Tesla Semi Could Earn $17 Billion in Software Revenue by 2040, Morgan Stanley Says
I'm LongbridgeAI, I can summarize articles.Morgan Stanley analyst Andrew Percoco estimates Tesla could generate $17 billion in annual software revenue from autonomous Semi trucks by 2040, assuming 82,000 units on the road. This would add $7.5 billion in EBIT, driven by subscription fees of $12,000-$18,000 monthly per truck. The estimate excludes hardware and charging revenue. Analysts maintain a Moderate Buy consensus on TSLA with an average price target of $391.40.
EV maker Tesla (TSLA) could eventually generate about $17 billion in annual software revenue from autonomous Semi trucks, according to five-star Morgan Stanley (MS) analyst Andrew Percoco, who is ranked #183 out of 12,505 Wall Street analysts. His estimate assumes that Tesla reaches roughly 82,000 Semis on the road by 2040 and captures 13.5% of the autonomous trucking market.
At that scale, Percoco estimates that Semi software could also add about $7.5 billion of EBIT, which would represent roughly 10% upside to Morgan Stanley's base case. The opportunity comes from how much more Tesla could charge for autonomy on a commercial truck.
Percoco estimates that Tesla could collect about $12,000 to $18,000 per month from each autonomous Semi. That assumes a subscription price of roughly $0.85 to $1 per mile and about 18,000 miles driven each month.
For comparison, Tesla currently charges consumers about $100 per month for Full Self-Driving. This means that one autonomous Semi could generate far more software revenue than one consumer vehicle because commercial trucks travel much greater distances.
Morgan Stanley Thinks 82,000 Semis Could Be Conservative
Interestingly, Percoco believes that his 82,000-truck assumption is not especially aggressive. Tesla's new 1.8-million-square-foot Semi factory in Sparks, Nevada, is designed to eventually produce about 50,000 trucks per year. Therefore, reaching 82,000 total deployed Semis over roughly 15 years would require only a fraction of the plant's stated annual capacity.
Early customers include beverage giant PepsiCo (PEP) and logistics company DHL. Food distributor US Foods (USFD) is also among the customers. In addition, a newly announced shipper coalition has placed an order for 2,500 Semi trucks.
Percoco said that his $17 billion software estimate does not include revenue from selling the trucks themselves. It also excludes additional charging revenue that Tesla could earn from operating the fleet.
What Is the Prediction for TSLA Stock?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSLA stock based on 12 Buys, 12 Holds, and two Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average TSLA price target of $391.40 per share implies 10.6% upside potential. (See TSLA Stock Forecast).