Musk said the Tesla Semi would change the world of transportation

By | May 14, 2023

Of alan ohnsman

Elon Musk belatedly celebrated the launch of the Tesla Semi last December in the way he loves best: a live-streamed event that began with electronic dance music punctuated by his tirade about the electric truck’s “sick” look and his “unbelievable” performance. played” before an audience. of Tesla employees and fans who were ready to cheer. PepsiCo executives and a unit from Frito-Lay were there to pick up some vehicles and deliver chips and drinks to the party.

“This thing has crazy power compared to a diesel truck,” Musk told attendees at Tesla’s Gigafactory in Sparks, Nevada. “And it’s not slow at all. It’s fast. It accelerates quickly. It’s quick to stop. It’s really a step up from what it’s like to drive a truck.”

Maybe. But in terms of sales, the Semi is still slow. The company expects to produce at least 50,000 of them annually for the next year, generating up to $12.5 billion in revenue based on an estimated price of at least $250,000 per truck. However, to date, Tesla (with revenue of $81.5 billion last year) has delivered only about three dozen trucks to a publicly identified customer and has not included the model in its last two quarterly production reports.

Tesla, whose CEO rarely saw and didn’t like a government incentive, is leaving money on the table: The Tesla Semi isn’t among the zero-emissions trucks that qualify for California’s generous $120,000 incentives for battery-powered trucks. (and $240,000 for hydrogen models). Not because it doesn’t qualify, but because the company isn’t even registered for the program, according to the Air Resources Board.

The Semi was also absent from the ACT Expo in Anaheim, California, last week, the nation’s largest show for zero- and low-emission trucks and vans. This is not unusual given Tesla’s habit of avoiding major auto shows and trade shows. But dozens of high-tech battery-hydrogen pickups from companies including Volvo, Hyundai, Daimler, Peterbilt, Kenworth, Hino, BYD and startup Nikola were on display. And Tesla was conspicuous by his absence.

“One of the things that stood out in this report is the complete lack of product comment from Tesla,” said Oliver Dixon, a senior heavy-truck analyst at research firm Guidehouse. “What was once considered the 800-pound gorilla in the room is still a gorilla in the room, but noticeably smaller than it was.”

The battery and hydrogen truck market is getting a boost as California bans the sale of new diesel commercial vehicles in the state until 2036 and only allows zero-emissions models until the mid-2040s. It’s unclear when, however. sales will increase. A survey of fleet operators by research firm Gladstein, Neandross & Associates, presented at ACT Expo last week, found that orders for electric vans currently amount to just 6,000 units over the next few years, with a value of around of $1.5 billion, up from virtually zero last year. By the mid-2030s, as battery and hydrogen trucks catch up with the cost of diesel models, they will dominate heavy-duty market sales, accounting for more than 200,000 units a year, according to a study by the National Laboratory of Renewable Energy. This will be a market worth more than $40 billion annually. The push for zero-emission trucks will go beyond California, as more than a dozen states, including New York and Washington, follow its strict air pollution rules and may adopt similar regulations for trucks.

Tesla had the opportunity to dominate the new electric truck space in the same way that it led the way in battery-powered passenger cars. Still, early signs are that it is falling behind its competitors in the nascent sector, drumming notwithstanding from Musk. California recorded just 134 battery-powered pickup truck sales in 2022. Of that number, most were made by China’s BYD, none by Tesla.

Shortly after the Semi was unveiled at a spectacular event in Los Angeles in November 2017, several companies with large fleets of trucks announced plans to buy thousands of models. Almost six years later, they are still waiting. Trucking giants Ryder and JB Hunt told Forbes they don’t know when they will start receiving the trucks. UPS said it is in talks with Tesla and hopes to start receiving them in 2024.

The company did not respond to a request for comment on the Semi program and its estimated sales for this year.

Tesla also did not provide details about Semi’s production and sales in its March 1 investor conference call or in its April 19 quarterly earnings update. In the company’s latest filing with the Securities and Exchange Commission, the only reference to Semi in the 34-page document is that it is in “pilot production” at the Gigafactory in Nevada. Usually this is an industry term for a model that is not yet a commercial product.

