Piper Jaffray Analysts Downgrades Truck Stocks On Tesla Semi News


Disruption in the marketplace is what happens when legacy companies are sailing along doing the same old, same old when someone comes along and steals their lunch. That’s what Tesla has done to the automotive sector, where it is now valued by investors more highly that Ford, GM, or Chrysler. (The GM thing changes day by day as the market changes, but Tesla is right there with GM with regard to market valuation.) Last week, Elon Musk tweeted that the Tesla Semi, an electric truck for hauling cargo trailers, would be revealed in September. Musk said the project was coming along nicely and that the result was “seriously next level.”

Tesla Semi to challenge truck makers

That led Piper Jaffray analyst Alex Potter to issue a report to the investors who follow him downgrading the value of legacy truck maker PACCAR and truck engine manufacturer Cummins. PACCAR is the corporate organization that owns Kenworth and Peterbilt trucks in the US. It also owns DAF, the Dutch truck maker, and British truck manufacturer Leyland.

Potter said those stocks were already overvalued due to “cynical optimism” but added that pressure from Tesla could cause their stock prices to fall. Potter has recently increased his guidance on Tesla to $368 per share, the highest of any major analyst. His note also warns that transmission manufacturer Alison is in danger of lower stock prices in the near term.

Regarding PACCAR, Potter wrote, “Tesla’s presence looms large; laugh all you want, but this trend cannot be ignored. In the automotive segment, Tesla and others have wrought substantial disruption, forcing incumbents to change their hiring practices, increase R&D spending, and ultimately, suffer lower multiples. PCAR may be less at risk than others — and it’s probably too early to start ringing alarm bells — but with the stock trading near the high-end of its historical valuation range, we wouldn’t be adding to positions.”

Turning his attention to Cummins, he was more scathing.  “Cummins makes diesel engines, but companies like Tesla (among others) are aiming to supplant CMI’s products. These Silicon Valley disrupters are not confining their ambitions to sedans; instead, they have announced plans for electric semis, electric pickups, electric buses, and various other products that defy the preeminence of diesel engines. CMI enthusiasts will note that EVs won’t replace diesel trucks in the coming 2 years (not in a material way, at least) and we agree. But when/if electric drivetrains are proven viable in the first commercial vehicle segments, we think incumbents’ valuations could fall rapidly thereafter.”

Isn’t it interesting how a Tweet from Musk can affect stock prices on Wall Street? Such is the power of disruption that Tesla wields.

Source: Cleantechnica  Photo credit: Kenworth

About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I’m interested in it. Please follow me on Google + and Twitter.

  • Eco Logical

    The demise of diesels can’t come too soon for me and my family.

    Diesel emissions (NOx, SOx, soot) are killing me and my kids … since we have asthma we can’t drive on a busy highway without carrying a ‘puffer’ … even with the puffer we still get sick (headache, raw throat, aching lungs) from the diesel pollution. To me it’s ridiculous, the diesels save a few bucks on fuel and we pay for it.

    Go Tesla!

  • Ed

    It is very difficult to see how all of this is going to work – battery swapping? Rapid charging? – but no one is going to challenge the concept until Musk “splains it” to us!

    • trackdaze

      you would imagine battery swap is easier and resolves charging downtime.

      there is of course 28kws of solar energy potential hitting the roof space of your typical 40ft container.

    • Leeper

      My money is on high voltage battery packs. Currently you have 400ish volt batteries . If you raise them to 4,000 volts your charge power could be over 1 megawatts without raising the amperage. Purely speculation though, can’t wait to see what debuts.

    • Leeper

      Could also just use multiple connections of existing technology.