Photo: Elon Musk
Piper Sandler hosted an "Electric Truck Day" last week with 11 different management teams. As a result, the firm came to several key conclusions regarding the development of manufacturers in the truck market. In a note, Piper Sandler said Tesla's outlook in the truck markets over the next 6-12 months will be crucial and urged investors not to be surprised if production delays lead to temporary sell-offs.
All the truck manufacturers discussed were divided into three categories:
Based on this, Piper Sandler concluded that the companies from category #2 were most likely to generate revenue in the short term. However, don't be fooled by this. In terms of changing the trajectory of the overall industry, the firm thinks that long-term value creators will come from categories #1 or #3. In doing so, they point out that companies like Tesla combine the expertise of both categories.
Piper Sandler emphasizes that the current demand for electric trucks is outstripping supply. Many fleets want to start using electric trucks and vans, but the major manufacturers have never started serious development of electric vehicles. Because of this, several conversion companies have emerged that are "electrifying" internal combustion chassis. They may have a long-term role, but Piper Sandler thinks many of these companies will remain "limited to niche medium-duty markets, with an annual unit demand measured in the thousands."
The firm points out that in the segments with the highest volume, which include Class 8 tractors and pickup trucks, fleets still lack options. Piper Sandler thinks that all major commercial vehicle brands such as Ford, Freightliner, Volvo, PACCAR, and Tesla will be launching electric trucks. But full-scale production has not yet begun, and even the highest-volume segments can only support 4-5 brands. "Bottom line: not everyone can win."
Cybertruck and Semi are approaching a critical phase, so you shouldn't be surprised if Tesla experiences delays, the firm writes. The Californian manufacturer "remains one of our highest-conviction long ideas, but even better entry points could lie ahead." Piper Sandler warns that temporary sell-offs seem likely, because over the next 6+ months, there is a high degree of unpredictability in Tesla's production ramp, however Cybertruck and Semi have excellent long-term prospects.
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