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Is the trucking industry ready for Tesla? Experts weigh in

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When Tesla CEO Elon Musk tweeted that Tesla will unveil an electric semi-truck in September, many in the trucking industry, and even Wall Street, took notice.

Electric vehicles will make up just 1 percent of the entire trucking market by 2020, but the EV trucking industry will grow to 10 percent just a decade later, according IHS Markit, an industry research firm. The percentages of all-electric trucks abroad will be slightly higher, with markets like the European Union, Japan, and China taking the lead.

“There is a certain amount of hype to Tesla’s announcement,” said Antti Lindstrom, an analyst at IHS Markit. “It doesn’t seem that long-distance trucking is ready for electrification right now.”

What will Tesla need to do to create a viable long-haul all-electric trucking industry?

Obstacles that Tesla will need to overcome for all-electric trucking success

Of all the freight transported in America, 70% is transported by the trucking industry, according to Apex Capital. Yet, if Tesla is to break into the trucking industry with all-electric vehicles, it will need to overcome a number of barriers.

Price is probably the number one factor of concern for all-electric long-haul trucks, as an all-electric semi- compared with a diesel truck will likely be much more expensive. “Tesla cars don’t need to prove an economic case to their buyers; Tesla trucks will,” Michael Baudendistel, a Stifel Financial Corp. analyst, wrote in a recent investor report. Yes, Teslas have been targeted thus far to a wealthy segment of the population, but, just as that will change with the introduction of the Model 3, so, too, can Tesla design a reasonably priced big rig when fuel versus charging costs are taken into consideration.

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Tesla would have to create a marketplace for electric trucks. “Given the happily consolidated nature of the domestic truck manufacturing market, the prospect of a new competitive threat, from a company with previous success in disrupting established industries nonetheless, is undoubtedly unwelcomed news,” states Baudendistel. This year, however, Mercedes-Benz Trucks is bringing the world´s first all-electric heavy-duty truck to market in a small release. Moreover, Piper Jaffray analyst, Alex Potter, released a note this week revealing that he was downgrading the engine and truck manufacturers Cummins and Paccar — partly as a response to Tesla’s impending semi truck reveal. With Tesla’s proven history, the trucking sector can’t be that far behind for the company. Indeed, as early as 2011, Tesla was invited to testify at the Congressional hearing titled, “The American Energy Initiative.” Tesla spoke then about the need and timing for alternative energy vehicles, especially those powered by electricity. Tesla demonstrated how an entrenched culture like that of the U.S. automaker could be disrupted; trucking manufacturers today have every right to be paying attention.

“We have intentionally departed from the traditional automotive industry model by both focusing exclusively on electric powertrain technology and owning our vehicle sales and service network… If, however, you believe in the power of American innovation to fundamentally change and improve our individual lives and our larger societal interests, then there is no question the time is right to step up and support the development of a viable EV market in the U.S. and to encourage in word and deed the American companies fighting to establish EVs in the marketplace.”

Where would all-electric trucks go for service and repair? “This has been an inconvenience for Tesla cars,” Baudendistel told Trucks.com. “For trucks, though, if the wheels ain’t turnin’, you ain’t earnin’.” Tesla has demonstrated its ability to respond to current owner needs as they became apparent. As early as 2015, the company won an automotive repair satisfaction survey. It launched a Mobile Tire Service program to better serve owners who end up on the side of the road with a flat tire. In anticipation of the Model 3 release, Tesla will be expanding its mobile service capability to include sending technicians to an owner’s home or office for minor repairs. Tesla has the capacity to create a comparable response service and repair program for long-haul all-electric trucks.

The highway charging network for heavy-duty vehicles does not exist; there is no place to charge a long-haul electric truck. “You can’t put the cart before the horse,” Baudendistel said. “Widespread adoption hinges on the availability of fueling stations, and the infrastructure built for Tesla autos was not designed for Class 8 trucks.” Electric trucks currently in use for redistributing cargo require a far smaller range than a long-haul big rig and can be recharged at a central facility. They don’t require a network of charging stations along the nation’s highways. But with the vast Supercharger network that Tesla already has in place, it seems sensible to assume that Tesla would provide adequate comparable charging for fleets of all-electric trucks.

Yes, at this time, recharging electric vehicles is time consuming. “Battery swapping and refueling overnight are both options which would require significant additional investment in infrastructure and logistics,” Baudendistel said. Tesla considered but then discarded the idea of battery swapping with its electric cars. However, with the Electrify America initiative that Volkswagen is spearheading as a result of its diesel malfeasance court settlement, recharging times may drop considerably and quickly as R&D expands. Additionally, unlike an all-electric bus, with its long wheelbase and battery storage underneath, wouldn’t the height and breadth of a semi-truck be the right design for a battery pack that is replaced at a convenient stopping point? Tesla may reconsider battery swapping if the contextual conditions are right.

