Trucking Industry Both Skeptical and Wary of Tesla Truck Plans

April 18, 2017 by Jerry Hirsch, @Jerryhirsch

The trucking industry views plans by Tesla Inc. to develop an electric semi-tractor with a mix of skepticism and trepidation.

At first glance, the hurdles the Palo Alto, Calif., automaker must overcome to launch an electric big rig appear huge.

There is almost no market for electric trucks now. The highway charging network for heavy-duty vehicles does not exist. The weight of the batteries that provide power to a semi-tractor eat into precious cargo load capacity. Diesel fuel is cheap, keeping a lid on the cost of operating a conventional truck.

But Elon Musk, Tesla’s outspoken chief executive, is perhaps the world’s biggest advocate of electric-powered transportation. He’s a known disruptor, pushing autonomous driving features into his cars and forcing the automotive industry to chase innovations such as company-owned stores and over-the-air vehicle updates. As the chief executive of SpaceX, Musk pushed the space company to become the first to land a reusable rocket booster on a barge in the middle of the ocean.

That’s why the trucking industry took notice when Musk tweeted last week that Tesla will unveil an electric semi-truck in September.

Analysts say Tesla could well present a problem for established truck manufacturers, but one that will take time to roll out.

“Think what you will of Tesla; but, if nothing else, Elon Musk—and by extension, Tesla—is a great disruptor,” Michael Baudendistel, a Stifel Financial Corp. analyst, wrote in an investor report Monday.

“Given the happily consolidated nature of the domestic truck manufacturing market, the prospect of a new competitive threat, from a company with previous success in disrupting established industries nonetheless, is undoubtedly unwelcomed news” to vehicle manufacturers such as Daimler, Paccar, Volvo and Navistar as well as powertrain suppliers such as Cummins, Baudendistel said.

But hurdles could short circuit Tesla’s menace to the truck manufacturing industry, he said.

“We’re a long way out from a real threat,” Baudendistel said.

For now, Tesla is mired in rapidly increasing its automobile assembly and battery manufacturing capacity so it can launch its Model 3 sedan. The compact electric car is scheduled to go into production this year. It is the first vehicle Tesla is targeting at the mass market and is expected to have a starting price of around $35,000.

Tesla CEO Elon Musk introduces the falcon wing door on the Model X electric sports-utility vehicles during a presentation in Fremont, Calif.

Tesla CEO Elon Musk introduces the falcon wing door on the Model X electric sports-utility vehicles during a presentation in Fremont, Calif. (Photo: Reuters)

Tesla last year delivered just 76,000 of its high-end Model S sedans and Model X SUVs but plans to increase overall production to 500,000 vehicles in 2018.

Meanwhile, Tesla is working on other vehicles, including a new sports car, a Model Y compact SUV, a small bus and a pickup truck.

Based on the rollout of Tesla’s other vehicles, it will be many years before Tesla is building heavy-duty trucks, Baudendistel said.

And before Tesla could launch truck production, it would have to solve “a litany of significant issues,” he said.

  • Price is at the top of the list. The expense compared with a diesel truck will be large. “Tesla cars don’t need to prove an economic case to their buyers; Tesla trucks will,” Baudendistel said.
  • There’s no place to get an electric truck serviced and repaired. “This has been an inconvenience for Tesla cars,” Baudendistel said. “For trucks though, if the wheels ain’t turnin’, you ain’t earnin’.”
  • There is no place to charge a long-haul electric truck. “You can’t put the cart before the horse,” Baudendistel said. “Widespread adoption hinges on the availability of fueling stations, and the infrastructure built for Tesla autos was not designed for Class 8 trucks.”
  • Batteries are heavy and range is critical. “We believe at least 600-800 miles of range is needed for the truck to be competitive in the line-haul market,” Baudendistel said. “We have heard indications that the Tesla semi’s range will be 200-300 miles, which would limit its addressable market.”
  • Refueling electric vehicles is time consuming. “Battery swapping and refueling overnight are both options which would require significant additional investment in infrastructure and logistics,” he said.

Natural gas trucks, a promising green technology that has fewer infrastructure and fueling obstacles than electric-drive vehicles, provides a sober lesson.

“The pace of change is slow in the trucking industry,” Baudendistel said. “After years of optimistic expectations that natural gas would overtake diesel, today it accounts for less than 5 percent of the North American Class 8 market.”

The trucking industry is watching Tesla carefully, but there are still too many unanswered questions to know if it can be successful or if any electric trucks can make inroads, Daniel Murray, vice president of research for the American Trucking Research Institute, told Trucks.com.

“No one has clarified for us how much extra battery weight will accrue, which of course decreases revenue weight,” Murray said.

“The very low fuel prices we see now and will for a long time are making most alternative-fuel vehicles appear to be very expensive,” Murray said.

Other analysts are also skeptical.

“There is a certain amount of hype to Tesla’s announcement,” said Antti Lindstrom, an analyst at global research firm IHS Markit. “It doesn’t seem that long-distance trucking is ready for electrification right now.”

Electric vehicles will make up just 1 percent of the entire trucking market by 2020, according to the industry research firm. That will grow to 10 percent a decade later. Electric trucks will make up higher percentages of overseas markets — up to 10 percent in the European Union and Japan by 2030 and as much as 12 percent in China, IHS estimates.

Lindstrom does expect some segments of the heavy-vehicle market to adopt electric powertrains.

