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    Tesla's new truck could hit Bharat Forge in long term: Analysts

    Synopsis

    After more than a decade of making cars and SUVs, Tesla unveiled its new electric semi tractor-trailer last weekend.

    ET Bureau
    MUMBAI: Tesla's new electric semi-truck could hit the top-line and bottom-line of India’s auto component maker Bharat Forge in long term, according to analysts.

    After more than a decade of making cars and SUVs, Tesla unveiled its new electric semi tractor-trailer last weekend. This truck, according to Tesla’s CEO, is capable of travelling 804 kilometres on an electric charge — even with a full 36,000kg load — and will cost less than a diesel semi considering fuel savings, lower maintenance and other factors. The production of this electric truck is expected to begin in 2019.

    Truck component sales formed around 44% of Bharat Forge's revenues of which 57% is export to North America is a key market. Within that segment, half the revenues come from crankshafts and these are not required in an electric truck, thus 20% plus revenues are at risk if the global truck fleet moves to electric, according to leading global brokerage.

    “Tesla’s electric truck is more impressive than expected. Bharat Forge’s crankshaft business will be at risk if truck goes down the electric route” said a Morgan Stanley note on Monday.

    Crankshafts, an engine part that turns the linear movement of a piston into rotary motion.

    As global crude oil prices rise, the electric truck is a feasible option, Morgan Stanley said. Semi would be 20% cheaper than a lone-running diesel truck and will entail half the costs when compared to a diesel truck in a platoon, the bank said.

    Shares of the Bharat Forge which surged 51% so far this year ended flat at Rs 697.80 on Monday. Morgan Stanley maintained an ‘Equal Weight’ on Bharat Forge and set a target price of Rs 659, about 5% lower than the current market price.

    However, some analysts said that the manufacturing of electric truck is at very initial stage and its impact on Bharat Forge or any other auto component companies could be felt after few years of actual launch.

    “Though the launch of electric truck would be a negative news for Bharat Forge, but the actual impact on the Pune based company would be felt atleast 5 years after the actual launch,” said Suraj Chheda, analyst, IIFL.

    Mumuksh Mandlesha, auto analyst at Quant Broking too agree that there won’t be any impact on the company’s sales in the near term due to the electric truck.

    Company management expects India to be ahead of regions like Europe in the electric vehicle space.

    However, according to management, company is already developing prototypes for electric locomotives since the last year for global companies. Also the management is of the opinion that until the weight issue gets resolved the sight to electric vehicle might be difficult.


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