Piper Jaffray analyst Alex Potter published a note on Tuesday saying he is downgrading engine and truck manufacturers Cummins and Paccar, in part because because "their valuations already reflect cyclical optimism, but also because we think TSLA's impending arrival could pressure valuations."
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He added that Allison Transmission Holdings, which he currently has an "underweight" rating, might be at greatest risk of disruption from electric vehicles, while Wabco might be "more-or-less" insulated from Tesla's competition.
In a separate note strictly on Cummins, Potter explained his position further:
"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."
And in a separate note dealing solely with 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.
Musk discussed plans for a semi truck in his "Master Plan, Part Deux," where he outlined the broad goals he has for the company over the next several years. Last Thursday, Musk tweeted that Tesla will provide information on the semi in September.
For now, details are scarce, which Potter acknowledged.
"First, we don't know how much Tesla's Class 8 vehicle will cost — or how well it will perform," he said in his broader note on the topic, and noted that different truck fleets have different needs — meaning it may be a while before Tesla's electric battery technology can offer the kind of range (and charging speed) that would make it a competitive choice for long-distance haulers.
Also, the fuel economy of the diesel engines common in these trucks can vary widely, which makes it difficult to compare costs with electric.
Tesla also would not be the first to produce an electric semi truck — Mercedes-Benz unveiled the Urban eTruck in July 2016, and has already begun manufacturing a small run of trucks for delivery later this year to a small group of customers for an initial round of testing. Mercedes plans to reach full production on its truck by 2020, if all goes well.
But Potter apparently thinks now is the time to be considering Tesla's disruptive potential in the market.
Potter recently gave Tesla the highest price forecast it has ever received from an analyst at a major firm, at $368. Tesla shares traded just below $300 on Tuesday afternoon.
Watch: Tesla semi coming in September