Tesla: Let's Get Serious About Semis

Dec. 15, 2017 8:00 PM ETTesla, Inc. (TSLA)TM1.14K Comments
Donn Bailey profile picture
Donn Bailey


  • Early buyers in the trucking industry can look forward to increased profits for the first five years of adoption before the playing field readjusts as more competitors acquire EV trucks.
  • New sales of diesel semis should be dead by 2025.
  • Startup Thor already has a road legal prototype which Tesla does not.
  • The Tesla Semi has serious competition coming by the time their truck is ready.
  • Tesla Semi still lacks important spec information.

First, let's recap the changing landscape for trucking. Great times are ahead for the industry. The death of the diesel engine is virtually guaranteed by 2025. If companies like Tesla (NASDAQ:TSLA), Nikola Motor, Kenworth, Toyota (TM) and Thor can bring their trucks to market by the early 20s, no one will be buying/leasing new diesel trucks. Any operators forced to acquire replacements before the end of this decade will be turning to the used market while awaiting their new electric truck/alternative fuel orders to be filled. Due to the long useful life of diesel trucks, we could see significant impacts on new diesel truck sales as early as next year.

For at least a few years, early adopters will have a significant load pricing advantage over diesel truck operators. There will be little need to cut load pricing by much since it will be easy to fill all available trucks in the early years of in-service placements. This will mean hugely increased profits for the early adopters and as much work as each new truck can handle. We can expect multi-truck operators to place these new units in "team" operations (two drivers working each truck as relay partners with each truck driven about 20 hrs per day) to maximize profits in these first few years.

Tesla Semi day cab truck (source:cnbc.com).

Nikola Two day cab design (source: Nikola Motors).

Thor ET-One day cab truck (source:trucks.com)

It will take at least 15-20 years to replace all existing diesel trucks in the U.S. In operations where used trucks are the norm, it could take a decade for electric trucks to make their way into service. Battery replacement costs will be a major factor in this segment. If the costs are prohibitive, sales of used trucks with over 1 million miles may never occur. Pricing models from both Nikola

This article was written by

Donn Bailey profile picture
Donn is Co-Manager of his family-controlled investment portfolio of mortgages, real estate, and publicly traded stocks. Donn grew up in Mexico and Ecuador before moving to the U.S. for college. He holds a Bachelor's degree in Business Management. He spent a decade in the aerospace industry before his passion for cars took him to GM and Ford dealerships. An avid ocean fisherman, he "semi-retired" to Florida in 2015. Never idle, he stays busy now as a licensed realtor and author on the real estate and auto industries.

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