Tesla says the Semi is available in trims that go from 300 to 500 miles on a full and fully charged. These figures, as well as Tesla’s claim that users could save $200,000 in fuel costs over three years, have not been independently verified. The company has not given a price for the vehicle, how much it weighs or how many tons of cargo it can carry. At an April event in Sacramento, Pepsi told local reporters that the trucks travel 400 miles per load.

Cloudy production regime

Last November, before handing over the trucks to Pepsi and Frito-Lay, Musk said production of the Semi would ramp up to 2023. “As I think everyone knows by now, it takes about a year to ramp up production… We’re tentatively targeting 50,000 units by 2024 for the Tesla Semi in North America.”

Then, in January, the company said it would build a dedicated assembly line for the Semi at its Nevada plant as part of a $3.6 billion expansion. Musk said production would be “limited” this year but would reach high volume next year, without elaborating.

“The production pace of the Tesla Semi has been very slow and Wall Street expects a rise in the second half,” said Dan Ives, an equity analyst at Wedbush Securities. “The demand is there. The problem is its production, which has been disappointing.”

PepsiCo, the only publicly identified semis buyer so far, has said it hopes to buy 100 this year. PepsiCo and Frito-Lay representatives did not respond to numerous requests for comment on the truck purchases and their performance.

By comparison, smaller competitor Nikola, which also sells battery-powered trucks, built 258 Tre BEVs last year and delivered 131 to dealers. The company said this week it plans to build up to 500 hydrogen fuel cell and battery vans by 2023.

Tesla hasn’t said much about the Semi’s sales statistics, but the National Highway Traffic Safety Administration has shared some details. In March, the Semi was recalled by the safety regulator for a parking brake malfunction that could have caused the bulky vehicle to roll over. In doing so, he revealed that there were only 35 Semis in circulation. (Nikola and Volvo battery-powered trucks also had early recalls.) A separate Tesla filing with the US Department of Transportation shows the company has a fleet of 291 trucks, though many of them are likely prototypes it has been testing since Musk first introduced it. in 2017, and said they would be sold in 2019. That fleet filing also reveals nine people were injured in Tesla-owned trucks, though it doesn’t specify the make.

Tesla has not signed up for Clean Truck government incentives

Pepsi has touted its Tesla Semis, particularly the 18 trucks it bought in April, as proof the company is greening its fleet because it cares about the environment. But those initial trucks were heavily subsidized with public funds. So far, it has received $5 million for 18 Semis and charging systems at its Sacramento facility, where a bottling plant is located, and $5.3 million for 15 trucks and chargers at the Frito-Lay snack plant in Modesto.

The Tesla Semi also qualifies for a $40,000 federal zero-emissions truck tax credit created by the Cut Inflation Act. The need for significant subsidies raises some questions about the adoption of the Semi and its battery-powered competitors in areas where such incentives do not exist.

“We are enabling these fleets by providing incentives for companies to purchase these cleaner, zero-emission technologies that otherwise probably wouldn’t exist without government subsidies,” said Alberto Ayala, executive director of the Metropolitan Quality Management District. Sacramento Air. The Tesla Semi costs about $250,000, he said.

In the Los Angeles area, home to most of the country’s cars and commercial vehicles, the South Coast Air Quality Management District said it has provided grants to customers to buy Volvo electric trucks. He told Forbes that he had no requests for Tesla Semi purchases.

Despite the incentives and new California regulations, it will be hard to steer the trucking industry away from diesel. This is because electric and hydrogen trucks remain more expensive even with generous incentives. Then there’s the cost of installing high-powered charging stations to service multiple trucks at once, and the need for a more powerful network to handle the 750-kilowatt charger Tesla’s truck uses. For hydrogen fuel cell models, which promise longer range and faster refueling times than battery models, the main issue is reducing the cost of hydrogen and finding cheaper ways to transport and store the fuel. .

If Tesla does finally start production of the Semi, there’s another challenge ahead for it and newcomers like Nikola: persuading fleet owners to switch from major suppliers like Peterbilt, Volvo, Daimler and Freightliner that have their own trucks. ecological.

“You have a number of veteran players who have been around for quite some time,” Guidehouse’s Dixon said. “For a non-inheritance player, like Tesla or Nikola or whoever, to come in and get market share, he’s going to have to get it from these guys. They’re very nice people to talk to, but they don’t.” play especially well.”

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