100,000 Tesla Semi Sales Spells $18 Billion In Revenue

Tesla Semi

APR 5 2018 BY EVANNEX 33

100K TESLA SEMIS = $18B REVENUE/YEAR

When Tesla unveiled its all-electric Semi truck in late 2017, the reaction was all too familiar.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Posted by Galileo Russell. The opinions expressed in these articles are not necessarily our own at InsideEVs.

Above: Tesla Semi (Source: Tesla)

Tesla fans were ecstatic, and the orders started piling up. The mainstream media was skeptical of Tesla meeting its 2019 delivery goal, and trucking companies wrote the product off as physically impossible to deliver.

Orders Piling Up

Despite skepticism from legacy trucking manufacturers (like Mercedes-Benz), trucking operators have taken a different stance towards Tesla’s Semi.

At the time of its unveiling, Tesla began taking $5,000 reservations for its Semi to build a backlog.

Within weeks some of the world’s biggest logistics companies serving a variety of industries joined the waiting list. Some of the big names include Walmart, Anheuser-Busch, Pepsi, and UPS.

Above: A look at some of the publicly announced preorders for the Tesla Semi (Source: Business Insider)

Even better than these announced orders was recent commentary from DHL executives after they spent time testing the Tesla Semi. Not only does DHL estimate the Semi could save them “tens of thousands” per year in operating costs, but that the payback period would only be a year-and-half.

If these economic savings can be validated after Tesla begins deliveries, they will likely lead to massive follow-on orders from initial customers.

Trucking operators are heavily focused on cost savings and truck economics. Most of these early customers likely placed these orders to test out the claims Tesla has made. Upon validation, there could be follow-on purchases that are orders of magnitude bigger.

For instance, UPS (who has placed the biggest public Tesla Semi order to date) operates a delivery fleet of over 100,000 vehicles.

Financial Impact

Up until recently, I believed the impact of the Semi on Tesla’s financials would be pretty insignificant. However, that changed after listening to Tesla’s Q4 2017 earnings call in February.

Elon Musk, when asked about the Semi, revealed he expects Tesla could be selling as many as 100,000 trucks annually within 4 years from the start of production. My original estimates had Tesla Semi sales peaking around 20,000 annually after four years. Needless to say, I was stoked to quintuple my sales projections.

Above: Tesla Semi delivery projections (Source: HyperChange TV)

Assuming an average selling price of $180,000 per semi truck (options and all), Tesla would generate $18B in revenue from selling 100,000 trucks.

At face value, this seems to be a crazy goal, but in the context of the US semi truck market, it’s actually quite reasonable. In 2017, North American heavy-duty truck sales were near ~300,000 units. This implies if Tesla sold its truck in North America alone, it would need to capture 33% market share.

However, Tesla will be delivering its semi-truck globally (it already has orders from operators in Norway, Italy, and the UAE), making the 100,000 target easier to reach.

If the economic savings are real, I believe these sales are possible. And Tesla doesn’t appear to be stopping at disrupting the trucking industry.

Tesla has insinuated that it plans to drop the cost of trucking so dramatically that it could start to compete with rail. That would cause Tesla’s Semi truck to be a catalyst to expand the overall trucking market, as it eats into the adjacent multi-billion dollar rail segment. If this scenario plays out, 100,000 in annual sales may end up being quite the lowball.

Above: The Semi was recently spotted at the Tesla Service Center in Dallas (Image: Teslarati via nxteslaowners)

Beyond just selling the trucks outright, Tesla has a major opportunity to monetize the charging infrastructure of its Semi truck.

Tesla will be selling energy at a fixed price to recharge customers’ Semis at Megachargers located across the country. It’s too early to tell if Tesla will try and make a profit from this revenue stream, or run it at breakeven to spur unit sales. Regardless, this is another component of the financial impact I’m monitoring closely.

Risks & Reasons To Be Bearish

It’s all about factories and Megachargers — how fast can Tesla actually build these trucks, and how fast Tesla can build out the charging infrastructure (Megachargers) to support various routes.

