Tesla’s electric truck is a shot at a $30 billion market

Tesla Inc. this week gets a chance to regain some of its standing with Wall Street as it is set to unveil its newest prototype, an all-electric heavy-duty truck, on Thursday.

Tesla TSLA, +4.07%  shares were up more than 1% on Monday, snapping a two-day losing streak and cutting down on November losses that have topped 7%, the stock’s worst monthly performance since July.

Chief Executive Elon Musk tweeted Sunday that the Thursday unveiling will be broadcast on the company’s site, and again promised a truck that will wow viewers:

The semi is Tesla’s first foray into commercial vehicles, where a pragmatic take on a cost/benefit analysis would presumably trump cachet, which the company has enjoyed with its passenger cars.

Read more: Tesla’s junk bonds are trading under water — and it could spell trouble for Elon Musk

And Tesla is in need of some good publicity. The company earlier this month reported a wider-than-expected quarterly loss and, crucially, Model 3 delays.

Tesla shifted the goal post for producing 5,000 of its mass-market sedans a week to late in the first quarter of 2018, from expectations it would reach that milestone by the end of the year.

Analysts at Bernstein said in a note Monday they expect Tesla to reveal a semi truck with 300-450 miles of range and target its availability for mid 2019. That range would be a “significant constraint” given that commercial trucks drive up to 600 miles a day, they said.

The analysts said they’d also look at how Tesla plans to offer charging for the trucks, whether through a separate charging network or through existing spots.

The truck’s success will hinge on whether it can offer “a compelling return on investment for truck owners/operators,” analysts at Goldman Sachs said in a recent note.

Related: Morgan Stanley keeps Goodyear its top pick in cars, shared mobility

There is going to be a trade-off between range, gross vehicle weight, and cost given the potential size of the battery pack required, and Tesla is likely to “upsell its automated driving capabilities with its semi-truck product,” they said. That could include the ability to “platoon,” where automated trucks follow one leader truck with a human driver on highways.

Little is known about the truck, which Musk first mentioned in April and again in September, when he tweeted an obscured picture of the truck. The unveiling has been postponed twice, as it had been expected for September and then for October before Tesla settled on the Nov. 16 date. Musk has called the truck “seriously next level,” but given no details.

See also: Tech to kill car dealerships, in one chart

Electric passenger vehicles are primarily luxury purchases, analysts at RBC Capital said in a note Monday. Cost is a factor, but there are also subjective components, they said. For commercial fleets, however, the decision tends to be “purely economic.”

Factors to watch include range, which in competitor electric trucks from Daimler and others have reached up to 200 miles, and cost, which is heavily dependent on range, the RBC analysts said.

With the truck, Tesla gets a shot at the $30 billion Class 8, heavy-duty truck market in North America, they said.

Tesla shares have gained 46% this year, compared with 15% for the S&P 500 index. SPX, +0.16%  That outperformance, however, disappears on a three-month basis, with the stock down 13% compared with the benchmark’s 6% gain.

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