Tesla Model; Semi Adds 10% to 2023 Revenue

As of today, our model now reflects both the Semi and Roadster. We expect combined these two segments will add about 2% to the Street’s 2020 revenue and about 10% to 2023 revenue, almost entirely from the Semi. Given Tesla’s history of missing manufacturing deadlines, the vast majority of Street estimates currently do not factor in the Semi or the Roadster.

Impact to model. We believe Tesla will begin shipping Semi’s in the Jun-20 quarter, later than the 2019 target Musk laid out at the Semi unveil event earlier this month. In 2020, we believe Tesla will ship 3,250 Semi’s, and account for ~2% of total revenues, but as demand begins to inflect we anticipate the company will ship 40,000 units by 2023. Assuming a $171k average selling price, we believe in 2023 the Semi can generate $6.8B in revenue and account for ~9% of total sales.  We expect the Roadster to add about 1% to 2023 revenue.

Expect Semi profit margin to be similar to overall company. There has been little color provided on the margin profile of the Semi.  Our belief is the margin profile will be similar to Tesla’s current margin. This is based on the positive margin effect of the Semi using motor and battery components similar to the ones used in the Model 3 and benefit from economies of scale, and the negative margin impact of building a low volume Semi cab. We believe these two forces will offset yielding margins inline with current levels. Since we believe the Semi can add ~10% to our original revenue estimate, we believe the company will be able to capture most of this additional upside on the bottom line. Our new 2023 EPS is $16.62, which is up from our prior estimate of $15. Link to model here.
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