Tesla’s bet on electric trucks

Elon Musk said that Tesla would unveil a Tesla Semi in September, marking the company's entry into trucking. An electric pickup will follow and there is a possibility of an electric cargo van as well.

Elon Musk said that Tesla would unveil a Tesla Semi in September, marking the company's entry into trucking. An electric pickup will follow and there is a possibility of an electric cargo van as well.

Elon Musk says a Tesla Semi will be unveiled in September

Since last summer, Elon Musk has been teasing Tesla fans with word the company is building an electric “semi truck.” What form, shape and size that truck will take is still under wraps, but at least now we have a more definitive timeframe.

On Thursday, Musk twitted that the truck will be unveiled in September. “Tesla Semi truck unveil set for September," Musk tweeted. “Team has done an amazing job. Seriously next level.”

Musk first raised the idea of an electric semi in July 2016 when he released his company’s Master Plan Part Deux. In a July 31, 2016, tweet, Musk replied to a question about a possible electric cargo van and said it would “probably makes sense to build off the pickup truck chassis.”

That electric pickup, which a cargo van could be built off, will come in “18 to 24 months,” he tweeted on Thursday.


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In regards to the electric semi, Musk’s Master Plan provided a vison of his thinking. “In addition to consumer vehicles, there are two other types of electric vehicle needed: heavy-duty trucks and high passenger-density urban transport,” he wrote. “Both are in the early stages of development at Tesla and should be ready for unveiling next year. 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.”


Public details on the electric semi are nearly non-existent, although it has been reported that Jerome Guillen, who served as Model S Program Director during early development stages is leading the semi project. Prior to joining Tesla, Guillen was a Daimler engineer and led the development of Freightliner’s successful Cascadia truck.

Tesla’s desire to enter the trucking market comes at a time when there are several other companies working to develop successful electric truck programs, including the Nikola One hydrogen-electric truck and Mack Trucks, which recently unveiled an all-electric garbage truck. Daimler is testing a heavy-duty Urban e-truck in Europe.

In general, though, the majority of electric trucks in the U.S. have been in the medium-duty segment, including offerings from BYD and Wayne Engineering, Wrightspeed, Workhorse and even Daimler, which is bringing an electric Fuso truck to the U.S. later this year.

On average in the United States, electric urban delivery trucks use about 30% less total energy and emit about 40% less greenhouse gases than diesel trucks, for about the same total cost, taking into account both the purchase price and the operating costs.
— Dong-Yeon Lee

The reason for the interest in electric vehicles, though, remains clear regardless of vehicle class. In general, electric vehicles are cheaper to operate, require fewer moving parts, and produce less wear and tear on key vehicle components such as brakes.

“On average in the United States, electric urban delivery trucks use about 30% less total energy and emit about 40% less greenhouse gases than diesel trucks, for about the same total cost, taking into account both the purchase price and the operating costs,” said Dong-Yeon Lee, a CEE doctoral student, in a Georgia Tech report on the cost differences between electric and diesel trucks. “However, costs and emissions depend on how and where the truck will be used.”

The report went on to note that in operations with significant amounts of stop-and-go driving, “electric trucks are roughly 50% more efficient to operate than diesel trucks overall. That makes them at least 20% less expensive than diesel-fueled trucks, and reduces greenhouse gas emissions by roughly 50%.”

A 2016 Navigant Research report predicts electric trucks sales will grow from 31,000 in 2016 to more than 332,000 by 2026. The firm notes that as battery prices fall due to technological advances and economies of scale, trucks with hybrid, plug-in hybrid, or electric powertrains will become cheaper to buy and operate than diesel-powered.

“Technology advances make predicting the long-term price of electric trucks difficult,” wrote Valerie Thomas, one of the Georgia Tech study’s co-authors and an ISYE professor. “Battery price reductions down the road could have a large effect on the cost-competitiveness of electric trucks, while only diesel fuel prices could have a similarly large effect on the future cost-competitiveness of diesel trucks.”

The Sierra Club produced a fact sheet on electric medium-duty trucks and found similar savings. Even with a price premium of between $25,000 and $37,000, the Sierra Club said there is a savings, noting that battery prices have dropped from $625/kWh, the value used in the 2013 study, to under $200/kWh.

“Fuel cost savings from switching to electric trucks are tremendous. For example, diesel costs between $2-3 per gallon and last mile diesel vehicles are extremely inefficient [with] the average fuel economy ranging from 4.6 mpg to 9.6 mpg depending on route characteristics,” the organization writes. “Electricity prices average approximately $1.29 per gallon of diesel equivalent (mpge) ... Electric delivery trucks average between 16.7 mpge and 34.3 mpge for those same routes.”

Users could expect to spend $2,022 per year on electricity vs. over $6,000 on diesel. Additional savings are achieved from maintenance.

“For example, a diesel last-mile truck registers maintenance costs around $0.22/mile,” Sierra Club writes. “These costs include oil changes, break repairs, belt replacements, and regular inspections. An electric delivery truck, by contrast, costs only $0.056-$0.111/mile. Electric trucks simply have fewer parts to replace and repair. Additionally, electric drivetrains and regenerative breaking reduce wear and tear on remaining parts like brake pads. Because delivery trucks make frequent stops and travel in congested urban areas, brakes are historically one of the most frequent and expensive costs. With electric drivetrains break repairs can be reduced by 20-30%.”

So, is Tesla being visionary by jumping into the electric truck arena now? Adam Jonas, head of global auto research for Morgan Stanley, isn’t sure, but he thinks there is a bigger end game than just developing vehicles.

“We think that Tesla is morphing into more of a transportation company using vehicle machines sold today to become something much, much bigger,” he told CNBC’s Power Lunch last month. “[Tesla is not tapping] into hundreds of thousands or millions of cars, but more billions, hundreds of billions of miles [and all the data those vehicles are accumulating] and the 600 billion hours humanity spends in cars. ...Then launching a transportation as a service."

Speaking in terms of auto fleets, Jonas notes that “in the shared model where you're not driving 10,000 miles a year, but 50 or 100 in a fleet operation, then with the economics of electrification you can get that payback period under three years. That's the game changer — shared,” he added.