Published: August 24, 2017
Additional reporting by Alexandria Sage and Eric Johnson; Editing by Peter Henderson and Marla Dickerson
Tesla Inc (TSLA.O) next month plans to unveil an electric big-rig truck with a working range of 200 to 300 miles, Reuters has learned, a sign that the electric car maker is targeting regional hauling for its entry into the commercial freight market.
Chief Executive Elon Musk has promised to release a prototype of its Tesla Semi truck next month in a bid to expand the company’s market beyond luxury cars. The entrepreneur has tantalized the trucking industry with the prospect of a battery-powered heavy-duty vehicle that can compete with conventional diesels, which can travel up to 1,000 miles on a single tank of fuel.
Tesla’s electric prototype will be capable of traveling the low end of what transportation veterans consider to be “long-haul” trucking, according to Scott Perry, an executive at Miami-based fleet operator Ryder System Inc (R.N). Perry said he met with Tesla officials earlier this year to discuss the technology at the automaker’s manufacturing facility in Fremont, California.
Perry said Tesla’s efforts are centered on an electric big-rig known as a “day cab” with no sleeper berth, capable of traveling about 200 to 300 miles with a typical payload before recharging.
“I’m not going to count them out for having a strategy for longer distances or ranges, but right out of the gate I think that’s where they’ll start,” said Perry, who is the chief technology officer and chief procurement officer for Ryder.
Tesla responded to Reuters questions with an email statement saying,” Tesla’s policy is to always decline to comment on speculation, whether true or untrue, as doing so would be silly. Silly!”
Tesla’s plan, which could change as the truck is developed, is consistent with what battery researchers say is possible with current technology. Tesla has not said publicly how far its electric truck could travel, what it would cost or how much cargo it could carry. But Musk has acknowledged that Tesla has met privately with potential buyers to discuss their needs.
Reuters reported earlier this month that Tesla is developing self-driving capability for the big rig.
Musk has expressed hopes for large-scale production of the Tesla Semi within a couple of years. That audacious effort could open a potentially lucrative new market for the Palo Alto, California-based automaker.
Or it could prove an expensive distraction. Musk in July warned that the company is bracing for “manufacturing hell” as it accelerates production of its new Model 3 sedan. Tesla aims to produce 5,000 of the cars per week by the end of this year, and 10,000 per week sometime next year.
Tesla shares are up about 65 percent this year. But skeptics abound. Some doubt Musk’s ability to take Tesla from a niche producer to a large-scale automaker. About 22 percent of shares available for trade have been sold “short” by investors who expect the stock to fall.
Musk, a quirky billionaire whose transportation ambitions include colonizing the planet Mars, has long delighted in defying conventional wisdom. At Tesla’s annual meeting in June, he repeated his promise of a battery-powered long-haul big rig.
“A lot of people don’t think you can do a heavy-duty, long-range truck that’s electric, but we are confident that this can be done,” he said.
While the prototype described by Ryder’s Perry would fall well short of the capabilities of conventional diesels, Musk may well have found a sweet spot if he can deliver. Roughly 30 percent of U.S. trucking jobs are regional trips of 100 to 200 miles, according to Sandeep Kar, chief strategy officer of Toronto-based Fleet Complete, which tracks and analyzes truck movement.
A truck with that range would be able to move freight regionally, such as from ports to nearby cities or from warehouses to retail establishments.
“As long as (Musk) can break 200 miles he can claim his truck is ’long haul’ and he will be technically right,” Kar said.
Interest in electric trucks is high among transportation firms looking to reduce their emissions and operating costs. Electric motors require less maintenance than internal combustion engines. Juice from the grid is cheaper than diesel.
But current technology doesn’t pencil when it comes to powering U.S. trucks across the country. Experts say the batteries required would be so large and heavy there would be little room for cargo.
An average diesel cab costs around $120,000. The cost of the battery alone for a big rig capable of going 200 to 400 miles carrying a typical payload could be more than that, according to battery researchers Shashank Sripad and Venkat Viswanathan of Carnegie Mellon University.
Battery weight and ability would limit a semi to a range of about 300 miles with an average payload, according to a paper recently published by Viswanathan and Sripad. The paper thanked Tesla for “helpful comments and suggestions.” Tesla did not endorse the work or comment on the conclusions to Reuters.
A range of 200 to 300 miles would put Tesla at the edge of what the nascent electric truck industry believes is economically feasible, the researchers and industry insiders said.
Transportation stalwarts such as manufacturer Daimler AG (DAIGn.DE) and shipping company United Parcel Service Inc (UPS.N), said they are focusing their electric efforts on short-haul trucks. That’s because smaller distances and lighter payloads require less battery power, and trucks can recharge at a central hub overnight.
Daimler, the largest truck manufacturer in the world by sales, will begin production this year on an electric delivery truck. The vehicle will have a 100-mile range and be capable of carrying a payload of 9,400 pounds, about 1,000 pounds less than its diesel counterpart, according to Daimler officials.
Daimler has been joined by a handful of startups such as Chanje, a Los Angeles-based manufacturer that has a partnership with Ryder to build 100-mile-range electric trucks for package delivery.
Ryder and its customers believe electric trucks could cost more to buy but may be cheaper to maintain and have more predictable fuel costs. As batteries become cheaper and environmental regulation increases, the case for electric trucks could strengthen.
“This tech is being seen as a major potential differentiator. Everyone wants to understand how real it is,” said Perry, the chief technology officer.