.50/mile. "They estimate Tesla could see $7.5 billion in annual revenues if it achieves a run rate level of 10% share.”

Both the analysts believe that TSLA could change the truck industry if it comes out with the autonomous electric trucks as it will be cheaper to operate, compared to the conventional trucks with cost savings of 60-70%. They also believe that Tesla could partner with the carrier and shipping companies in the future once they unveil the Semi truck in September.