With deliveries slated to begin in 2019, there are a lot more questions than answers.

As of today, Tesla is not profitable, burning significant cash and has a mounting debt load. Its factory appears to be at capacity with the Model S, X and 3 and battery production remains constrained.

Tesla will need to build out new production lines and start to install Megachargers in the very near term to meet its deadlines. Unless Model 3 scales profitably, both of these look like moonshots.

Conclusion

The Semi is an exciting new piece of the evolving Tesla bull thesis. Going beyond consumer cars and into freight represents a massive new addressable market for Tesla to disrupt.

HyperChange TV Video

Written by Galileo Russell, a 25-year-old Tesla shareholder based in NYC. He has been blogging about Tesla since 2012 and is the founder of HyperChange TV, a new YouTube channel about tech and finance news for millennials.

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

Categories: Tesla, Trucks

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33 Comments on "100,000 Tesla Semi Sales Spells $18 Billion In Revenue"

newest oldest most voted
Matze

Paid Tesla PR with little knowledge of the writer. This is an advertorial

Marshal G

Paid Tesla bashing Troll.

morrisg

Nah, he’s not smart enough to get paid to bash Tesla…

gary

But Elon’s volume predictions and timelines are ALWAYS spot on. 🙂
That $18B/yr is as good as money n the bank….

earl colby pottinger

His timeline have always been too, but his volumes predictions have also been too small as they always sold more that they expect.

Ambulator

At the prices that Tesla is promising for charging trucks, I’m fairly sure they are planning to subsidize them. That may well be a justified position, but I see no reason to talk about profit from charging services.

The truck is a wonderful idea, but every time someone has predicted a rapid ramp up of a Tesla product they have been wrong. Somehow I don’t think that’s going to change now.

Actual Tesla Semi sales: 0
Money from Semi sales: $0

On a related note, Nikola trolls Tesla on twitter, refunding $8 billion in deposits on its fuel cell semi and saying it doesn’t need handouts from customer deposits to fund its development.
https://www.cnet.com/roadshow/news/nikola-deposit-refund-twitter-tesla/

scott

Nikola is a joke. While Tesla already has electric trucks traversing the country Nikola has nothing to show.

jelloslug

They handed them back because they are about to go out of business.

morrisg

Money from semi sales = Pre-production orders x $20,000 each. From the chart above, 405 orders x $20,000 = $8.1 million.

That’s what large trucking firms have ponied up Now to save a place in line for when production starts. Real money, not talking about it. Say what you want, but follow the money.

Vexar

Or nobody gave Nikola Motors deposits… or, they all canceled when the Tesla Semi came to light, just as I cautioned (here, at least) Nikola Motors to hurry and get market share.

Pushmi-Pullyu

ROTFLMAO!!
😆 😆 😆

If Nikola got $8 billion — that’s “billion” with a “b” — in deposits, then I’m Albert Einstein!

But that’s okay, MadBro. I realize that once you made the decision to start being a serial anti-Tesla FUDster, your ability to tell the difference between truth and even the most Ludicrous™ lies… simply vanished silently away.

Marshal G

100,000 x $180,000 = $18 billion. He is trying to show what is POSSIBLE. I understand you think it’s crap because “nobody buys EV’s” but did you see the chart of pre-orders?

Yes at the end of 2017 Elon expected 120-200,000
Model 3 production and delivery.
We know all the real numbers…..
Where is the production
where is the money to finance it….
Laughable

Oh what a difference a Day Makes!
Yesterday, ‘Tesla Was Going Bankrupt!’ Today, complaining that some Optimistic Production Numbers, that really were just ‘Musings’ by Elon, Never came to Fruition, last year! Whoop de Doo!

Are you Happy Now?

windbourne

I am hoping that these will give rail a real go for the money. If so, then it will force rail to come to grips with how HORRIBLE they are, as well as how expensive.
It might cause them to switch to electric and quit running diesel or LNG. Simple electric rail that runs at say 60-80 MPH using small nuclear power plants along the way, would lower the costs greatly.

jamcl3

The only thing that nuclear power plants have ever lowered the cost of is the cost of nuclear weapons.

