Tesla shares pop after trucker JB Hunt reserves ‘multiple’ semitractor-trailers – By Evelyn Cheng (cnbc.com) / Nov 17 2017
Tesla shares jumped Friday after J.B. Hunt Transport Services announced it has reserved “multiple” new electric semis just unveiled by Elon Musk.
Tesla shares spiked 4.5 percent in morning trade before trading about 2 percent higher at $318 a share.
“We believe electric trucks will be most beneficial on local and dray routes, and we look forward to utilizing this new, sustainable technology,” John Roberts, president and chief executive officer at J.B. Hunt, said in a statement.
In an expansion from personal vehicles, Tesla CEO Elon Musk unveiled an electric semitractor-trailer Thursday that has a 500-mile range on a single charge and is electronically connected with a fleet’s management system. The vehicle allows the driver to stand and puts the steering wheel in the center with a touchscreen panel on both sides of the driver. Musk said the truck is set to go into production in 2019, although the company has fallen far behind on its production schedule for the Model 3 mass market consumer vehicles.
“TSLA unveiled the Tesla Semi, a heavy-duty truck we believe could be disruptive to trucking markets given the strong specifications (~500 mile range) and low expected cost of ownership (potentially ~20% less expensive per mile than traditional trucks),” Baird Equity Research senior research analyst Ben Kallo and his team said in a Friday note.
“We believe the large U.S. market will support sales of the Tesla Semi as we think the vehicle should be competitive with many traditional heavy-duty trucks, and exceed performance of existing electric trucks,” Kallo said.
Baird has an outperform rating on Tesla with a price target of $411, based on Kallo’s model, which does not include any revenue from the truck but factors in spending for research and development.
J.B. Hunt said it plans to deploy the electric trucks to its intermodal and dedicated contract services divisions to support operations on the West Coast.
“This news is not unexpected. Transportation companies are always looking for ways to lower operating costs given the competitiveness in the industry,” Stephens Research Analyst Brad Delco said in an email to CNBC. “My assumption is that they will purchase a few trucks and test them in a more localized freight network before making a bigger purchases decision.”
Savings could be in the tens of thousands of dollars per truck a year.
Musk said Thursday a Tesla truck would be 25 cents cheaper to operate per mile than a standard diesel truck, at $1.26 a mile versus $1.51.
The U.S. Class 8 semitrailer market is about $30 billion in size so every 1 percent is worth $300 million, according to RBC Capital Markets analyst Joseph Spak.
PB/TK – JB Hunt’s decision to use the new Tesla Semi on the West Coast is the smartest play, especially in Cali. And it will be quick to start moving those operations into Nevada and Arizona.
