Trucking Industry Both Skeptical and Wary of Tesla Truck Plans

The trucking industry views plans by Tesla Inc. to develop an electric semi-tractor with a mix of skepticism and trepidation.

At first glance, the hurdles the Palo Alto, Calif., automaker must overcome to launch an electric big rig appear huge.

There is almost no market for electric trucks now. The highway charging network for heavy-duty vehicles does not exist. The weight of the batteries that provide power to a semi-tractor eat into precious cargo load capacity. Diesel fuel is cheap, keeping a lid on the cost of operating a conventional truck.

But Elon Musk, Tesla’s outspoken chief executive, is perhaps the world’s biggest advocate of electric-powered transportation. He’s a known disruptor, pushing autonomous driving features into his cars and forcing the automotive industry to chase innovations such as company-owned stores and over-the-air vehicle updates. As the chief executive of SpaceX, Musk pushed the space company to become the first to land a reusable rocket booster on a barge in the middle of the ocean.

That’s why the trucking industry took notice when Musk tweeted last week that Tesla will unveil an electric semi-truck in September.

Analysts say Tesla could well present a problem for established truck manufacturers, but one that will take time to roll out.

“Think what you will of Tesla; but, if nothing else, Elon Musk—and by extension, Tesla—is a great disruptor,” Michael Baudendistel, a Stifel Financial Corp. analyst, wrote in an investor report Monday.

“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 nonetheless, is undoubtedly unwelcomed news” to vehicle manufacturers such as Daimler, Paccar, Volvo and Navistar as well as powertrain suppliers such as Cummins, Baudendistel said.

But hurdles could short circuit Tesla’s menace to the truck manufacturing industry, he said.

“We’re a long way out from a real threat,” Baudendistel said.

For now, Tesla is mired in rapidly increasing its automobile assembly and battery manufacturing capacity so it can launch its Model 3 sedan. The compact electric car is scheduled to go into production this year. It is the first vehicle Tesla is targeting at the mass market and is expected to have a starting price of around $35,000.

Tesla last year delivered just 76,000 of its high-end Model S sedans and Model X SUVs but plans to increase overall production to 500,000 vehicles in 2018.

Meanwhile, Tesla is working on other vehicles, including a new sports car, a Model Y compact SUV, a small bus and a pickup truck.

Based on the rollout of Tesla’s other vehicles, it will be many years before Tesla is building heavy-duty trucks, Baudendistel said.

And before Tesla could launch truck production, it would have to solve “a litany of significant issues,” he said.

Price is at the top of the list. The expense compared with a diesel truck will be large. “Tesla cars don’t need to prove an economic case to their buyers; Tesla trucks will,” Baudendistel said.

There’s no place to get an electric truck serviced and repaired. “This has been an inconvenience for Tesla cars,” Baudendistel said. “For trucks though, if the wheels ain’t turnin’, you ain’t earnin’.”

There is no place to charge a long-haul electric truck. “You can’t put the cart before the horse,” Baudendistel said. “Widespread adoption hinges on the availability of fueling stations, and the infrastructure built for Tesla autos was not designed for Class 8 trucks.”

Batteries are heavy and range is critical. “We believe at least 600-800 miles of range is needed for the truck to be competitive in the line-haul market,” Baudendistel said. “We have heard indications that the Tesla semi’s range will be 200-300 miles, which would limit its addressable market.”

Refueling electric vehicles is time consuming. “Battery swapping and refueling overnight are both options which would require significant additional investment in infrastructure and logistics,” he said.

Natural gas trucks, a promising green technology that has fewer infrastructure and fueling obstacles than electric-drive vehicles, provides a sober lesson.

“The pace of change is slow in the trucking industry,” Baudendistel said. “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.”

The trucking industry is watching Tesla carefully, but there are still too many unanswered questions to know if it can be successful or if any electric trucks can make inroads, Daniel Murray, vice president of research for the American Trucking Research Institute, told Trucks.com.

“No one has clarified for us how much extra battery weight will accrue, which of course decreases revenue weight,” Murray said.

“The very low fuel prices we see now and will for a long time are making most alternative-fuel vehicles appear to be very expensive,” Murray said.

Other analysts are also skeptical.

“There is a certain amount of hype to Tesla’s announcement,” said Antti Lindstrom, an analyst at global research firm IHS Markit. “It doesn’t seem that long-distance trucking is ready for electrification right now.”

Electric vehicles will make up just 1 percent of the entire trucking market by 2020, according to the industry research firm. That will grow to 10 percent a decade later. Electric trucks will make up higher percentages of overseas markets — up to 10 percent in the European Union and Japan by 2030 and as much as 12 percent in China, IHS estimates.

Lindstrom does expect some segments of the heavy-vehicle market to adopt electric powertrains.

The U.S. arm of Chinese vehicle manufacturer BYD is developing electric trucks to move containers around at ports and distribution centers. Those trucks require a far smaller range than a long-haul big rig and can be recharged at a central facility. They don’t require a network of charging stations along the nation’s highways.

Some municipalities are adding electric buses to their fleets. But the architecture of a bus is different from a truck, making it easier to electrify, Lindstrom said.

“The structure of a bus, with its long wheelbase, allows you to put a lot of batteries underneath,” he said. “You don’t have that in a semi-truck.”

Buses also carry people, who are much lighter than most of the loads long-haul trucks transport.

“It is a different operating environment,” Lindstrom said.

Nikola Motor, not Tesla, is the alternative technology company best positioned to crack the long-haul truck market in the near term, Lindstrom said.

Headquartered near Salt Lake City, Nikola is developing a hydrogen fuel cell truck and plans to build a highway network of fueling stations. Hydrogen allows for fast fueling like diesel trucks. The fuel cell can power an efficient electric powertrain without saddling a big rig with large, heavy battery packs.

But even Nikola’s venture is risky and depends on its ability to create a network of fueling stations, Lindstrom said.

Although skepticism abounds, it’s never safe to predict that Tesla and Musk will fail. Critics have predicted Tesla’s demise for years, yet it continues to grow. As of Monday, its stock market value was $50 billion, about equal to General Motors’, even though GM manufacturers and sells about 10 million more vehicles annually than Tesla does.

“We are keeping a watchful eye on Tesla as a new entrant, but we are far from convinced that a Tesla electric semi-truck will be a major threat – especially in the next few years,” Baudendistel said. “Still, we wouldn’t count Tesla out long-term.”

Related: Workhorse W-15 Electric Pickup Truck Will Be Sports Car Fast