Analyst Downgrades Cummins, Kenworth, Peterbilt Stocks On Tesla Semi Announcement

Tesla Semi


Turns out an electric semi truck might actually pose a significant threat to tradition big rig makers.

That’s the word from Piper Jaffray analyst Alex Potter following the announcement and slight reveal of the Tesla semi truck.

Tesla Semi Rendering

Earlier Tesla Semi Rendering

Potter sent out a note to investors following this Tesla semi news. Potter stated:

“Commercial vehicle makers – and their suppliers – would be wise to stymie their laughter and take these tweets seriously. We are downgrading truck stocks CMI (Cummins) and PCAR (Kenworth & Peterbilt) partially because we think their valuations already reflect cyclical optimism, but also because we think TSLA’s impending arrival could pressure valuations.”

Potter added:

“It can be difficult to determine payback times for EV trucks. First, we don’t know how much Tesla’s Class 8 vehicle will cost – or how well it will perform. But just as important, each fleet has different needs. The number of miles traveled can vary widely – from 200k miles annually for “slip- seated” long-distance haulers, to only 10k/year for some vocational fleets. In addition, diesel fuel economy (which is important for calculating cost savings vs. a base case) can range from 4mpg up to 10mpg+, depending on duty cycle, route characteristics, etc. We have yet to examine likely EV paybacks for different fleet types – so stay tuned – but regardless, the market is clearly large enough to warrant attention: in North America and Europe alone, we think the heavy truck market likely represents a revenue opportunity in excess of $100B/year (vs. TSLA’s estimated 2017 revenue of ~$11B).”

Potter separately sent out notes on both Cummins and Paccar. The Cummins note reads:

“Cummins makes diesel engines, but companies like Tesla (among others) are aiming to supplant CMI’s products. These Silicon Valley disrupters are not confining their ambitions to sedans; instead, they have announced plans for electric semis, electric pickups, electric buses, and various other products that defy the preeminence of diesel engines. CMI enthusiasts will note that EVs won’t replace diesel trucks in the coming 2 years (not in a material way, at least) and we agree. But when/if electric drivetrains are proven viable in the first commercial vehicle segments, we think incumbents’ valuations could fall rapidly thereafter.”

And here’s the Paccar note:

“Tesla’s presence looms large; laugh all you want, but this trend cannot be ignored. In the automotive segment, Tesla and others have wrought substantial disruption, forcing incumbents to change their hiring practices, increase R&D spending, and ultimately, suffer lower multiples. PCAR may be less at risk than others — and it’s probably too early to start ringing alarm bells — but with the stock trading near the high-end of its historical valuation range, we wouldn’t be adding to positions.”

We’ve witnessed history with Tesla stock surpassing Ford and then General Motors. Could Tesla do the same in the trucking segment? It may take a few years for Tesla to make in roads in the big rig industry, but history could repeat itself with Tesla surpassing the mainstay players in that segment too.

Source: CNBC

Categories: Tesla, Trucks


Leave a Reply

32 Comments on "Analyst Downgrades Cummins, Kenworth, Peterbilt Stocks On Tesla Semi Announcement"

newest oldest most voted

Don’t forget about the Nikola One as well.

Nicola One will be an interesting contender in this market shake up!

I wouldn’t be surprised if Tesla’s Semi looks a little like Nikola one.

IMO this is a very challenging problem statement. Can’t wait for more details.

A hydrogen truck? I think the way to disrupt the transport industry is to come up with lower $/mile. Concepts with drastically higher $/mile is unlikely to impress the industry.

This and also due to the fact that Tesla has so much more momentum, appeal and trust market wise.

Nikola promises on par or lower $/mile. Yes, I agree that they look like some Tesla copycat startup with vaporware dreams and without clear sources of huge capital needed to execute it.
But “lower $/mile” isn’t what can be done with batteries only for long and medium range trucking, that is most of the market. The numbers just don’t add up.
Delivery vans that do mostly city cycle would be more reasonable choice, and would provide much more fuel economy and air quality improvement in cities. But we already have upcoming Daimler battery electric truck for it. UPS also has done a lot of testing with all kinds of alt fuel tech, but settled on range extenders for delivery vans.
Drayage trucks, again, BYD already sells battery electric ones.

What a crock, pick up the truck stocks at a lower price, great value.

I already lost my shirt shorting the stock when you told me to do that. /sarc


If I want to go poor taking advice on the internet, I’ll give my money to a Nigerian Prince. 😀

Not giving advice, if people want to sell name brand truck stocks at a discount people will buy them at lower prices and profit.

Tesla news are some of the most stock pumping/shorting news beside Federal Reserve decision and Trump Tweets…

Just ban gas/diesel sales by 2030 like the EU will do.

The same Kenworth (among others) is building actual electric trucks for Los Angeles ports, not posting some silly virtual reality renderings.

“Hydrogen Fuel Cell”.


Yea, sounds like Tesla’s going to eat their lunch.

“Class 8 hydrogen fuel cell truck”


Yeah, because what class 8 (semi tractor-trailer) truck fleet owners are really looking for is trucks that need a special, very difficult to handle type of fuel which literally no fueling station in the world is set up to provide in the quantity needed by a semi tractor, and at a price about 3.5-4 times as high as diesel for the equivalent mileage.

Gosh, they’ll just line up to buy those, won’t they!


From the article:

“Piper Jaffray analyst Alex Potter… stated: ‘Commercial vehicle makers – and their suppliers – would be wise to stymie their laughter… We are downgrading truck stocks… partially… because we think TSLA’s impending arrival could pressure valuations’.”

