Tesla def has the balls and the know how to do this but whether they can get it all together and produce a product in a timely manner is yet to be determined. Please don't look at past history in regards to this hahah
Analysts' Take on Tesla Semi Truck -- Is Elon Musk pulling Wool over our Eyes?
Sarwant Singh, ContributorNov 20, 2017
Tesla, the company, and Elon Musk, the person, have always taken big risks – the Tesla Semi might just be the biggest risk to date in the history of this path-breaking disruptive company.
With the electric semi-truck unveiling on 16 November 2017, Tesla officially enters the business of trucking. The future of the global logistics industry, estimated by Frost & Sullivan to amass ~€10.6 trillion by 2020, might just have experienced a disruption not seen in the past 100 years of trucking.
Tesla Semi Electric Truck Unveiling
Tesla Semi boasts specifications that are unprecedented in the logistics industry, which has been viewed as slow to adapt to change, at least till date. Starting with an impressive ability to lug ~80,000 pounds at 65 mph up a 5% grade, to a claimed range of 500 miles (~800 km), this machine is well spec’d to rise to the challenges in the industry. With an aerodynamic drag coefficient that beats a premium sports car (Cd = 0.36 for the Tesla Semi aerodynamic version), we notice Tesla adopting a combination of design improvements that the industry is currently working on to improve overall vehicle aerodynamics.
Furthermore, with the use of mega-chargers that will charge the truck in 30 minutes to provide a range of up to 400 miles (~640 km), the need for taking a break to simply recharge the vehicle may be a thing of the past. The design and development team at Tesla seem to also have delivered on the finer, hitherto unfocused, details such as the thermo-nuclear explosion-proof windshield that will potentially save the fleets from the hassles of the frequent windshield replacement. By placing the driver literally at the centre of the cabin, the Tesla Semi has, in a way, made truck driving “cooler”. This, we believe, if mass-produced as unveiled, will help in tackling the acute driver shortage issue which the North American market is expected to experience in the near-future.
That said, the story of the Tesla Semi goes beyond the product. We could not help but notice how the focus was on total cost of operation (TCO) – probably the most important parameter in the world of trucking- while Elon did not disclose any detail on the pricing of the semi. The experts at Frost & Sullivan understand that, if Elon’s claims are to be believed, Tesla Semi can fundamentally alter the business of trucking by combining leasing, insurance, maintenance costs – all of which were highlighted during the unveiling – to deliver attractive TCO for the fleets. A leasing model to compensate for the high initial acquisition cost, lower insurance rates owed to the highest safety standards of the vehicle, and minimum maintenance costs thanks to significantly fewer moving parts (and the 1 million no breakdown guarantee – I see a huge risk here if his electric batteries will provide traction performance that long) are the components of new business models that are transforming this industry. At the same time, the resale value and end-of-life of these trucks is an aspect we have to wait and watch to get some clarity on.
Frost & Sullivan’s recent research on transformations in the trucking industry has indicated four fundamental shifts, namely Electrification, Connectivity, Autonomy and New Business Models, expected to drive changes in the near- and long-term. Tesla Semi hits each one of the above-mentioned aspects with a full-electric drivetrain; advanced HMI technology and seamless integration with fleet systems; platooning-ready (~L3 autonomy) vehicle and potential new business models to create a viable economic case for the truck.
Road freight is a $725 billion market in US, and €395 billion market in EU. The industry is highly fragmented, top five logistics firms in the US earn less than 20 percent of the total revenue, hence, brokerage forms an integral part of this network. In the US, freight brokerage was estimated to be worth $130 billion, while in Europe, the respective figure is €86 billion for the year 2015. The idea of “More Truck per Truck” is at the core of on-road transportation businesses’ quest for profits. Our research indicates that almost 1 in every 4 trucks on the road is plying empty, both in the US and EU. Furthermore, within the trucks that are not empty, the utilisation rates are 56 percent and 54 percent in the US and Europe, respectively. In other words, during more than half the time these trucks are on the road, no load is carried, no money is earned.
A long-haul truck is subjected to multiple waiting/ idle times – at toll gates, at traffic, during loading and unloading. Empty miles and fleet utilisation are two challenges the industry needs to solve. The Tesla Semi, from a theoretical perspective, could potentially provide solutions for both challenges – by being a “digital-native truck” which enables usage of empty mile saving solutions such as automated freight management and by delivering technology advancements that improve fleet utilisation significantly. Whether both these objectives are adequately met by, or through, a Tesla Semi in real-time is something we have to evaluate at a later date.
In 2016, trucks went digital. From vehicle manufacturers to fleets, every stakeholder in this logistics business has taken definitive steps to accelerate connectivity and digitization within their products, services and solutions. In a future non-fossil fuel based, connected, autonomous world of freight mobility, it is desirable rather than necessary to view the truck as a “cyber-physical node of freight delivery”. We understand that, looking at the history of Tesla’s automotive products, Tesla Semi has either intentionally or unintentionally sparked the paradigm shift of viewing a truck not as a mere “one-off product” but as a “living, upgradeable, freight solution”.
Of course, everything is not rosy and we are sure there will be immense challenges. From the right-sourcing of cobalt for Lithium-ion batteries, to ramping-up production of the Semi, and finally in ensuring the Mega chargers (infrastructure) readiness – Tesla has to get many more pieces of the puzzle right to make this machine a market reality. In addition, there are many important parameters that are unclear – most importantly of all being the split between the vehicle weight and the payload capacity.
Given the non-clarity regarding vehicle pricing, our best estimates suggest that the Tesla with a battery pack at around $120/kwh to $160 kwh, the Semi might be 2.5X – 3X pricier than a comparable HD diesel truck today (which on average retails at 130,000 USD). In addition, we have to wait till after mass-production to estimate factors such as resale value and real-time cost of operation.
The biggest risk we see in Musk’s strategy is the battery. It is one thing using the Tesla ar battery for 200,000 miles and another driving a heavy duty truck for ~750,000 miles over ~10 years. It is a big gamble, and if I were CEO of Tesla, I would have gone for a 2 to 6 tonne electric city truck which, given mayors of cities are putting restrictions on Diesels entering city centres, would have had a much higher premium price and uptake rate. Well, then it would not be fun for Elon Musk. I just hope this mega truck won’t prove to be his Waterloo.
This article was written with contributions from Ananth Srinivasan, Senior Consultant in Frost & Sullivan’s Mobility Group.