Does the world need a Tesla truck?
On the evening of November 16th, the world will get its first look at Tesla’s next big project: an all-electric semi truck with a rumored range of up to 300 miles. The big question is, does the world actually need this?
Elon Musk certainly thinks so. Earlier this week, he tweeted that the truck would “blow your mind clear out of your skull and into an alternate dimension.” Which seems like a totally fine and not at all hyperbolic way to manage expectations.
But the freight industry seems ambivalent at best. Trucking leaders say they welcome Tesla’s entry into the market, while acknowledging that their industry as a whole is clearly trending toward some form of electrification. But they also point out that truck manufacturers and operators have already embraced alternative fuel technologies, from natural gas to propane to hydrogen fuel cells. And battery-powered electric vehicles will face steep challenges, from weight restrictions to the availability of convenient charging stations, before they can be widely adopted.
“We’ve got a lot of alternative fuel technologies that are already being deployed, so adding electric into the mix is certainly welcomed,” said Chris Spear, president and CEO of the American Trucking Associations. “It is the future. Tesla has certainly made their mark on the passenger vehicle side; it was just a matter of time before they entered our fray.”
“Fray” is the perfect way to describe what Tesla is about to enter. Rather than being first to market with an all-electric vehicle like it more-or-less managed to do with passenger vehicles, the automaker is joining what has increasingly become a crowded space. Everyone from tiny startups to established OEMs (original equipment manufacturers) are taking a stab at battery-electric trucking.
Everywhere you look, there are new alternatives to fossil fuel-consuming vehicles being rolled out: electric delivery trucks, vehicles powered by liquid propane, and hybrid pickups. But not everyone’s buying them. Thanks to low gasoline and diesel prices, as well as an administration in Washington that’s been signaling its intent to walk back from federal environmental regulation, there’s little incentive for truck operators to transition to expensive alternative fuel powertrains.
“We don’t get many calls from our customers any more asking for propane or natural gas trucks,” Roy Hiatt, fleet sales manager for Isuzu Commercial Truck of America, told Trucks.com during the 2017 Work Truck Show in Indianapolis last March.
But that hasn’t stopped the industry from chasing the zero-emission dream. Bosch is partnering with Nikola Motors to develop a Class 8 hydrogen-electric truck by 2021. Daimler recently unveiled an electric light-duty truck called the Fuso eCanter. And last August, Indiana-based Cummins, a leader in diesel and natural gas engines, revealed Aeos, a fully electric Class 7 truck with a range of about 100 miles on a single charge.
Julie Ferber, executive director of electrification at Cummins, said the Aeos was designed for a 100-mile-a-day duty cycle because the technology for longer hauls simply doesn’t exist yet. “Long haul is not ready for electrification yet,” she said. “Our calculations are that it would take something like 19,000 pounds of batteries to do 600 miles on a single charge. And from a cost and a weight perspective, that does not make sense.”
Tesla is no doubt aware of these limitations. Early spec reports pegged its semi’s range in the 200- to 300-mile area, indicating that the truck would be intended for short day trips. There have also been reports from suppliers that Tesla is interested in equipping its trucks with self-driving technology. (Wall Street investors will be looking for some new version of Autopilot to help assuage their concerns that Tesla is lagging in the self-driving world.)
Tesla’s truck is a key component of Elon Musk’s “Master Plan Part Deux,” in which he vowed to expand the company’s lineup of vehicles to “cover the major forms of terrestrial transport.” That includes an all-electric crossover (rumored to be the forthcoming Model Y), a minibus, a pickup truck, and a semi truck. “We believe the Tesla Semi will deliver a substantial reduction in the cost of cargo transport, while increasing safety and making it really fun to operate,” Musk wrote last year.
But since it was unveiled last year, the Master Plan has revealed itself to be rather fluid. Musk appeared to walk back plans for the minibus in a recent earnings call. And the Model 3, the company’s first mass-market vehicle, has run into some serious production snags, raising questions about the company’s ability to handle its current commitments.