The U.S. arm of Chinese vehicle manufacturer BYD is developing electric trucks to move containers around at ports and distribution centers. Those trucks require a far smaller range than a long-haul big rig and can be recharged at a central facility. They don’t require a network of charging stations along the nation’s highways.

Some municipalities are adding electric buses to their fleets.  But the architecture of a bus is different from a truck, making it easier to electrify, Lindstrom said.

“The structure of a bus, with its long wheelbase, allows you to put a lot of batteries underneath,” he said. “You don’t have that in a semi-truck.”

Buses also carry people, who are much lighter than most of the loads long-haul trucks transport.

“It is a different operating environment,” Lindstrom said.

Nikola Motor, not Tesla, is the alternative technology company best positioned to crack the long-haul truck market in the near term, Lindstrom said.

Headquartered near Salt Lake City, Nikola is developing a hydrogen fuel cell truck and plans to build a highway network of fueling stations. Hydrogen allows for fast fueling like diesel trucks. The fuel cell can power an efficient electric powertrain without saddling a big rig with large, heavy battery packs.

Nikola Motors' hydrogen fuel cell truck

Nikola Motors’ hydrogen fuel cell truck. (Photo: Nikola Motors)

But even Nikola’s venture is risky and depends on its ability to create a network of fueling stations, Lindstrom said.

Although skepticism abounds, it’s never safe to predict that Tesla and Musk will fail. Critics have predicted Tesla’s demise for years, yet it continues to grow. As of Monday, its stock market value was $50 billion, about equal to General Motors’, even though GM manufacturers and sells about 10 million more vehicles annually than Tesla does.

“We are keeping a watchful eye on Tesla as a new entrant, but we are far from convinced that a Tesla electric semi-truck will be a major threat – especially in the next few years,” Baudendistel said. “Still, we wouldn’t count Tesla out long-term.”

Related: Workhorse W-15 Electric Pickup Truck Will Be Sports Car Fast

8 Responses

  1. Johannes

    Not true
    Tesla inc. will be its own best customer, they will use the first iteration internally.
    Save huge cost on fuel, create awareness and demand.
    Plus… countries like norway already have laws in the pipline to ban diesel trucks in the very near future so the demand already exists.

  2. MIchFin

    Even if Tesla targeted the short haul trucks there would be a big enough market for them. They would never be able to keep up with demand.

  3. Chris

    You didn’t mention anything about autonomy. A 300 mile charge is plenty if it can drive, charge, and get back in the road by itself. It can work 24/7.

    • Michael Myers

      While true, setting up SERIOUS charging stations every 300 miles on most interstates is no joke. However, neither is building a vehicle that can land 100 people on Mars.

      Elon doesn’t think small.

      • Dave

        You would only need 20 MegaChargers on I-10 at a spacing of 150 miles. Certainly not rocket science.

    • Tavi

      Trucking is highly regulated as far as HOS ( hours of service) goes as we all know it. Being an owner operator myself for over 10 years, I could tell, any minute of the day counts against the 14 hour rule. Waiting time to charge the batteries, unfortunatelly, is not something that a truck operator can afford to do, except if it can be done at the end of the day during the mandatory 10 hour break; nowadays is close to impossible even to find a suitable parking space after 6-7 pm if you are operating in the Midwest or East Coast (West Coast is worse if you thing greater LA area). Starting December of this year, a new law will come into effect that mandates all the operators to have their working hours monitored by an electronic device, hence, the true shortage of parking will become a very expensive reality.
      I love what Elon Musk is doing in all his endeavors, I believe his semitrucks would take care nicely of the local deliveries, a lot of the freight moves locally from the railroad yards to the local warehousing locations, wich short range electric (non poluting, most importantly) trucks would find a viable niche.
      Long haul, indeed, we would need atleast 6-800 mile range to be able to afford to wait 10 hours to charge the batteries. But I wouldn’t be surprised if Elon comes with a wonderfull solution. He usually does :).

    • pete

      Obviously you have no idea about over the road trucking, as 300 miles is laughable .

      • Dan R

        In most of the rest of the world there is a four hour limit on driving without a break. At 55mph this will mean you travel 220 miles, you must now take a 45 minute break.

        If the truck can be recharged in 45 minutes, this will not impact on your journey time.

        Currently the car batteries can be charged with a supercharger in that time period. The larger batteries should be able to be charged at a similar rate provided you can get at 1.5MW electrical connection to the truck stop. This is not unfeasible as it is the equivalent to 10 superchargers today.

        To get around 300 miles of range (and the ability to absorb a quick charge) they will need a 1500Kwh battery it will weigh around 7 tonnes. However the motors and controllers will probably weigh less than a current trucks diff. So this will be offset by junking the engine, fuel system, exhaust, and gearbox. The battery will cost in the region of $150,000 by the time the truck comes out.

        As part of the programme I expect Tesla will create a few supercharger stops along existing corridors and sell the first trucks to larger companies who can plot a small portion of their routes to exclusively use these corridors.

        The key thing is they don’t have to sell this to everyone straight away; it will suit enough of the market to allow them to sell enough trucks for them to justify developing the vehicle, building the factory and the first “ultra-chargers”.

        Once they do those things expect that the total cost of ownership is likely to be lower than for a regular truck (cheaper fuel and less maintenance) and much lower once you replace the driver. The adoption will likely follow the role out of the “ultracharger” network.

        The Tesla truck is like digital cameras were in 1999, worse picture, limited storage and arguably more of a hassle to print out the photos why would anyone want one over a film camera? It’s the potential that they are working to and that potential is a fully autonomous electric truck which will be much cheaper than the current model.

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