Trucking industry skeptical but wary about Tesla semi plans

Long-haul trucks are going to be a tough nut for EVs to crack, but it’s never smart to bet against Tesla. That’s the one-sentence summary of the trucking industry’s reaction to Tesla’s recent announcement that it will unveil an electric semi-truck in September.

The challenges involved in electrifying big rigs are huge. The battery for a semi-tractor would probably have to be around 8 times the size of the one that powers Model S, and its ponderous weight would cut into precious cargo capacity. There is no highway charging network suitable for heavy-duty vehicles. And diesel fuel is cheap, so there’s little incentive for operators to switch from conventional trucks.

Industry analysts agree that Tesla could pose a serious challenge to established truck manufacturers, but “we’re a long way out from a real threat,” as Michael Baudendistel, an analyst with Stifel Financial, wrote in a recent investor report.

“Given the happily consolidated nature of the domestic truck manufacturing market, the prospect of a new competitive threat, from a company with previous success in disrupting established industries, is undoubtedly unwelcomed news” to vehicle manufacturers such as Daimler, Paccar, Volvo and Navistar as well as powertrain suppliers such as Cummins, Baudendistel said. However, before Tesla could launch truck production, it would have to solve “a litany of significant issues.”

“The pace of change is slow in the trucking industry,” Baudendistel added. “After years of optimistic expectations that natural gas would overtake diesel, today it accounts for less than 5 percent of the North American Class 8 market.”

Other segments of the heavy-vehicle market are moving to electric powertrains. Terminal trucks, which are used to move containers around at ports and distribution centers, are good candidates for electrification, as they don’t require much range, and can be recharged at a central facility. Electric transit buses are also being deployed in cities around the world. However, the architecture of a bus is different from that of a truck. “The structure of a bus, with its long wheelbase, allows you to put a lot of batteries underneath,” points out Antti Lindstrom, an analyst at research firm IHS Markit. “You don’t have that in a semi-truck.” Human passengers are also much lighter than the loads typically carried by long-haul trucks.

Lindstrom has his eye on Nikola Motor Company, which recently unveiled a Class 8 truck that uses both lithium batteries and a hydrogen fuel cell. Hydrogen allows for fast fueling, and the fuel cell can power an electric powertrain without the need for large, heavy battery packs.

There are a lot of variables in the trucking industry, so calculating an economic case for an electric truck is complicated, says Piper Jaffray analyst Alex Potter. Nonetheless, he clearly believes the threat from Tesla is real. “Commercial vehicle makers – and their suppliers – would be wise to stymie their laughter and take these tweets seriously,” Potter  writes. “We are downgrading truck stocks CMI and PCAR partially because we think their valuations already reflect cyclical optimism, but also because we think TSLA’s impending arrival could pressure valuations.”

The prize at stake is a large one. “In North America and Europe alone, we think the heavy truck market likely represents a revenue opportunity in excess of $100 billion per year (vs. TSLA’s estimated 2017 revenue of ~$11 billion),” Potter  writes.

 

Source: Trucks.com, Electrek

  • Benjamin Nead

    The phrase “skeptical but wary” in the article’s headline is a bit of a grammatical jumble. The meanings of “skeptical” and “wary” are similar. Inserting the word “but” between them implies that they are supposed to be contrasting.

    After reading the article (a very good appraisal of the challenges faced in converting the long haul truck fleet to electric power, by the way,) I’s say get rid of the words “but wary” in the headline. Or make it “skeptical and wary.”

  • Zephyr

    But it’s not really about whether this is a threat to the legacy players. Tesla’s mission is to transform the transportation sector, not take over every sector. Most indications are that industry leaders, while conservative and cautious due to low margins and high capital costs for major R&D, would welcome market signals (policy-based or otherwise) that would compel a real transition toward more efficient tech. They’re just all afraid to be the first mover. So, if Tesla can show a plausible path forward on the issue, they’ll probably all follow suit pretty quickly, and Musk won’t give dual feces if his company never builds many trucks.

  • dogphlap dogphlap

    The move to battery electric trucks interests me a lot. WrightSpeed have been making series hybrid garbage truck conversions for a while now (Mr Wright was once an Engineer in the very early days of Tesla). He has made the point that long haul trucks despite being internal combustion powered (diesel) with far from ideal arodynamics are very efficient when driven on uncongested inter-state roads at their design speed. Questions that spring to mind are which part of the trucking industry is Tesla aiming to make sales to i.e. will they tackle long haul from the start and if they do will they have a pure BEV solution or go the hybrid route. Will they sell to large trucking businesses the complete package of truck and fast charging infrastructure (it could make sense to set up depots along certain regularly travelled routes for rapid charging and or battery swaps if the trucking company owned everything) ? Then of course there is the elephant in the truck stop i.e. fully autonomously driven tucks.

  • Vincent Wolf

    When new supercapacitors come along that are 25 to 50 times more energy dense than LiON batteries it will all be a moot point–fossil fuels will lie down dead as a door nail forever.