Adding up all the teases and comments, it seems clear that the truck will be cool. It is Tesla, after all. “We just thought, ‘What do people want?’” Jerome Guillen, the head of Tesla’s truck project, told Rolling Stone for its cover story on Musk this week. “They want reliability. They want the lowest cost. And they want driver comfort. So we reimagined the truck.”
Of course, later in the article, Musk’s characteristic self-deprecation shone through. While examining an unspecified “a driver-comfort feature,” he says, “Probably no one will buy it because of this,” he quipped. “But if you’re going to make a product, make it beautiful. Even if it doesn’t affect sales, I want it to be beautiful.”
Driver comfort is an interesting angle for Tesla to highlight, especially considering that drivers won’t be the company’s target audience. Fleet operators looking to keep costs low are a different audience altogether. And according to trucking experts, interest in alternative fuel trucks has fallen after a brief spike from 2011 through 2013, when fuel prices approached $4 a gallon nationally.
Speaking of fuel, it’s unclear how Tesla will address the serious gaps that exist in the current charging infrastructure. As of June of this year, there were around 16,000 EV charging stations with about 44,000 connectors in the United States. Most of these are Level 2 at best, with the faster DC charging stations, like the Tesla Superchargers, only numbering 2,172 stations with 5,992 outlets. By comparison, there are about 168,000 gas stations. That’s a level of convenience and reliability that will be seriously hard to beat.
Tesla’s semi may have great range, the latest technology, and a sleek look, but according to ATA’s Spear, none of that will matter if drivers are scrambling to find places to charge. “If you can’t fill it up, you’re not going to buy it,” he said.
That said, the trucking industry has shown signs of growth in recent years. Despite a dearth of drivers, private companies in the general-freight trucking industry, on average, increased sales by about 7 percent, according to a recent analysis. But the margins are razor thin, and have been for decades. Your average Class 8 truck costs around $120,000. But if Tesla is aiming at 200-300 miles of range, its looking at $100,000 in battery costs alone, which could bring the entire vehicle’s sticker price up to $250,000. That might be cost prohibitive for many fleet owners, so Tesla will need to make a convincing argument that it’s per-mile costs can beat its gas-guzzling competitors.
“The truck industry is at least an order of magnitude more complex than cars,” said Mike Roeth, executive director of the North American Council for Freight Efficiency. “That’s due to the customer requirements of these trucks, as well as the regulations varying from state to state. A truck in Michigan is different than a truck in Texas.”
He added, “The truck builders have to build a very complex set of specs. So when you think about Tesla and passenger cars, the variation you’d get in a Tesla car is much lower than you do in others, because they want to focus on scale. And that’s a real hard thing to do in trucking. But I don’t know. They might be able to play a niche [role]… we’ll see. But that’ll be hard. Because the truck companies will want what they’ve had in the past, and they’ll want it specific to their needs.”
Tesla’s best bet would be to market their trucks to short-haul delivery operations. A day cab doesn’t need huge range, probably no more than 150–200 miles a day. For things like port operations and other local hauling, an electric truck isn’t a bad solution. That’s why Cummins, Daimler, and others are pursuing short-haul electric vehicles. Unfortunately for Tesla, reliability and durability are crucially important to the operators of these trucks. Class 8 semi trucks can accumulate hundreds of thousands of miles in their useful life. And Tesla doesn’t have a great reputation on this criteria.
Tesla is a newcomer in the trucking industry, and not one with a sterling track record in quality assurance. So far, Tesla’s customers have been limited to wealthy car owners — the type with garages full of backup vehicles if their Tesla breaks or requires maintenance. In the trucking industry, vehicle uptime is critical. Uptime is money. If a truck breaks or is in for maintenance, it isn’t earning its keep.
It’s probably best to view Thursday night’s truck-and-pony show Hawthorne as a bit of savvy marketing move, plus a down payment on the future of transport. “Given the production issues around Tesla and its significant cash burn, it might be easy to discount this announcement as more marketing than substance, but I expect Tesla will build this truck eventually,” said Michael Ramsey, an analyst at Gartner. “If the future is electric — and it likely will be at some point — then laying the groundwork now is not a waste of time.”