Tesla Inc (TSLA) Efficiency Upper Hand to Fade Faster Than You Might Think, Warns Melius Research

Melius Research's Robert Wertheimer says Tesla's numbers do not seem as "compelling" in the grander scheme against the traditional diesel truck improvement pipeline.


Tesla Inc (NASDAQ:TSLA) has a new semi-truck on the loose just in time for the holiday season to kick off, and voices around the Street have been weighing in as to just how efficient the electric semi is and the tidal wave of impact it could reap on the trucking market.

As far as Melius Research analyst Robert Wertheimer is concerned, Tesla’s upper hand is not as promising as bulls might believe, especially considering fuel efficiency seems to tilt towards the leverage of traditional trucks, who have had a head start in the race. Serving up a generally negative perspective, it appears that as truck rivals bolster their miles per gallon, Tesla’s efficiency appeal “will fade faster than most think.”

While at the start of the millennium, it was not unusual for trucks to get 5mpg, nowadays, fleets are seeing closer along the lines of 7 mpg. By Wertheimer’s calculation, a boost of two miles per gallon translates to a dip for diesel from 20,000 gallons annually to below 15,000 gallons. The analyst predicts “best-in-class” trucks present-day could come close to 9 to 10 miles per gallon.

“In other words the opportunity to lower the Tesla cost of ownership with fuel savings is currently 15,000 diesel gallons a year, but will soon enough be only half that, using current line-of-sight technologies. At current fleet average diesel costs the savings opportunity on 100,000 miles per year is $37,500 per truck. At current best-in-class the available pool of offset-able fuel cost is $25,000. On future trucks, perhaps not too far distant from Tesla’s launch, is only $20,000 per year. All this assumes you can run a truck 100,000 miles a year in 300 to 500 mile increments,” Wertheimer highlights.

In a nutshell, the analyst anticipates, “The future difference between Tesla’s astonishing 19 mpg equivalent and the SuperTruck 12 mpg is only 3,000 gallons a year of diesel equivalent. Compared with the 7,000 gallons per truck per year already in the diesel improvement pipeline, that 3,000 gallons doesn’t look as compelling.”

Therefore, for Wertheimer, CEO Elon Musk’s electric car empire’s shake up of the trucking market will be less about fuel efficiency payoff and more about its “push [of] aero and other efficiencies into the long-haul trucks faster.”

Wall Street is undecided on this giant, with TipRanks analytics exhibiting TSLA as a Hold. Based on 21 analysts polled by TipRanks in the last 3 months, 5 rate a Buy on Tesla stock, 8 maintain a Hold, while 8 are bearish on the stock. The stock’s consensus target price stands at $320.27.

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