Investor's Corner
How Tesla’s Semi will dramatically alter the trucking industry
The Tesla Semi offers something to the trucking industry that could drastically alter the entire freight moving sector. The trucking industry has seen major changes since it began roughly a century ago and has, despite the assumptions of many outsiders looking in, been one of the more technologically-advanced industries in our nation. Trucks themselves have seen huge changes in the past few decades while the freight industry as a whole has been reinvented and revamped multiple times over in that same time period.
Nasdaq.com contributor Martin Tillier mentions the impacts that the Tesla Semi and others with similar game-changing technologies will have on the trucking industry long-term. Most notably with autonomous trucks and their electric powertrains.
“The technological change that benefits trucking and delivery businesses has been widely reported, but in my experience most people that I ask about it focus on the potential negatives rather than looking for opportunities,” writes Tillier. “..they ignore the biggest beneficiary of all: trucking companies. They are looking at a future where two of their major costs, fuel and drivers, will be dramatically lower..”
Those salient points are much bigger-picture than most commenting on the Tesla Semi and other related vehicles would note. Just about every major manufacturer of commercial vehicles, including Class 8 trucks, is getting in on the electrification game and many are also building towards automation. The companies most often noted, like Tesla and Nikola, are actually side-players compared to the already-established heavy-duty builders like Paccar (Kenworth, Peterbilt), Daimler, Volvo, and the like. Even manufacturers like Cummins are working with alternatives to petroleum-burning drivetrains.
The stakes are huge. According to the American Trucking Associations, over 70 percent of the freight (by tonnage) moved in the United States is moved by truck. There are about ten and a half billion tons of freight moved around the U.S. annually and about 3.6 million Class 8 trucks on the road pulling that freight.
The electrification of trucks is a big step. It won’t happen really quickly, but it will happen eventually. How, exactly, that electrification comes will depend on a lot of things. It could be the battery-powered Tesla Semi or it could be the hydrogen fuel cell-run Toyota-Kenworth collaboration. Or any mixture of things, including the range-extending turbine proposed for the original Nikola design or that of Capstone. Whatever the solution or solutions are, freight-hauling trucks of all sizes are going to become electric. That’s a given.
Why? For the same reason they all went to diesel a few decades ago. It’s more efficient and thus cheaper. Before diesel, most trucks were powered by gasoline and were extremely inefficient, hauling less weight and getting worse fuel economy. Diesel itself saw many changes over time as the engines it powered improved and emissions fell. Currently, trucks use around 38 billion gallons of diesel fuel a year. At four dollars a gallon, that’s about $152 billion in fuel. With electricity, costs could be a fraction of diesel. Roughly a quarter of the cost, in fact, in worst-case assumptions. More optimistic numbers would put it in the 1/16th to 1/8th fractions.
Tesla Semi’s center seating position for drivers
The gains with autonomous self-driving or driving assist technology are even higher. In trucking, the highest cost to the trucking company is the driver behind the wheel, with wages and benefits–not to mention legalities and downtime–having the highest impact on the bottom line. A truck driver can legally drive for 11 hours per day and most drivers average about 600 miles daily. An autonomous truck could drive 24/7, stopping only to load/unload or refuel. Self-driving trucks would also solve a problem that’s long plagued the trucking industry: driver shortages.
Truck drivers will lose jobs, yes. Eventually. Remember, we’re talking decades here, not years. When (not if) automated big trucks take over as the bulk of the industry’s means of moving freight, most drivers will be required to find new careers. We must remember, however, that truck driving is essentially made up of a labor force which has little formal training and mostly on-the-job experience as their primary resume point. These drivers become more skilled with time and hence demand higher wages. The most skilled workers in truck driving tend also be those closest to retirement. Replacements for those skilled drivers are new drivers who’ve completed perhaps three weeks of trucking school and a month of over-the-road training with a slightly more skilled driver as a mentor. This doesn’t make trucking an easy job, but it does mean that those with the most skills are the least likely to lose their jobs when automation becomes the norm.
We can argue until our fingers bleed, typing about the feasibility of the Tesla Semi and Elon Musk’s promises for the truck’s capabilities. Whether Tesla delivers on those promises is moot; as we know that someone, somewhere, and sometime very soon will deliver on similar promises regardless. The trucking industry is going through another sea change. Those in technology, used to a new iPhone every year and who hashtag about cryptocurrencies, might consider a decade or two as a long time to wait. Those in manufacturing and transportation, however, see twenty years as a single generation and their version of 2.0 has huge economic impacts on the nation’s and world’s economies.
The trucking industry knows that electrification and automation are coming. Fast. The Tesla Semi may or may not physically bring that revolution, but it certainly does symbolize it.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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