Tesla event did not blow all of Wall Street's minds into an alternate dimension

Key Points
  • The Tesla Semi range exceeded expectations, and the Roadster was a total surprise with impressive specs.
  • But key questions linger about the performance of the truck, its potential, and other issues facing Tesla.
Tesla CEO Elon Musk shows off the Tesla Semi as he unveils the company's new electric semi truck during an presentation in Hawthorne, California, November 16, 2017.
Alexandria Sage | Reuters

Tesla's newly revealed electric semitrailer and sports car surprised and exceeded some analysts' expectations, but the Thursday night event did little to answer some of the lingering questions and concerns over the company.

Tesla gave some needed information on its Class 8 electric semitruck — such as its range, which was higher than many analysts had expected. And the company did say the truck would be higher-performing and more economical than diesel trucks, based on several metrics.

But key data about pricing, depreciation, production partners and other issues were lacking, said some analysts. Moreover, while the company also unveiled a new high-performance car with record-setting specs, the event offered no new information on other aspects of its business that have concerned investors, such as the production ramp of the Model 3.

Tesla shares were up nearly 3 percent Friday morning.

Tesla CEO Elon Musk had said the reveal would "blow your mind clear out of your skull and into an alternate dimension."

But that may have been overstating it, said Cowen analyst Jeffrey Osborne.

"Putting it simply, our mind wasn't blown and we are still in this dimension," Osborne said in a note sent Friday.

"The reveal party in LA offered no new nuggets of information to ease these investor concerns in our view and in fact raised more questions than answers," he said.

The event itself was impressive, and the Semi's 500-mile range was a surprise, Osborne said. But clearer information was lacking about the cost of the truck, where it will be serviced and how much a network of solar-powered "Megachargers" will cost.

"In essence, all last night's event did was add to Elon Musk's shopping list of things he needs to spend money on at a time when the company is having difficulty making its base vehicle (Model 3) and its equity and debt has traded off," he said.

Jefferies analyst Philippe Houchois said Tesla's claim that the Semi's total cost of ownership would be more than 20 percent lower than that of a diesel engine did not square with Houchois' understanding of trucking costs and that more information is needed about the longevity of the batteries on the truck.

"While deposits could help liquidity, we think the stock's next move will depend on additional disclosure on Model 3 ramp up and the size of incremental capital required, which we assume will be straight equity and which we estimate in a $2.5-3.0 [billion] range," Houchois said. "Longer term, we continue to think the capital intensity of the business model will keep returns below best-in-class auto OEMs."

The company also did not list any production partners on the Semi, said Goldman Sachs analyst David Tamberrino.

"To the negative, we were anticipating that the company would announce production partners (i.e., for chassis and Semi truck vehicle build), as well as pre-ordered fleet customers," Tamberrino said. "However, the company did not provide details on any partnerships, or color on the potential production capacity and location — only noting that they have historically vertically integrated and could likely continue that trend with the Semi truck (which the company anticipates will be available in 2019)."

"On the order front," he added, "while there was no large announcement, the company noted that orders "were not zero."

On Friday, large trucking company J.B. Hunt Transport Services said it reserved "multiple Tesla Semi tractors." However, the company didn't disclose any further details about pricing or the number of tractors ordered.

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. Wal-Mart is planning to test Tesla's electric trucks, the company said Friday.

The U.S. Class 8 semitrailer market is about $30 billion, so every 1 percent is worth $300 million, according to RBC Capital Markets analyst Joseph Spak.

— CNBC's Michael Bloom and Evelyn Cheng contributed to this story.

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