Elon Musk says he continuous to be confident about electric trucks and says the Tesla company he heads is continuing to develop ambitious plans for developing electric commercial vehicles and he believes it’s a market worth pursuing.
“We’re going to do the pickup truck, the Semi and the next-generation bus,” Musk said in a conference call with investors and stock analysts in the USA last week. “We’ve got lots of awesome ideas,” he added.
Last year, Musk unveiled prototypes of an electric prime mover that uses common motors, screens, door handles and other parts from Tesla’s just-launched Model 3 compact sedan.
Fully loaded, the Tesla Semi it is claimed will be capable of traveling between 480 and 1000 km per charge at highway speed, Musk claims.
While distances within that range are generally considered regional routes, rather than a long haul, the truck would satisfy many freight requirements in its native America. Nearly 80 per cent of freight in the U.S. is moved less than 400km.
“It’s going to be better than what we showed last year. There are a lot of improvements,” says Jerome Guillen, Tesla’s vice president of trucks.
Besides saying that the range on the biggest model will be 1000km instead of 800km, Tesla has not provided any new information about the truck.
That “leaves us wondering what other specs would beat the already high bar,” Ravi Shanker, an analyst with Morgan Stanley Research, wrote in a report to investors this week.
Other analysts are watching Tesla’s truck and bus plans with a hint of doubt.
“The uncertainty is no one knows for sure how many cars or semi-trucks Tesla will sell,” David Whiston, the autos analyst at Morningstar Research Services said.
Whiston said that initially the semi-truck would probably be a low-volume product marketed to large freight fleets that have the budget to dive into new technology, as opposed to independent operators.
“Over time it could get big, but there will be plenty of competition too,” Whitson said. “Tesla’s challenge will be to keep getting capital to fund capacity expansion,” he added.
Musk’s plan, announced last Tuesday, to explore converting Tesla from a Nasdaq-listed company to a private business could complicate that.
Tesla already has a highly leveraged balance sheet and history of negative cash flow, Alexander Potter, an analyst at Piper Jaffray & Co, said in a report to investors.
Previously, Tesla had tapped the public debt and equity markets to raise cash to fund operations and research and development.
Tesla says its trucks will sell for $AUD200,000 for the small range version and $AUD225,000 for the longer range capability, Musk said.
Environmental incentives in various states could slash the purchase price. A typical diesel prime mover in the USA costs between $AUD130,000 to $AUD200,000 depending upon its purpose and configuration.
Musk claims that Tesla would be delivering 100,000 electric heavy-duty trucks annually by 2022.
That forecast was widely met with industry skepticism. It would take Tesla from zero to a five per cent global market share for heavy-duty trucks. That would mean Tesla’s semi-tractor business would be about the size of Paccar the maker of Peterbilt, Kenworth and DAF trucks.
“It’s not clear where this Semi is getting made,” Whiston said. “They’ve also got a lot on their plate car-wise,” he added.
Although Tesla is road-testing prototypes of its Semi, when production might start is still a question mark, particularly given the company’s trouble with manufacturing the Model 3.
“Probably the biggest limiter on our growth is how fast can we grow battery production and especially cell production along with the wholesale supply chain, I think, will be the fundamental determinant of Tesla’s growth,” Musk said.
Musk is now saying that the first Tesla truck to reach production would probably be a pickup rather than the semi.
“Probably my personal favorite for the next product is the pickup truck and we are going to just do an amazing pickup truck,” he said.
When any of these will be available for purchase, however is unknown, according to industry analysts.
“There was little or no mention of where, how or when the Semi, and the pickup will be produced,” said Barclays Capital analyst, Brian Johnson in a report to investors.
Still, there is a growing consensus that electric trucks, buses and commercial vehicles will become a viable business and that is born out by the major established truck makers who all have advanced plans for low and zero emission trucks.
Daimler, Volvo and Volksagen-Navistar along with other heavy-duty vehicle manufacturers are starting to field test and sell electric trucks and buses.
Daimler in North America said it would it will begin testing a fleet of 20 electric heavy- and medium-duty Freightliner trucks at the Southern California ports in Los Angeles and Long Beach this year.
“We believe that electrification will offer a competitive solution for an increasing number of commercial vehicle segments as we look to the decade ahead and beyond,” said Jim Meil, an industry analyst for ACT Research and author of an industry report: ‘Commercial Vehicle Electrification to Charge or not to Charge’.
The segment’s growth will be a combination of advances in battery technology, environmental considerations and government policy, and the potential for significant operational cost savings, Meil said.
“Initial adoption will likely be in shorter-range hauls with frequent stops and starts, regular and predictable routes, and daily return-to-base for overnight charging types of operations,” he said.
The early adopters will use medium-duty and highly specialized Class 8 trucks that can operate with shorter ranges to meet limitations of battery storage technology.
“As battery technology advances with chemistry and design upgrades, performance will improve, costs will drop and a wider range of applications and duty cycles will open,” Meil said.
Electric trucks are likely to have a 20 per cent share of the new medium-duty truck market and into the double-digit percentages for big Class 8 trucks by 2035.
If oil and diesel prices rise significantly from current levels, the market take rates could reach 30 per cent or higher, depending on the segment according to Meil.
