Tesla’s Semi Truck Could Unlock $17 Billion in Software Revenue, Morgan Stanley Says

Tesla is moving to accelerate its long-awaited entry into the heavy-duty trucking sector, a shift that Morgan Stanley analysts believe could capitalize on record-high diesel prices and unlock substantial software revenue. The investment bank has revised its outlook on the electric vehicle maker, highlighting the Semi truck as a potential wildcard that is transitioning from concept to credible market competitor.

High-volume production of the fully electric Semi began in April following its introduction in 2017. CEO Elon Musk has stated that Tesla intends to roll out self-driving versions of the truck by 2027. The company is scheduled to hold an inauguration event on September 24 at its Nevada manufacturing facility, which has a targeted production capacity of 50,000 units annually. Major clients including Walmart, PepsiCo, and Swedish electric-truck manufacturer Einride—which plans to deploy 500 Semis—have already placed orders.

Analyst Andrew Percoco described Tesla as a “credible emerging competitor” in autonomous trucking, noting that the company’s previously viewed status as a potential disruptor is now gaining tangible traction. With diesel prices averaging $6 per gallon in the U.S. this week according to AAA, the economic case for electric and autonomous freight is strengthening.

Percoco estimates that an autonomous fleet could generate profits six to eight times higher than those of human-driven fleets. He calculated that Tesla could earn between $12,000 and $18,000 monthly per vehicle through its Full Self-Driving subscription model, assuming specific mileage thresholds are met. If Tesla captures 13.5% of the market by 2040, this could translate into a $17 billion revenue stream from software alone.

“Tesla Semi represents an underappreciated driver of earnings growth through 2040,” Percoco wrote. Consequently, he raised his price target for Tesla’s bull case to $840 from $820, while maintaining a neutral rating on the stock. The base-case price target remains at $400. Tesla shares traded around $365 on Friday.

However, Morgan Stanley analyst Ravi Shanker cautioned that autonomous trucking remains largely a “promise” until commercial production ramps up in 2027. He noted that most vehicles currently generating revenue are effectively prototypes. Additionally, Tesla has temporarily deprioritized Semi autonomy features to focus on its newly launched Cybercab and other vehicle programs, with Musk indicating in July that the Semi should not become a distraction in the coming months.

Beyond Tesla, Morgan Stanley identified Aurora Innovation and Kodiak AI as strong contenders in the autonomous trucking space. The firm projects Aurora will hold 22.5% of the market by 2040, while Kodiak is expected to capture 8.8%. Accordingly, Shanker raised Aurora’s price target to $18 from $14, maintaining a buy rating, and initiated coverage on Kodiak with a $9 price target and a neutral equivalent rating. Both stocks saw gains in recent trading.