It’s been a tough few weeks for Tesla, with production issues, lawsuits and analysts speculating that the company is running out of cash and will need to raise capital before the end of the year to continue. Now, Searching for Alpha author John Engel suggests that the long-awaited Tesla Semi project may be dead.
The Tesla Semi was unveiled in November 2017 to great fanfare and intrigue. Did Tesla have the magic ingredient to make a fully electric truck viable that has so far eluded so many others? A series of public announcements from companies like Pepsi, Anheuser-Busch, and UPS followed, suggesting that maybe — just maybe — this truck would revolutionize the industry.
After the initial lights faded, industry experts began crunching the few numbers on the truck — and things weren’t always good. However, many believe that the all-electric 8 Series truck could work in certain applications, and there is still optimism that Tesla can achieve this.
Then came the Model 3. The Tesla Model 3’s production woes have been well documented, and the long-awaited car has hit one hurdle after another as Tesla and Elon Musk try to solve their problems.
In the company’s most recent earnings call, Engel points out that Musk never mentioned the Tesla Semi — the company’s favorite car just months ago — until he was specifically asked about it by CNBC’s Phil LeBeau, who wanted to know about its reservation numbers and pricing. How extensive was the development process?
Musk’s answer was amazing.
“I actually don’t know how many reservations we have for the Semi. About 2,000? Okay. I mean, we haven’t really tried to sell the Semi. It’s not like there’s a sustained sales effort, so the sales requests for the Semi are kind of opportunistic, and they’re actually companies approaching From us “Yes, it’s not something we think about much,” Musk replied.
For Engel, the admission that Tesla isn’t actively selling the Semi is obvious.
“If it looks like the Semi can capture a significant market, Tesla will go ahead with it,” he wrote. “This would not necessarily require huge capital expenditures to build a production facility – not at first anyway. But the company is expected to at least tout the market opportunity and continue to promise that development will come soon. Instead, investors have remained somewhat strangely silent.
So what is the status of the similarity?
Last week, Semi was sued by Nikola Motor, which claims Tesla infringed three of its patents in the Semi’s design. This lawsuit seeks compensation in the amount of two billion dollars. Additionally, Anheuser-Busch announced that it will purchase up to 800 Nikola Two tractor models over the next seven years as it works to convert its entire dedicated fleet to alternative energy.
With all the bad publicity surrounding Tesla, many are now wondering if Tesla itself will survive.
To do that, Tesla may have to shut down the Semi project and direct that money to other needs rather than trying to compete in an arena full of legacy companies with technology that may still be several years away from being viable in the world. Category 8 market.
Engel believes that with only about 2,000 orders for the Semi — a total he calls “anemic” — and Musk’s announcement that Tesla will cut its capital expenditures budget from $3.4 billion to less than $3 billion, Engel gives reason to believe the Tesla Semi is anything but. priority.
“The company has apparently ‘significantly reduced its capex forecast by focusing on critical near-term needs.'” In other words, it is cutting costs and pushing back growth projects to conserve cash during the still-painfully slow Model 3 ramp, he wrote. : “With Tesla’s net working capital deficit at a record high, the desire to withdraw from expensive ventures makes sense from a financial perspective,” noting that “it now seems clear that Tesla has almost abandoned the project — or at least put it on hold.” In his place.” It went back to the back burner.
