Tesla Targeted Wrong Market

Although Tesla’s new electric trucks line is bound to be a seller, an analyst at Barclays believes that the company is aiming its product at the wrong market.

Michael Cohen, an analyst at Barclays, released the report, which states that an increase in regulatory pressure and certain anticipated policy changes could force freight carriers to adopt lower emission power trains in their vehicles.

This in turn would mean that Tesla’s new semitrailer would be aimed at the part of the market that is the least likely to transition to electric drivetrains.

The analyst cited a number of factors, which could cause the restraint in transition. These include constraints on the price range and the payload capacity of the vehicle.

However, Cohen considered the political aspects of the proposition. He stated that on an average, heavy duty vehicles like trucks are known to be the biggest polluters. Although these vehicles make up only 10% of traffic, they are responsible for almost 40% of all vehicle emissions.

As such, it is difficult for politicians to sanction the manufacture and promotion of more fuel-based trucks.

Cohen’s assessment holds with global norms, which show that over 200 cities have some kind of emission regulation in place. In fact, major cities like Madrid, Paris, and Mexico City have gone ahead and announced bans on diesel engines.

The U.S. has also set regulations to improve fuel efficiency in vehicles, while others like China have placed restrictions on fuel consumption.

The European Union has stated that it will soon develop a carbon dioxide standard for all heavy duty vehicles, which will come into play in the first half of 2018. All these moves in turn create a greater market for Tesla’s electric truck.

However, it means that policy changes play a greater factor in the sale of electric cars than the public’s desire for the cars themselves.

Policies, are certainly not a variable that can ever be trusted.

Cohen was also apprehensive about the Tesla’s plans to enter the long-haul trucking market.

His apprehension was echoed by industry veteran and CEO of Wrightspeed, Ian Wright who stated that long-haul trucks were the “worst” market for a battery run vehicle to invest in.

Tesla, however, chose not to comment on its investment.

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