I have a rather low opinion of self-appointed “analysts,” yet I think this is the most clueless financial “analysis” I’ve ever seen! And that’s a field with some pretty strong contenders.

On the other hand… perhaps Mr. Potter is only playing dumb here. Perhaps he’s only pretending not to realize that Tesla’s BEV semi tractor will almost certainly be only a concept vehicle, not intended for production. Perhaps this is just Mr. Potter’s way of trying to manipulate stock prices, or sell whatever stocks/future his company is trying to sell this week.

If Mr. Potter actually believes this, then…

“Tesla’s BEV semi tractor will almost certainly be only a concept vehicle,”

I don’t know PMPU it seems like a good place to sell batteries.

Can’t wait for the reveal.

Sure, it would be a great way to make a profit selling large battery packs; but who is gonna buy them? The cost/benefit analysis just doesn’t work. Batteries currently are too expensive and will wear out too fast in the very heavy use they’d get in a BEV semi tractor used on a daily basis.

But I’m perfectly content to wait and see whether or not my prediction here will be proven right. I would be very happy to be proven wrong; I just can’t see how that would be possible.

Maybe you should hear Elon Musk out before offering your own sometimes pretty pedantic and annoying views (over exposure much…).

The idea that Tesla should be interested in showing a concept with no real world relevance strikes me as pretty ridiculous.

I don’t think Tesla has the means to start up a semi truck production line anytime soon so there’s probably not a huge threat to other manufacturers.

Though maybe this is just a sneaky attempt by Musk to show those manufacturers how to make an electric truck? Show that it can be made and they will copy it. After all, Musk’s stated goal is to eliminate fossil fuels for all transportation and he can’t do it all himself.

Sure, Tesla’s BEV semi tractor will almost certainly be just a concept vehicle. We’re only now on the cusp of BEVs being cost-competitive with passenger cars, and the cost/benefit analysis is much worse for heavy freight trucks.

Unless Tesla has some magic or truly breakthru commercialized battery tech up its sleeve, which is rather improbable, a BEV semi tractor which can compete on price with a diesel semi tractor is still some years away. Likely that won’t come until we see a couple of breakthroughs in battery tech.

Yes, we are pushing the BEV envelope and at this point only a hybrid makes sense for heavy long-hauls, i.e., a H2 or gasser/diesel hybrid. The energy density of current batteries is not high enough and limits range.

Once the Gigafactories are rolling, they’ll need some gigantic demand to shovel all those new batteries into. An EV heavy truck segment (Tesla branded or not) could swallow one hell of a lot of 2170 cells.


Exactly. It’s a great place to sell batteries. I’m not sure PMPU is right. I think this truck could be a real offering.

Tesla is already advertising to an alternative market: PowerPacks for medium- and large-scale grid energy storage. That should be sufficient to absorb any excess production from Gigafactory 1 for cells Tesla doesn’t need for its cars.

I don’t know about every one else but I prefer driving myself,I like driving trucks I mean electric self driving trucks and cars sounds great but it’s not for me I’ll take a 379 model peterbilt any day over an ugly looking electric truck besides that who can afford one

I’d be very cautious about claiming that Tesla’s BEV semi tractor will be “ugly looking”. You might wind up with a rather large plate of crow to eat!

I think it’s safe to predict it will be highly streamlined and “futuristic” looking.

To be honest even though I love cars especially evs but unless it is an interesting road I would rather let someone else drive so that I can read or sleep.

Cool brah,

I take my Railpower GG20B Hybrid Duel Ultra-capacitor Electric Locomotive anyday.

It remains to be seen how exactly Tesla envisages that class 8 long range all electric truck, but if they can pull something off that’s both practical and has lower $/mile than diesel than that would be extremely disruptive in an industry where $/mile is everything.

Transport companies would have a hard time ignoring Tesla’s offerings because if they do their competitors would soon eat their lunch!

Brilliant to come up with a product people are practically forced to buy.

Tesla never come with competitive and economical product in their existence. Their business model is to raise hype and push wasteful and expensive products, collecting all possible subsidies on the way.
As you are correct that $/mile is everything in this industry, I wonder what they will “invent” this time. Or will it be yet another hype generating share sale tool and subsidy milking scheme like the famous battery swap stations across the country.

Maybe I missed it… Has Tesla actually specifically said the Semi they’re currently working on is a long-distance trucking solution?
I’ve seen several analyses that yield that a BEV semi-trailer or full-trailer rig can’t be economical at current battery density or price — by a factor of 5 at least.

A plug-in hybrid-electric drivetrain of some sort would make a lot of sense, OTOH (locomotive-like diesel-electric serial hybrid , or maybe turbine-based).

Without any details on what Tesla’s planning, how could anyone seriously downgrade the big truck vendors? Long-term TCO and reliability is a prime consideration with them, and Tesla doesn’t have a good record there, nor is it placed to sell to fleets.

Tesla could well be planning to start with short-range large trucks (e.g., port haulers), which are good niches as is.

Tesla’s semi could not be a concept, because Benz has been testing a similar version of battery semi for 3 years and they have already leased production versions a few hundred of them within Europe, there are already quite a few companies in Europe that make Hydrogen trucks and they will most likely compete with Benz, Some parts of EU already are providing Hydrogen fillups. Certain Port Authorities in CA, are already using fleets of Battery and Hydrogen trucks for short haul.