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Tesla’s New Semi Truck: Hype vs. Reality

By Chris Hillman

Last November, Elon Musk unveiled the prototype of Tesla’s Class 8 Semi Truck to a mixed audience of tech enthusiasts and logistics professionals. Highlighted by a sleek body with an aerodynamic design, lower-than-normal center of gravity, and better-than-expected range of near 500 miles, the truck, like most of Musk’s projects, generated headlines around the world. Earlier this week, FedEx reserved 20 of the all-electric vehicles. Late last year, UPS reserved 125 of the trucks.

There’s plenty of hype surrounding the new semi, so let’s get to the facts—or at least what we know so far. Production is scheduled to start in 2019, and Musk promises to have pre-orders delivered in two years. The fully loaded truck will have a range of just under 500 miles, partly due to the sleek, futuristic lines producing increased aerodynamics. A 30-minute charge from a “mega-charger” will provide 400 additional miles of range. Without any cargo, Musk’s semi can go from 0-60 mph in an impressive 5 seconds. Perhaps more impressive, it can complete the same acceleration in 20 seconds with a haul of 80,000 lbs.

The range and acceleration aren’t the only new features; the cab will be laid out differently than conventional semi-trucks. The driver seat is centered in the cab with the passenger seat behind and off to right of the driver.

There will be two models; one will have a range of 300 miles with a base price of $150,000, and the other will have a range just shy of 500 miles and a base price of $180,000. Like the Model 3, the base price will have optional add-ons and upgrades.

Although the fanfare and excitement is high, Tesla faces technical and marketplace challenges. Technical challenges include the limited range, lack of charging stations, and down time while the battery charges. Most of these challenges can be mitigated by focusing on urban stop-and-go routes as opposed to the long-haul routes. Still, it will be an important logistical challenge to figure out how and where the trucks will be charged.

The marketplace presents two major obstacles: driver adoption and market penetration. Driver adoption will be interesting to watch, as truckers age and retire. Companies most likely will need to devote time and resources to training. And in an industry that already has thin margins, an incremental increase in cost of 20 percent to 40 percent per unit will keep most small to midsize companies from being early adopters.

It is important not to overlook the external factors brewing in the electric semi market, too. Although Tesla is facing setbacks with the delivery of the Model 3 passenger sedan due to “production hell,” according to the company, Cummins recently announced that it will be producing electric powertrains for passenger buses by 2019. Cummins will have a distinct advantage in scalability. The feasibility of electric buses will likely result in earlier adoption simply because buses return to the same dispatch lot every night, which will provide for easier charging.

According to writer Khalil Gibran, “Progress lies not in enhancing what is, but in advancing toward what will be.” There is no doubt that Musk and Tesla seek “toward what will be.” The question is: Are they ahead of the times?

Chris Hillman is an Associate within Cushman & Wakefield’s Industrial Tenant Representation group in Dallas.

 

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