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Tesla’s Electric Truck A Risk For Bharat Forge, Says Morgan Stanley

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It’s not just truckmakers and oil producers that Elon Musk’s electric truck Semi threatens to steamroll. Tesla Inc. could shake up the auto components industry, and the ripples may hit India’s Bharat Forge Ltd.

At least Morgan Stanley thinks so. The Semi may have “underlying implications” for the maker of crankshafts, an engine part that turns the linear movement of a piston into rotary motion. That’s because electric trucks require not such part, the bank said in a note.

Bharat Forge gets half its truck parts sales from crankshafts. Which means, over 20 percent its revenue could be at risk, Morgan Stanley said.

Tesla’s Semi, expected in 2019, could be the biggest challenge yet for the global road freight industry. It will have an estimated driving range of more than 800 kilometres as opposed to analysts’ expectations of 320-480 km, Bloomberg reported. The truck can be charged within 30 minutes using a mega charger, Musk said at the launch last week.

As global crude oil prices rise, the electric truck is a feasible option, Morgan Stanley said. Semi would be 20 percent 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 Pune-based Bharat Forge rose as much as 1 percent before noon today compared to a 0.57 percent rise in the benchmark NSE Nifty Auto Index. Morgan Stanley maintained an ‘Equal Weight’ on Bharat Forge with a price target of Rs 659—a downside of nearly 6 percent from the last price given the “the cyclical nature of business and electric vehicle-related risks”.

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