Issue link: http://resourceworld.uberflip.com/i/937377
F E B R U A R Y / M A R C H 2 0 1 8 www.resourceworld.com 47 TESLA'S CHALLENGE Tesla is an amazing company at design- ing new products. The Tesla Semi truck is no exception. Tesla is not good at making money. Consequently, the financial com- munity is extremely polarized in its views on the stock. The bulls buy into the vision of Tesla leading a disruption of the trans- portation industry in much the same way that Apple disrupted the cellphone indus- try. Elon Musk is the new Steve Jobs in this view. The bears view Tesla as a financial black hole of negative cash flow and accelerating losses. In this context the bears point out that for the Tesla Semi truck to succeed, Tesla will now have to spend heavily to build out a network of Megachargers. This will add to the financial burden Tesla must shoulder in the next few years and should not be viewed as a positive in the bears' view. What is my view? I think this is a prod- uct that will succeed in markets where a transport truck is needed to shuttle back and forth in short to medium range trips where an initially limited network of Megachargers will meet the user's needs. It will not be as important to Tesla as the Model 3, which I view as critical to Tesla's future success. I think the Tesla Semi truck will change the transporta- tion market incrementally and over time. The announcement of the Tesla Roadster was probably the more important product announced at the unveiling. Tesla remains a fascinating company that needs to demonstrate that its business model actually works. It needs to drive down the cost of lithium ion batteries while at the same consuming vast amounts of battery materials such as cobalt, nickel, lithium, manganese and graphite. It needs to demon- strate economies of scale or there will be a reckoning in the market in the next year. Ultimately, it will not matter whether Tesla succeeds or fails in its attempt to become a mainstream auto and truck manufacturer in terms of the impact Tesla is having on transportation. It has already disrupted everyone's thinking about the potential of electric vehicles in a greener future of transportation. Other auto manu- facturers are going to meet Tesla head on with a raft of new vehicles in the next two to three years, including Volkswagen, the Thor Trucks ET-One and the Chanje panel van. Some have already introduced electric trucks such as E-Fuso (part of Daimler) and BMW. In a recent development, Elon Musk said Tesla is planning to produce a pickup truck that would be about the size of the popular Ford F-150 or perhaps a little bigger. He was vague regarding the tim- ing but said the pickup would come after a sport utility vehicle known as Model Y attains production. "I promise that we will make a pickup truck right after Model Y," Musk Tweeted. "Have had the core design/engineering elements in my mind for almost five years. I am dying to build it." n