With latest high-profile pre-order from Anheuser-Busch, Tesla’s product launch speculation rises

The Budweiser brewer says this is part of its strategy to reduce the company’s carbon emissions by 30% by 2025. (Photo: artist rendition by Jason Fouts)

The Budweiser brewer says this is part of its strategy to reduce the company’s carbon emissions by 30% by 2025. (Photo: artist rendition by Jason Fouts)

Following PepsiCo’s largest public pre-order of Tesla’s 100 electric trucks to date, Budweiser recently announced its own order of 40. Anheuser-Busch announced it has placed an order for 40 Tesla semi-trucks as part of a company-wide strategy to employ cutting-edge technology to reduce the environmental impact and increase the efficiency of its operations.

Anheuser-Busch owns and operates 21 breweries, 20 distributorships and 22 agricultural and packaging facilities, employing more than 18,000 people across the United States. Its employees build on a legacy of corporate social responsibility. Anheuser-Busch reduced total water use at its breweries by nearly 50 percent over the last 10 years, and recently announced its commitment to converting it facilities to 100% purchased renewable energy.

The 40 semi-trucks, which represent one of Tesla’s largest reported pre-orders, will be fully electric-powered and equipped with autonomous driving capabilities, as part of the company’s commitment to improving road safety and reducing carbon emissions.

Integrating the Tesla semi-trucks into the brewer’s distribution network will help Anheuser-Busch achieve its commitment to reduce its operational carbon footprint by 30 percent by 2025 – the equivalent of removing nearly 500,000 cars from the road globally each year.

Numerous world forum reports on sustainable energies are demonstrating the direct connection between the employment of sustainable energies and good business.

“At Anheuser-Busch, we are constantly seeking new ways to make our supply chain more sustainable, efficient, and innovative,” said James Sembrot, senior director of logistics strategy. “This investment in Tesla semi-trucks helps us achieve these goals while improving road safety and lowering our environmental impact.”

The company also says the technology will also improve safety and efficiency, particularly for truck drivers while they are operating these vehicles, and will help ensure drivers continue to play a central role in beer distribution far into the future.

“We can’t wait to get these trucks on the road, and keep leading our industry forward to a greener, smarter future in partnership with some of the world’s most innovative companies,” said Mr. Sembrot.  “The transportation industry is evolving fast, and we’re really excited to play a leadership role in driving this evolution by integrating these new technologies across our network.”

Anheuser-Busch intends to use the trucks for deliveries to its wholesalers within a 500-mile radius, which is in line with the range specified by Tesla.

So, just how many of Tesla’s Semi’s have been ordered? No one seems to know. Forbes suggests only “a fair amount of interest thus far, notching total reservations of over 117 units from customers including Walmart, DHL, and Canadian supermarket chain Loblaw.” They add, “This number excludes an order from J.B. Hunt Transport Services, which indicated that it reserved multiple trucks without providing a specific number.”

However, Green Car Reports has seized on an Instagram post of a small order of three by an “outdoor living design and construction firm serving the Chicago Southland” that just might confirm a total of 1,230 reservations for Tesla’s Semi. Elemental Landscapes of Illinois posted this screenshot of its reservation for three Tesla Semi trucks, showing a reservation number EO000001230.

“If the reservation numbering system is sequential and multiple trucks can be reserved with a single reservation number, Tesla could be sitting on a significant number of truck reservations before the all-electric hauler hits the road.”

While such speculation is compelling, it could also simply be that the first 1,000 trucks ordered are for the Founder’s Series, which would put the actual reserved total at 230.

As Tesla will charge between $150k to $180k per truck, the revenue from 230 reservations is not material relative to the company’s $11 billion in projected 2017 revenue. From a PR standpoint, it can only be a good thing.

The long-term success of the Semi, of course, depends on its economic viability for customers. While the truck is expected to have lower maintenance expenses and running costs compared to diesel trucks, the actual payload is likely to be a metric closely watched by the trucking industry. The battery weight alone could come in at about 7 tons, although battery technology will almost certainly improve—and ultimately the company’s fortunes rest on that very premise.

Overall, if Tesla is able to provide a compelling economic case for customers, the Semi could provide a meaningful upside to its revenues. For instance, the North American Class 8 truck market is valued at at least $30 billion, with unit volumes of roughly 250,000 a year, per Piper Jaffray. If Tesla is able to capture even 5% of these volumes in the next five years, it could add incremental revenues of almost $2.25 billion, assuming an average selling price of $180k.

The semi requires a minimum $20,000 deposit. Its base price is expected to be $150,000 for one with a 300 mile driving range or $180,000 for one that can go 500 miles on a charge. To buy the special "Founders Series" trucks, companies will have to pay the full $200,000 price up front.

At those prices, truck operators should be able to save enough money on fuel to make up the entire purchase price of the truck in just two years, Tesla claims.

The Semi is projected to launch in 2019, but Tesla’s history of pushing back production deadlines for its vehicles is well documented. It’s currently behind schedule producing the new Model 3 sedan. It began Model 3 production in June, but had built only 260 of them as of October 1.

Others aren’t as concerned about hitting the hard deadlines. DHL Supply Chain, for instance, plans to use the Tesla trucks on dedicated delivery and pickup runs for automotive and consumer products customers, ferrying freight to and from factories and to distribution centers.

“Something like this that’s new and is as complex as the Semi, I don’t know if we can count on specific dates. We understand the challenges [Tesla is] facing,” says Jim Monkmeyer, the division’s president of transportation in North America. “This is the future, and we want to be in on the ground floor.”

Regardless, the recent purchase from Anheuser-Busch shows that some companies are willing to give Tesla a fair shot. It remains to be seen if the Tesla Semi finds long-term success, but maybe you shouldn’t count Musk out just yet.

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