Thus, making Wars more Financially possible, Bankers More Money, and Mass Graves more Frequent, I expect!

G2

On the nose!

Lou Grinzo

I’ve been saying for years that the big win for decarbonizing transportation was in fleet sales of minivan and larger vehicles. Fleet operators tend to make decisions based on what Excel tells them, especially regarding operating costs, not what their gut tells them. Add to that the fact that they can schedule vehicle use and charging times and avoid the “but I need a car that can drive 3,000 miles with no notice” nonsense we hear from a lot of US car buyers.

The general pattern here — big fleet operator buys what is (for it) a very small number of units and tries them out, then gets in line for BIG follow-on orders — could easily result in Tesla moving a heck of a lot of semis not long after they go into production.

From a climate perspective, this is great. We need to move as much transportation from fossil fuels to electrons as quickly as possible. I’d love to see nearly every passenger vehicle on my daily drive be an EV, but if semis lead the way while consumers take longer to become educated about EVs, that reduces our emissions, too.

TwoVolts

+1.
I’d like to see the fleet of USPS mail delivery trucks converted as well. Electric vehicles seem like the perfect fit for mail delivery. The ONLY thing I like about my current mail truck: I can HEAR when it arrives on my block so I know when to go get the mail.

And…That ‘Noticing it’s Coming’ part, could be handled by a Blue Tooth Switch or Sensor, to change a light in your home from Red, to Green, in a “You’ve Got Mail” type of message, or by an App or Text Msg!

TwoVolts

Perhaps some day – we can only hope. There were many times in the past where I had to drive to my local post office after a rate hike just to buy a sheet of 2 cent stamps – thinking to myself ‘can this possibly be any dumber?’.

At least they finally adopted a first class stamp that is still good after postage rate hikes. There is always hope for intelligent change.

HVACman
Talk about building mountains from mole hills! I’ve studied the Tesla semi more than just about anyone here and find it absolutely a stunningly-creative engineering achievement, but I also deeply studied the US trucking industry to get a grasp on the current state-of-the-art, both technically and economically. Total US Class 8 truck sales of all kinds (from trailer-towing tractors through dump trucks, cement trucks, etc) surged to a record 269,000 units last year. The number one brand was Freightliner, at 100,000. Yet this article assumes that Tesla, with only two prototypes in the earliest stages of field-testing and zero existing charging or service infrastructure support suitable for the trucking industry , can grab 40% of the market and go from 0 to the largest truck manufacturer in the US in less than 4 years. Freightliner, PACCAR, Volvo, and International understand well what competition means. It is far more likely that they will all have 500-mile-range BEV versions of their own within 4 years if more than a handful of Tesla’s reservations turn into actual configurations and purchase orders. And is also very likely that Pepsi, Walmart, UPS, and others are already privately talking to Freightliner et al. about these possibilities,… Read more »
earl colby pottinger

Yes, in 1908 I can see what you wrote, I studied how many horse drawn delivery van there are and this Henry Ford thinks in a few years can grab a major share from all the big companies that already exist.

As pointed out. fleet owners think with their wallet, not their heart. If Tesla trucks are cheaper than that is what they will buy and they will not care about the old manufacturers.

Pushmi-Pullyu

The limit might well not be the demand for Tesla’s Semi Truck, but how many Tesla can build within a few years. Not to put words into HVACman’s mouth — er, keyboard — but perhaps that was his point.

There is no way Tesla is going to be able, by 2022, to (1) build 100,000 Semi Trucks in a year, (2) build enough service centers to maintain them, and (3) build and stall enough Megachargers to power all of those trucks.

It’s ridiculous to think that Tesla could do all that while also spending most of its resources on ramping up Model 3 production and work on putting the Model Y into production… not to mention making the Roadster Mk II !

