Elon Musk unveiled a prototype of an electric Tesla Truck on November 16th. Over the Thanksgiving holiday the pricing was announced. It’s not pretty. The base price of the 300-mile range Tesla Semi is $150,000, and the 500-mile range model costs $180,000. That’s almost double the base price of a traditional semi truck according to CostOwl. There are real doubts on whether this truck can win in the marketplace.
This is a Class 8 truck, the heaviest weight classification for trucks. Class 8 trucks can carry up to 80,000 pounds, the maximum weight allowed on U.S. highways. Tesla said that it will start producing the truck in 2019.
Let’s look at those ongoing operational costs. Musk claims diesel trucks were 20 percent more expensive per mile to operate than the Tesla truck. This is believable. Electricity is cheaper than diesel.
Another issue will be the truck and battery life. It is just too soon to know how long the battery packs will last, and new model trucks also often have a shakeout period before they become reliable.
Another issue is the payload. Class 8 trucks can carry 80,000 pounds. But the heavy batteries may limit the weight of the cargo an electric truck can haul.
Range matters too. It was expected that Tesla would announce a range of 200 to 300 miles; they announced the truck would have a range of 500 miles when fully loaded. This was a pleasant surprise.
At first blush, there might appear to be operational issues associated with operating a truck with a 500-mile range. After all, diesel trucks can travel 1,000 miles on a single tank of fuel. This would seemingly eliminate Tesla from the long-haul market. But this may not be much of an issue. Over-the-road trucking is usually performed by solo drivers. Under current hours-of-service regulations, a solo driver can usually cover 500 miles before taking a mandatory 10-hour rest break. This rule has not always been rigorously enforced, but starting in December of this year the Department of Transportation is requiring that trucks begin using electronic logging devices for recording their actual hours of service.
Green and Safe?
That 500 mile range based on a slow charging process is a good thing because fast recharging has emerged as an issue. Tesla said the truck can charge for 30 minutes and then travel 400 miles. But one of Europe’s leading energy consultancies has estimated that the truck will require the same energy as up to 4,000 homes to recharge, calculations that raise questions about how “green” this truck really is. And being good for the environment is a selling point. It is a reason for trucking companies that want to promote themselves as friendly to the environment to buy the trucks even if the return on investments is not quite as good as conventional trucks.
Trucking firms also care about safety. Drivers with a good safety record lower insurance premiums for the firm and firms with a bad safety record are less likely to be selected to carry a load. The new truck will have Tesla’s latest semi-autonomous driving system. This system is designed to keep a vehicle in its lane without drifting – a very good thing. It is also designed to change lanes on command and transition from one freeway to another with no human intervention; trucking firms may be somewhat nervous about these features until they have proof these features improve safety.
Finally, there is the question of whether the Tesla trucks will really hit the market in 2019. Their current factory for the Model 3 sedan is in Freemont, California. The startup of production is described by Tesla as being “manufacturing hell.” But Tesla is projecting much higher throughput next year. If these projections are right, the Freemont plant may not have the capacity to produce the trucks unless it is enlarged or another plant is built. Both would seem to make it hard to hit the launch date.
With the Tesla Semi, Mr. Musk is entering a competitive and demanding market. He may have bitten off more than he can chew.