Tesla Fires Up Electric Trucking

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Researched by Industrial Info Resources (Sugar Land, Texas)--The trucking industry was recently rocked by what could be a game-changing event--the unveiling of the much-anticipated semi truck from Tesla Incorporated (NASDAQ:TSLA) (San Carlos, California). With its stylish and bold design and the eye-popping range of up to 500 miles per charge (well above the targeted 300 miles) it looked like Elon Musk had another surefire hit on his hands. He then doubled down on the semi by claiming an expected $200,000 or more fuel savings over the truck's life cycle and estimating a two-year payback period, against an expected base price of around $180,000 for the 500-mile version (a 300-mile version is expected to sell for $150,000).

To further wow the trucking world, some performance figures were released as well, like a zero-to-sixty miles-per-hour (mph) time of less than 20 seconds while fully loaded (80,000 pounds gross combination weight), the ability to climb a 5% grade with a full load at 65 mph, and a recharge time of 30 minutes for 400 miles of range at the still-in-development Megacharger high-speed network. The announcements have been met with solid interest by some of the major players in the industry, with fleets such as United Parcel Service Incorporated (NYSE:UPS) (Atlanta, Georgia) and Wal-Mart Stores Incorporated (NYSE:WMT) (Bentonville, Arkansas) and others plunking down about 400 deposits of up to $20,000 on a truck that is not targeted for delivery until 2019-20.

After all of the excitement following the announcement subsided, there remains a big question: Given Tesla's track record of over-promising and under-delivering, how much of this will really come to pass, and what is the real timetable? Currently, Tesla only has one operational assembly plant in Fremont, California. This facility is already operating at close to capacity to deliver passenger automobiles, and Tesla has yet to reach the stated delivery output of the new Model 3 in anywhere near the timeframe initially stated by Musk.

A $1.26 billion expansion at this plant expected to nearly double it in size is getting underway, but will this clear up the auto production backlog and allow for truck production? This could be alleviated by outsourcing common truck components such as frames to other manufacturers, but exactly how Tesla will address this issue remains to be seen. Another concern is that the massive battery (projected to be 1 megawatt-hour in capacity) for the truck will put a strain on battery production. The Gigafactory in McCarran, Nevada, is still under construction and until it is completed there may be shortages in battery production to contend with as well. This may be the reason the original idea of "battery swap," where entire batteries could be swapped out to allow for longer travel distances without the need for recharging has seemingly been replaced with the Megacharger concept, which will have its own challenges in getting off the ground and having enough stations installed to provide the stated charging performance for a countrywide network.

There are these issues and others that must be resolved in order for Tesla to really pull this off, but judging by the reception from the trucking community and the economics involved, they are sure to devote all the resources required to make this launch a success.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.