Tesla CEO Elon Musk recently revealed that they plan to unveil their Tesla semi truck in September, setting forth yet another ambitious deadline when the company already has a lot on its plate. But why would a niche consumer player want to release a truck? One analyst suggests it could be about services rather than about the truck itself.

Tesla semi
Blomst / Pixabay

Another large addressable market for Tesla Semi

In a note dated April 20, Morgan Stanley analyst Adam Jonas suggested that the autonomous electric Class 8 semi Tesla is planning may be all about services rather than just having another vehicle to sell. Musk revealed the plans to launch a semi last year as part of his “Master Plan Part Deux,” and at the time, most probably envisioned it as something the company would do far down the line after the Model 3, which is the next vehicle it is planning to release.

Jonas does feel it makes sense for Tesla to become a truck OEM, even going so far as to say that an electric autonomous Class 8 truck makes “a lot of sense – maybe even more sense than passenger cars.” He pegs the total addressable market in the U.S. very high and said that even if Tesla only gets 10% of the new truck market in the country, it could rake in $2.5 billion in revenue in a year.

Is the Tesla semi a sleeper service play?

He also suggests that this could be about services rather than becoming a truck manufacturer, as a semi could offer a sustained supply of revenues and data.

Jonas suggests that Tesla might even sell a truck without a battery, which would offer a significant reduction in cost. Instead, he suggests that the company could offer battery swapping instead of installing a huge battery in it and then charge 25 cents per mile to lease the battery, a scenario he called “a big win for both trucking carriers and Tesla.”

He estimates that trucking companies would be able to slash their fuel costs in half, as they spend about 50 cents per mile on fuel today. This would also result in a lower cost for the truck itself and no residual risk associated with wear and tear on a battery that holds less and less charge as it ages.

Tesla semi may not need to invest a lot to enter

To those concerned about the upfront cost of developing the truck, he says the incremental investment “may not be significant” and feels that a bit of the autonomous and driving technology that’s needed could be shared with the company’s passenger car division. Further, he notes that production run rates on a semi would probably be much smaller than they are for cars, so it could easily fit into the company’s current factories without a lot of investment.

However, he notes that Tesla would have to invest in more battery swapping stations with no overlap with current Supercharger stations. He pegs the amount of capital needed to enter the trucking segment at $1.7 billion, including what’s needed to build 1,500 battery swapping stations.
He also estimates that an autonomous electric truck could be 60% to 70% cheaper to operate than a regular truck because costs for the driver, fuel, maintenance and insurance would probably be much cheaper. He also feels that Tesla may be moving much faster on this than most realize and wouldn’t be surprised if the company unveiled a number of large carriers and shipping companies that it is partnering with when it shows off the vehicle in September.

Shares of Tesla stock slipped by as much as 1.28% to $301.61 during regular trading hours on Thursday.