The Tesla Freight Network: A $10 Billion Opportunity

Jul. 18, 2017 12:44 PM ETTesla, Inc. (TSLA)234 Comments
Yarrow Bouchard profile picture
Yarrow Bouchard


  • I believe Tesla is likely to launch an on-demand self-driving semi truck service, which I call the Tesla Freight Network.
  • I use some rough back-of-the-envelope math to estimate that the Tesla Freight Network will generate at least $10 billion in annual revenue over the very long term.
  • This is the minimum amount of revenue I believe Tesla will generate based on a projected 1% market share. I anticipate Tesla's market share will likely be much higher.
  • I also consider one of the reasons this math might turn out to be wrong: What if self-driving causes the trucking industry's revenue to collapse?

Introduction: The Tesla Freight Network

Following its strategy in passenger cars, I predict that Tesla (NASDAQ:TSLA) will begin by selling semi trucks to customers before transitioning to an on-demand self-driving service. I believe that Tesla will launch a Tesla Network for freight like its planned Tesla Network for passengers. I anticipate that this service, which I call the Tesla Freight Network, will probably launch sometime in the early 2020s. Using some rough back-of-the-envelope math, I find that the Tesla Freight Network could eventually generate tens of billions or even hundreds of billions in revenue for Tesla.

This is not a new idea. Uber (UBER) already has launched a similar service, Uber Freight, although for now it still uses human drivers rather than self-driving trucks. Uber also acquired Otto, a self-driving truck startup, and continues to work on developing self-driving for long-haul freight trucking. Uber has made clear its service for passengers will go autonomous. Taking Uber Freight autonomous seems like a given.

In October, Tesla announced the Tesla Network for passengers, an autonomous ride-hailing service that will compete with Uber. With Tesla now working on self-driving freight trucks, the logical next step is to develop a competing service to Uber Freight. Tesla will have an edge over Uber, as well as over other competitors, if the all-electric Tesla semi can achieve a cost per mile than semi trucks powered by diesel engines. This should be achievable thanks to the lower energy cost, lower maintenance cost, and longer lifetime of electric powertrain technology. Tesla will have an additional advantage in machine learning for self-driving freight trucks if can build up a large fleet of primarily human-driven trucks with Autopilot that collect driving data.

Contrary to popular belief, Tesla is not already priced for perfect execution of its strategy. That could only possibly be

This article was written by

Yarrow Bouchard profile picture
I write about autonomous vehicles and other AI robots on Seeking Alpha and in my Substack newsletter. I've been long TSLA since February 2017.

Disclosure: I am/we are long TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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