The trucking industry has expressed concern that batteries needed to power a semi- would be heavy, take up cargo room, and compromise range. Daniel Murray, vice president of research for the American Trucking Research Institute, told Trucks.com, “No one has clarified for us how much extra battery weight will accrue, which, of course, decreases revenue weight.” Baudendistel added, “We believe at least 600-800 miles of range is needed for the truck to be competitive in the line-haul market. We have heard indications that the Tesla semi’s range will be 200-300 miles, which would limit its addressable market.”  Just this month, however, Panasonic’s President Kazuhiro Tsuga admitted the battery trade-off between energy density and safety is prodding his company, which partners with Tesla, to look at alternative battery power sources. And this year’s Battery Symposium in Japan, once a showcase for fuel cells and LIB cathode materials, saw a shift to discussions about solid-state, lithium-air, and non-Li-ion batteries. Thus, the current state of batteries for all-electric vehicles may look entirely different in a decade and may fit the needs of Tesla all-electric long haul transportation.

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Diesel fuel is inexpensive these days, which limits the costs associated with current big rig transport. “The very low fuel prices we see now and will for a long time are making most alternative-fuel vehicles appear to be very expensive,” Murray said. That perspective may be a bit short-sighted, however, as, in August 2016, the EPA and NHTSA jointly finalized standards for medium- and heavy-duty vehicles through model year 2027. They are intended to improve fuel efficiency, cut carbon pollution, reduce the impacts of climate change, bolster energy security, and spur manufacturing innovation. Clearly, these are comparable goals to Tesla’s as outlined in the 2016 Master Plan Part Deux. Evolution toward all-electric long-haul transportation as spearheaded by Tesla may fulfill many of the upcoming standards so that fossil fuel costs become irrelevant.

Elon Musk as the world’s biggest advocate of electric-powered transportation

Yes, there are many reasons why an all-electric Tesla long-haul truck will be difficult to integrate into the current transportation sector. Then again, as Baudendistel concedes, “If nothing else, Elon Musk—and by extension, Tesla—is a great disrupter.” Tesla’s innovations, from company-owned stores, over-the-air vehicle updates, and autonomous driving features, to name just three, have forced the automotive and technology industries to new levels. So, although many in the trucking industry are skeptical, it has rarely been wise to bet against Elon Musk.

“We are keeping a watchful eye on Tesla as a new entrant,” Baudendistel admits. Even with obstacles to be overcome, he says, “Still, we wouldn’t count Tesla out long-term.”

Carolyn Fortuna is a writer and researcher with a Ph.D. in education from the University of Rhode Island. She brings a social justice perspective to environmental issues. Please follow me on Twitter and Facebook and Google+

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Investor's Corner

SpaceX reports its second earnings today: here’s what to expect

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Credit: SpaceX

SpaceX (NASDAQ: SPCX) will report its second public earnings call today since its IPO earlier this year, and there are a few things we expect to hear about, as well as Wall Street analysts, who have already outlined their expectations for the call.

Wall Street analysts have a consensus of $12.72 billion in revenue and an earnings per share (EPS) of $0.13. These are broken down into three sectors: Space, Connectivity, and AI/SI, which are perceived in this way:

  • Space: $1.41 billion
  • Connectivity: $4.84 billion
  • AI/SI: $6.47 billion

Other outlets cluster near $12.8 or $12.9 billion in revenue and $0.14 – $0.15 EPS. This implies a roughly 65 percent sequential growth from Q2’s $7.81 billion, driven mostly by AI/SI, with the first post-IPO positive EPS expected.

SpaceX just launched its secret Starfall saucer again

Here are the three things to watch for on the call:

AI Revenue Ramp and the $100B+ ARR target

AI is truly the swing factor for SpaceX, and analysts expect it to roughly double from Q2’s $2.56 billion and become about half of total revenue. Management previously guided to a $100 billion+ annualized run rate by December, including the Cursor acquisition, which was $60 billion, to close the quarter.

SpaceX makes first acquisition post-IPO

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Listen for updates on SpaceX’s compute capacity, especially pertaining to its contracts with Google, Anthropic, and others, revenue per watt, any new deals, and Cursor’s early contribution.

Starlink/Connectivity Metrics and Mobile Expansion

Connectivity remains a main profit engine for SpaceX. Subscriber additions will be something to pay attention to, as Q2 ended at 12 million and previews are looking at 14 million for this quarter. Additionally, ARPU trends, enterprise and government growth, and any commentary on Starlink Mobile will be something to pay attention to, especially following the recent low-band spectrum deal and FCC-related constellation approvals.

