Tesla's bid to reinvent the transportation and trucking industry launched as its Semi was unveiled with innovative features, an economic claim to win some preorders and a more than a few loose ends that are usually only pondered on the second day of an Elon Musk showing.
As CNET Roadshow noted, the Tesla Semi is clearly aimed to shake up the trucking industry. We'll put aside efforts from the likes of Volvo and Daimler -- two companies that have shown they can actually mass produce trucks -- for now.
The biggest takeaway is that the Tesla Semi will be able to cover 500 miles on a charge. That figure is huge given that 500 miles is the average distance a long-haul trucker covers. Shorter hauls would presumably be able to go round trip. With the 500 mile figure, Tesla is aiming to reduce the range anxiety the trucking industry will face. ABI Research analyst Susan Beardslee, however, said that range anxiety is likely to persist.
Tesla may have a few anxiety issues of its own. Tesla Semi is supposed to be in production in 2019, but has had trouble hitting its benchmarks for the Tesla 3. Another issue is that Tesla is a consumer focused company entering a new industry focused on enterprises. Tesla will need a new sales approach, manage service contracts and be able to meet a host of other agreements.
With that backdrop it's worth looking at the challenges facing Tesla as well as the buying decision for the trucking industry.
Nice unveiling, but not enough information to do a real total cost of ownership analysis. Tesla claimed its Semi had a total cost per mile of $1.26 compared to a diesel truck of $1.51. The catch is that Tesla didn't reveal a price of its Semi or ongoing maintenance, which would be presumably lower. Nevertheless, Evercore ISI Research made a few assumptions to ponder.
It's also unclear what mega chargers would cost to deploy and implement.
When will the blanks in Tesla's Semi be filled in? Tesla started talking about performance with the Tesla Semi and those talking points are largely designed for the media. Tesla didn't disclose battery pack size, distribution plans and costs. The performance talk may have also missed the fleet owner mark. "We note that most fleet operators are less focused on performance and more focused on safety, reliability, and cost per mile got around to," said Cowen analyst Jeffrey Osborne.
Can Tesla back up its 1 million miles without a breakdown claim? Tesla Semi has fewer moving parts, no transmission and a windshield that won't crack. The maintenance guarantee will play into any economic discussion. The American Transportation Research Institute noted that the average tractor-trailer is replaced after every 754,000 miles.
What's Tesla's plan for the channel? Tesla will also face some common distribution issues. Osborne explained in a research note:
Trucks typically aren't purchased at high end shopping malls or affluent suburbs, areas that Tesla's retail presence is in today. How that retail network evolves with the entrance into the trucking market is an unknown. All that being said, trucking is likely to be the first major market for Level 4 autonomy and we would expect Tesla to look to test its capabilities for AVs within its trucking fleet and Tesla appears to have an early lead in that arena, although is facing litigation around false advertising of autopilot functionality for past buyers of Model S vehicles.
Is zero emissions enough to spur upgrades? Tesla's Semi is likely to be used in California ports where there's a clear mandate to get to zero emissions. Other states aren't going to have those requirements. Tesla's cost and emissions argument will likely make more sense in the Northeast and West anyway. In fact, J.B. Hunt said it reserved the right to purchase several Tesla Semis for its West Coast operations.
Here are some region trucking cost statistics from the American Transportation Research Institute.