I still say Tesla would be better partnering with an existing semi truck maker. That would give them access to service shops and experienced mechanics, as well as an assembly plant already set up for assembling large trucks.

And yet, as the Ramp Up of the Model 3 gradually, but Steadily, Increases its Build (And Delivery) Rate, it is in fact expanding much of what it needs for Semi Production! Model 3 Motors, already at about 2,000 Plus per Week, are not long away from Doubling, in part from offering the Dual Motor Model 3, and from general volume ramp up! Even now, they could be building 1 Extra Semi every Month or Two, expanding the current 2 Truck Testing Fleet! Since before outside customer’s sales begin, Tesla will be using this Semi in their own working freight Programs, I think that the growing pains they are facing with the Model 3 are strengthening them! Tesla will, I expect, have an expanded Semi test fleet to identify bugs, road challenges, Megachargers Reliability, and more, just to Get to public production! Before Semi Production begins, they will be already over 5,000 Model 3’s per week, likely over 10,000 per week, as well! Figure 100,000 Semi’s = the number of Motors in 400,000 single Motor Model 3’s, or 200,000 Dual Motor Model 3’s; meaning, if Tesla can get to 10,000 Model 3’s per week, from July, 2017, to July 2019… Read more »
jamcl3

Well Volvo Trucks in North America is really Volvo/Mack, and sells closer to 20 K total but maybe ten times that globally amongst all the many brands. But you are generally spot on.

Tesla did go from zero to about 140,000 EVs per year in 6 years, if you extrapolate the last quarter. So maybe, but I agree it will probably be much lower.

However I am not so optimistic that the piston heads will catch up quickly. They just do not get it. Have any of the passenger car OEMs gotten anywhere close to Tesla in 6 years? Nope. The truck guys tend to be ten years behind pass cars.

Bunny

Over 300,000 Nissan Leafs sold worldwide
That doesn’t count?

Prad Bitt

300,000 in eight years, not even one per dealer a month.

Pushmi-Pullyu

Typical wide-eyed, uncritical Tesla cheerleader PR from Evannex. Even Tesla isn’t suggesting it’s going to sell as many as 100,000 of its Semi Trucks!

As a Tesla fanboy, this sort of thing just makes me roll my eyes.

“Tesla will need to build out new production lines and start to install Megachargers in the very near term to meet its deadlines.”

I’m not at all convinced that Tesla will install any Megachargers in advance of sales, except for Tesla’s own use along the route between the company’s Fremont assembly plant and its Gigafactory One. It would make far more sense for Tesla to require fleet owners to pay for the installation where they need them, and only in those places. Tesla Semi Trucks are aimed at fleet sales only, and there’s no rational reason for Tesla to pay to install Megachargers any place except where their customers need them.

With the estimated price of the trucks being so low, and with Tesla apparently guaranteeing the low price of 7¢/kWh for charging at Megachargers, Tesla appears not to be making much money at this. Therefore, it seems reasonable to think Tesla is going to require its customers to pay for Megacharger installation and upkeep.

DoodleBug

Pushmi,
what makes you think that their profit margins won’t be reasonable?
Like others, I have run the numbers (having done a lot of research to get decent estimates) and – when production is mature – there is certainly good money to be made building Semis IF Tesla hits its $100 battery pack cost target.
The competitors with the biggest advantage on BEV trucks are going to be those with car production for exactly the reasons Robert W says above – scale economies in motors, batteries and power electronics that car & truck production (including R&D to develop the best stuff). For ICE trucks, those shared economies are limited.
We are entering a new era for the economics of car/truck manufacturing.
And Tesla does have a worthwhile first mover advantage that truck OEMs will struggle to catch-up with BOTH because the R&D takes time, but also because they remain in the mindset that diesel is going to rule for a long time (recent statements by both Volvo and Daimler). To me, that sounds a lot like what Kodak middle managers once upon a time were saying about digital photography.

Steven

Revenue is a nice concept, but Net Profit Per Unit is better.

We should talk more after the first 10,000 are delivered.