US enters into great Tesla Semi debate
Business pundits as well as Musk fans get into act as share markets get choppy
US business commentators and investment houses are agog at the impact on Paccar and Cummins by Elon Musk’s Tesla Semi tweet over the Easter break.
Musk wrote that his firm’s electric prime mover would be unveiled in September.
Paccar’s share price lost more than a dollar from Monday to end trading at US$64.20 while Cummins lost nearly US$3 sliding to $144.
On Tuesday, an analyst with investment firm Piper Jaffray downgraded the outlook for both stocks from "overweight" to "neutral", due to the potential for "disruption", not just from Tesla, of what is expected to be leaner and more efficient technology, sparking instant interest from pundits online and on television.
Seemingly lost in the speculation was that banking and investment firm Wells Fargo upgraded Cummins on Monday to "outperform".
Interestingly, though Piper Jaffray mentioned Allison Transmission as a possible disruptee, its share price rose strongly after a very short dip, from US$34.27 to US$34.89.
Analysts on business news service CNBC pointed out that the promise of electric prime movers and intelligent transport still had a long way to go while Tesla sceptic and former General Motors vice chairman Bob Lutz appeared on screen to question Tesla’s future as an electric carmaker, given manufacturing cost challenges, the huge competition from longer established mainstream companies and rock-bottom pricing.
This intervention followed Tesla’s market capitalisation topping that of Ford, despite the company having built a fraction of that company’s totals in the past few years.
Against the naysayers, business website Motley Fool echoed other fans in saying Tesla’s trucking move "poses a direct threat" to the truck and engine-makers’ US business models.
Though not entirely convinced that Tesla will have an easy time of it, the website warns of the possibility that "truck companies hedge their bets and potentially put off purchases of old-tech trucks in order to be able to spend that money on battery-powered Tesla semis later".
One of the more involved debates over the truck initiative was in the Tesla-focused website Teslarati, where issues such as price, return on investment, range, potential European demand, uses and the electric ambitions of delivery giants such as UPS were discussed.