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Tesla to Enter Trucking Business with New Electric Semi

by Dee-Ann Durbin
Monday Nov 20, 2017
Tesla to Enter Trucking Business with New Electric Semi

After more than a decade of making cars and SUVs - and, more recently, solar panels - Tesla Inc. wants to electrify a new type of vehicle: Big trucks.

The company will unveil its new electric semitractor-trailer Thursday night near its design center in Hawthorne, California.

The move fits with Tesla CEO Elon Musk's stated goal for the company of accelerating the shift to sustainable transportation. Trucks account for nearly a quarter of transportation-related greenhouse gas emissions in the U.S., according to government statistics. Tesla also could equip its trucks with the semi-autonomous driving features found in its cars, like automatic braking and lane changing.

But the semi also piles on the chaos at Palo Alto, California-based company. It's way behind on production of the Model 3, a new lower-cost sedan. It's also ramping up production of solar panels after buying Solar City Corp. last year. Musk has said Tesla is also working on a pickup truck and a lower-cost SUV and negotiating a new factory in China. Meanwhile, the company posted a record quarterly loss of $619 million in its most recent quarter.

Musk, too, is being pulled in many different directions. He leads rocket maker SpaceX and is dabbling in other projects, including high-speed transit, artificial intelligence research and a new company that's digging tunnels beneath Los Angeles to alleviate traffic congestion.

"He's got so much on his plate right now. This could present another distraction from really just making sure that the Model 3 is moved along effectively," said Bruce Clark, a senior vice president and automotive analyst at Moody's.

Tesla hasn't released any details about the semi. Some analysts expect it to get around 200 miles per charge and be used for daily tasks like transporting freight from a port to a distribution center. Musk has said it should take about two years for the semi to go on sale.

Tesla is venturing into an uncertain market. Demand for electric trucks is expected to grow over the next decade as the U.S., Europe and China all tighten their emissions regulations. Electric truck sales totaled 4,100 in 2016, but are expected to grow to more than 70,000 in 2026, says Navigant Research.

But most of that growth is expected to be for smaller, medium-duty haulers like garbage trucks or delivery vans. Those trucks can have a more limited range of 100 miles or less, which requires fewer expensive batteries. They can also be charged overnight.

Long-haul semi trucks, on the other hand, would be expected to go greater distances, and that would be challenging. Right now, there's little charging infrastructure on global highways. And charging even a mid-sized truck would likely require a two-hour stop, cutting into companies' efficiency and profits, says Brian Irwin, managing director of the North American industrial group for the consulting firm Accenture.

Irwin says truck companies will have to watch the market carefully, because tougher regulations on diesels or an improvement in charging infrastructure could make electric trucks more viable very quickly. Falling battery costs also will help make electric trucks more appealing compared to diesels.

But even lower costs won't make trucking a sure bet for Tesla. It faces stiff competition from long-trusted brands like Daimler AG, which unveiled its own semi prototype last month. Fleet operators want reliable trucks, and Tesla will have to prove it can make them, said Michelle Krebs, executive analyst with the car shopping site Autotrader.

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