Capex Trajectory, Cash Burn/FCF, and Starship/Operational Updates

Q2 capex of roughly $18.4 billion weighed on the stock. Investors will look to scrutinize Q3 spending levels, any guidance on the pace into Q4/2027, free cash flow, backlog, and liquidity. Operational color on Starship (Flight 14 milestones and Flight 15 timing/reusability progress), Falcon cadence, and government/NASA contracts are also in focus.

Of course, there will also be some speculation on the potential Tesla-SpaceX merger, but there was nothing mentioned in the company’s proxy it sent earlier this week.

SpaceX will report earnings after market close today and will stream the call on X.

Interested in ordering a Tesla? Use my referral code for three free months of Full Self-Driving (Supervised) here

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Elon Musk

Elon Musk will give ‘every kid in America’ a SpaceX share in 2027

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Credit: Grok Imagine

Elon Musk said he is planning to give “every one of his SpaceX shares to every kid in America” in 2027, stating that “this will be the first of many.”

SpaceX went public earlier this year, and its stock price has been relatively stable since leveling off shortly after its IPO. Based on its current price, it’s a gift of just over $10 billion to children across the United States.

It appears to be closely related to President Donald Trump’s bank accounts for children, which were set up earlier this year as Trump Accounts.

Just hours earlier, Anthropic had announced the establishment of its Anthropic Public Benefit Fund, “a new wholly-owned entity dedicated entirely to public benefit.” Musk responded by stating he recommended “giving the shares directly to the public,” and that he would be doing it that way.

Just a little bit later, Musk said children across the U.S. would be getting a share from him:

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There are roughly 70 million children, meaning someone under the age of 18, in the United States, according to the Federal Interagency Forum on Child and Family Statistics. Musk’s ownership of SpaceX stock shows he has around 849 million Class A shares of SpaceX stock, according to filings with the SEC.

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Investor's Corner

SpaceX’s biggest earnings test yet lands Tuesday, and Tesla shareholders should be watching

SpaceX reports earnings Tuesday as Wall Street watches AI spending, Starlink growth and Tesla merger

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SpaceX reports third quarter results after the market closes Tuesday, with a webcast at 4:30 p.m. ET streamed on X, and Tesla follows a day later. Bloomberg consensus, cited by Pepperstone, calls for revenue of $12.89 billion, adjusted EBITDA of $6.62 billion and adjusted EPS near $0.15. That would be about 65% growth from the second quarter and SpaceX’s first profitable quarter since its IPO. Analysts expect roughly $6.4 billion from AI and $4.9 billion from Starlink, which is projected to reach 14.3 million consumer subscribers. Capital spending is forecast at $19.6 billion, leaving free cash flow near negative $11.6 billion.

The numbers matter because SpaceX has spent months trying to win over a skeptical market. It priced its record IPO at $135, spiked to $225.64, then sank near $105 in early August. Friday’s close of $146.03 sits about 28% below the June high. The Q2 report beat on revenue at $7.8 billion and put Starlink at 12 million subscribers, but $18.4 billion of capex hurt the stock. Since then SpaceX reached orbit on Starship Flight 14 with 26 Starlink V3 satellites, agreed to buy 800 MHz spectrum for about $8 billion as part of its Starlink Mobile push, and signed a fourth compute hosting deal in four months worth roughly $13 billion a year from December. Management is targeting more than 2 gigawatts of compute by year end and a $100 billion annualized revenue run rate. Evercore ISI, which raised its target to $275, said the quarter may be judged more on those targets than the reported figures

All of this sits under the Tesla merger question. Barclays analyst Dan Levy expects an all stock deal in which SpaceX buys Tesla at a premium, using reference values of $2.1 trillion and $1.5 trillion, and said an announcement would need to come by late October or early November to be voted on at Tesla’s December 6 annual meeting. Barclays estimates Musk would hold about 37% of the combined company and 56% of the votes. Musk said in July that combining companies cannot be discussed on an earnings call, but an investor question asking when SpaceX will merge with Tesla is sitting on SpaceX’s Q&A platform, and Teslarati has tracked how the Roadster demo revived the talk.

If a deal happens, Tuesday’s result would effectively set the price Tesla holders would receive. Their shares would convert into SpaceX stock, along with exposure to a company with a heavy investment on AI, while Tesla itself expects 2026 capex above $25 billion. A strong quarter and calmer spending would make that exchange easier to sell. Another round of heavy capex and a falling stock would make it harder.

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