Unpacking The Tesla Semi
There are more unknowns than knowns in Elon Musk’s grand plan to disrupt the trucking industry with Tesla Semi.
First, the knowns. There are two versions to the Tesla Semi. The base version will travel 300 miles on a single charge and will cost $150,000. This version has a reservation price of $20,000. (Presumably, the reservation price will help finance production costs for the truck). The other, more advanced version will carry 80,000 pounds (approximately 40 tonnes) over 500 miles. It will cost $180,000. There is also a Founder series version of the Tesla Semi available for $200,000. It doesn’t have a reservation fee; buyers will have to pay the full cost upfront. The truck will average $1.26 per mile over 100 miles. For context, diesel trucks cost $1.51 per mile over the same range.
Tesla claims that the Semi will result in cost savings of upwards of $200,000 over a million miles and a payback period of two years. Those savings will come from various improvements/changes that Tesla has incorporated into the truck. For example, drivers are not required in convoy formations. Cheap fuel prices will also help trucking companies save on costs. Then there are the reduced service and maintenance costs for the truck. For example, Musk announced that the Semi’s brake pads will last forever. Based on the truck’s design (it doesn’t have facility for truckers to sleep) and range, it would seem that the vehicle is designed for local and regional transport.
The Known Unknowns
As is often the case, the devil lies in the details. More specifically, the battery’s details. Here is where the unknowns come in. According to Musk, the Tesla Semi’s advanced version will recharge 400 miles of range in 30 minutes using the company’s Megacharger.
A Bloomberg article casts a sceptical eye on Musk’s claims. It estimates that such an approach will require a charging system ten times more powerful than what the company offers today. Tesla’s current generation of high speed superchargers have a power output of 120 KW and can add 180 miles to the battery of a Model S sedan. There is also the slight problem of not having a charging network in place currently. Charging at the company’s network would cost more than the $0.7 per kilowatt promised by Tesla based on calculations by Michael Baudendistel, analyst at Stifel Financial Corp. He is also interested in knowing the battery’s weight. “A fundamental issue with electric vehicles is that the batteries are heavy, which reduces available payload capacity. We think it is reasonable to believe there may be a 10,000 pound battery pack in the Tesla tractor with a 500-mile range, or a 700 kWh pack,” he wrote in an analyst note. Bloomberg New Energy Finance, a research organization, estimates that Tesla would require a battery capacity of between 600 KwH to 1000 KwH to enable the range promised by Musk in his announcement. That may be a tall order, given limitation of current battery capacity. In October, Tesla rival Daimler unveiled a truck that can carry a maximum weight of 11 tonnes over 220 miles.
A paper by graduate students at Carnegie Mellon earlier this year evaluated the requirements for Tesla to make its electric truck vision a reality. “In order to enable a driving range of over 400 miles for LCVs at a realistic battery pack weight, specific energies of about 350-400 KwH. A crucial factor that could bring down energy requirements and cost is through a vehicle redesign that lowers drag coefficient to about 0.3.” Indeed, during his announcement, Tesla CEO Elon referenced the Bugatti Chiron’s drag coefficient of 0.38 while announcing that his electric trucks have a better drag coefficient. The electric truck unveiled by Musk is also a radical redesign, as compared to standard Class 8 vehicles. (But certain truckers seem to have problems with it).
Another intriguing part of the Tesla Semi pitch is its price. Analysts had predicted a much higher price, almost double, for the vehicle. Here again, Tesla has beat expectations by pricing the trucks much lower. Based on the expected range of the Tesla Semi’s battery, analysts now expect it to cost $170,000. Diesel engines cost $100,000. Tesla’s price range for its trucks does not provide the company with much, by way of profits. Daimler has not provided a sticker price for its electric trucks.
Still, it might not be wise to write off Tesla and Elon Musk. These are known unknowns (to use former U.S. Secretary of State for Defence Donald Rumsfeld's words). In the meanwhile, there are already certain factors working in his favor. For example, battery costs for trucks are expected to decline to $122/KwH from $260/KwH in 2016. Governments around the world are also offering subsidies to introduce and promote electric trucks on their highways. As has often happened in the past, Musk might pull off this venture successfully, albeit with delays (as has often happened in the past).