Tesla (TSLA) Semi Production Ramps Up With Massive 2,500-Truck Contract

TLDR

• Tesla launched mass production of its electric Semi at a newly built Nevada facility capable of manufacturing 50,000 units annually.
• Freight coalition ZET SCALE awarded Tesla the lead role in a 2,500-truck contract, with contributions from PACCAR, Volvo, and RIDE.
• Additional recent contracts include 500 units from Einride and 370 from WattEV, demonstrating increased commercial demand.
• TSLA shares have declined approximately 16% year-to-date, with Wall Street’s consensus target suggesting around 3% potential gain.
• BYD’s ETT 44 electric truck poses new European competition as Tesla prepares its Semi launch overseas next year.

Tesla shares are trading around $378 following a challenging year for the automaker, posting roughly a 16% decline since the start of January. This downturn persists despite the company reaching a significant manufacturing achievement with its electric Semi truck.

Tesla, Inc., TSLA

The electric vehicle manufacturer launched high-volume Semi production this week at its newly constructed Sparks, Nevada manufacturing site. Chief Executive Elon Musk shared the announcement through a prerecorded video during the facility’s official opening ceremony on September 24.

Located adjacent to Tesla’s 4680 battery cell manufacturing lines at Gigafactory Nevada, the new plant covers 1.7 million square feet. When operating at full capacity, the facility is engineered to build as many as 50,000 Semi trucks annually.

The Semi made its debut in 2017. While limited customer deliveries started in 2022, scaling up to full production faced repeated delays stemming from supply chain disruptions and battery availability challenges.

Customer deliveries from the new production line are scheduled to commence this week. The company has not disclosed specific current production volumes.

Historic Contract From Freight Coalition

ZET SCALE, a recently established freight consortium, has selected Tesla as the primary supplier for a 2,500-truck electric Class 8 vehicle procurement. This single order could potentially double the total number of battery-powered heavy-duty trucks operating across American highways.

While Tesla serves as the lead supplier, the coalition is diversifying its procurement. PACCAR’s Kenworth division, RIDE, and Volvo Group’s Volvo brand will contribute additional vehicles to fulfill the complete order.

The fleet deployment will occur gradually across multiple years, distributing trucks to 10 regional distribution centers spanning Los Angeles, Houston, Chicago, Atlanta, and the New York metropolitan area. Tesla’s allocation, even when divided among multiple suppliers, is expected to exceed its previous largest Semi contracts.

Previous major orders include a 500-truck commitment from Swedish logistics technology firm Einride announced in August and a 370-unit deal with WattEV from May. Additionally, PepsiCo and Microsoft participate in a separate 2,500-truck procurement announced this week through transportation consortium Catalyst Mobility.

PepsiCo became an early Tesla Semi adopter and currently operates the vehicles within its logistics network. DHL and US Foods have also integrated the trucks into their fleets.

European Market Faces New Rivalry

Tesla’s value proposition emphasizes operational cost savings. Musk has highlighted that electricity delivers lower per-mile costs compared to diesel fuel, which represents the primary consideration for fleet managers evaluating vehicle transitions.

The long-distance Semi variant achieves up to 500 miles per charge, while the base model provides 325 miles of range. Tesla also intends to integrate its autonomous driving technology into the Semi platform in future updates.

However, European markets present fresh competitive challenges. BYD introduced the ETT 44 at the IAA Transportation exhibition—a 44-tonne electric tractor delivering up to 1,000 horsepower with approximately 372 miles of range.

Tesla’s European Semi rollout is scheduled for next year, though initially limited to the standard-range configuration. This strategy could position Tesla at a range disadvantage relative to BYD’s European offering.

Financially, Tesla’s automotive gross margin excluding regulatory credits decreased to 16.3% in the most recent quarter. Energy storage margins experienced a steeper decline, dropping to 20.4% from 39.5% in the prior-year period.

TSLA holds a Moderate Buy consensus on TipRanks, supported by 11 Buy ratings, 12 Hold ratings, and two Sell ratings. The consensus price target of $388.85 suggests approximately 3% upside potential from current trading levels