As Tesla Semi reservations grow, so does pressure to deliver

  (Photo: Tesla)

(Photo: Tesla)

FedEx said Monday it has reserved 20 fully-electric Tesla Semi trucks, which aren't scheduled to begin production until late 2019.

"Our investment in these trucks is part of our commitment to improving road safety while also reducing our environmental impact," said FedEx Freight Chief Executive Mike Ducker in a statement.

The Tesla Semi is an all-electricbattery-poweredClass 8 truck prototype which was unveiled on November 16, 2017 and planned for production in 2019. The company initially announced that the truck would have a 500 miles range on a full charge and with its new batteries it would be able to run for 400 miles after an 80% charge in 30 minutes using a solar-powered "Tesla Megachargercharging station. Elon Musk said that the Semi would come standard with Tesla Autopilot that allows semi-autonomous (upwards of Level 4) driving on highways.

After Tesla revealed the pricing of its electric semi trucks, we later learned that the regular production versions for the 300-mile and 500-mile range versions would be $150,000 and $180,000 respectively, while the company is also listing a Founders Series version for $200,000. This means that FedEx’s order alone is worth between $3 million and $3.6 million.

Tesla first started taking reservations with a $5,000 deposit per truck, but has later changed the listed deposit price to $20,000 for a “base reservation” of the production version and the full $200,000 for the Founders Series truck.

For all the much-maligned production issues related to Tesla’s Model 3, the Semi will be the true test of delivery and production. Why? Because, as Matt Horton, chief commercial officer of Proterra—a startup focused on all-electric buses—has observed, “Long-haul trucking is the most challenging duty cycle for a battery-electric vehicle to perform, given the long distances required at freeway speeds with a heavy payload in tow.”

In response to Musk's description of Tesla's work on a "a heavy duty, long-range semi truck" at a talk in April 2017, researchers from the Carnegie Mellon College of Engineering estimated the loads and ranges for an electric truck, given battery technologies known a year ago. They determined that an electric semi might be feasible for short- or medium-range hauling, but not for long-range, as the weight of the batteries required would take up too much of the weight allowed by law. One estimate for the battery weight, at 11,800 kg (just over 26,000 pounds), is estimated to account for around one third of the payload, and would increase the cost of the truck to about double that of an equivalent diesel.

Bulls who ride the peaks and valleys of Musk's promises, anticipate battery evolution to surprise everyone by the time the Semi is truly ready for production. Bears have a good deal of reason to believe the Semi is a fallacy based upon the regular production woes of a company who struggles with delivering on Model 3 sedan promises. Nevertheless, all the reservations to date comprise a remarkable display of confidence in electric trucking by a single industry—not to mention a huge investment. To date, over 500 reservations have been made, 125 from FedEx rival UPS, and 100 from PepsiCo, and 40 from Anheuser-Busch alone.

Over the past couple of weeks, Tesla appears to be deploying a Semi prototype to some of its biggest reservation holders. Two weeks ago, it was spotted in Anheuser-Busch’s brewery in St. Louis. The truck was parked at the brewery for a few hours, and was later seen parked at a supercharger in St. Charles, roughly 24 miles away.

Last week, the Semi was spotted in a Dallas, TX Service Center before being sighted at the Reunion Tower the following day, where Tesla and PepsiCo reportedly held a demo. Ryan O’Donnell, a member of the Tesla community who lives in the area, was able to enter the event, snapping some close-up pictures of the electric truck. O’Donnell also noted that a PepsiCo employee stated that the company’s 100 orders for the Tesla Semi were just a “drop in the bucket” for how many units the beverage and snack company is planning to order in the future.

Tesla's stock rose 2.2% in premarket trade, after falling 6.2% last week, while FedEx shares gained 1.8% ahead of the open.

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