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Elon Musk’s Impossible Electric Truck has the last laugh

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When Elon Musk announced plans to transform the long-distance transportation industry five years ago, it was hard to resist a laugh.

Long before he developed flamethrowers and humanoid robots and haggled with Stephen King over Twitter subscription fees, the Tesla Inc. CEO’s announcement of the semi-long-haul truck launched a battle not just with the auto industry, but with fundamentals of economics and physics .

Batteries have many benefits, but density is not one of them. That’s not a problem for passenger cars, but once you get into really power-hungry applications like long-distance trucks, marine and aviation, EVs are overwhelmed by the weight of their own power plants.

A Class 8 semi-trailer with half a tonne of diesel in the tank can transport a 20-tonne load 1,000 miles between refueling stops. Lithium-ion cannot compete with that. The three-ton, 540-kilowatt-hour battery in a full-featured Volvo AB electric truck weighs as much as a rhinoceros. Tesla is more cautious about its battery specs, but comparisons to Volvo’s numbers, snippets of its passenger cars and details of its Powerwall battery suggest the 1,000-kWh power plant would tip the scales nearly six tons on its largest semi alone. This is comparable to an adult male elephant or an empty school bus.

Even with a lighter powertrain, such a massive battery pack would make it difficult for the Tesla Semi to underperform the diesel while still staying within the roughly 40-ton GVW limits that trucks must meet to avoid damage to roads and bridges.

Logistics is an extremely low-margin industry. JB Hunt Transport Services Inc., one of the largest US operators, generated revenue of about $1.63 per mile last year from its long-haul intermodal business, about half of which is fuel. Lower the payload to accommodate a thick-skinned battery, or reduce the range to allow for a smaller power plant, or spend more of the day on a Megacharger and those meager gains look even thinner.

For all the skepticism (including mine) about the Tesla Semi, however, an annoying possibility has surfaced: Musk might end up getting the last laugh.

The first working models of the Semi were delivered to PepsiCo Inc. last week, part of an order for 100 vehicles. That’s three years behind schedule, but it happened anyway. Sober automakers are also getting involved. In addition to Volvo, Daimler Truck Holding AG ordered 1,280 emission-free trucks and buses in the first half of the year and presented a prototype of a long-distance model in September.

What has changed? If Tesla had made dramatic breakthroughs in battery density, Musk would be bragging about it, so that’s not the answer. However, there is one big difference in 2022 compared to 2017: the cost of diesel.

The decline in domestic oil refining and pressure on energy prices in 2022 has meant that fuel costs for US trucks are almost double what they were five years ago. Plug the current prices for California diesel and commercial electricity into the trucking spend calculator from logistics data company ACT Research Co., and even an electric vehicle that costs twice as much to buy as a conventional vehicle saves 12% in costs per mile. equates to nearly $17,000 per year based on typical usage.(1)

That may not last as diesel prices fall back to earth, but it’s close enough to have the electric truck firmly in the game.

The other factor supporting the Semi right now is that it’s not trying to offer full-spectrum competition to long-haul trucks. Its range is half that of a Class 8 between refueling stops. It is also significant that one of the first customers will be a Frito-Lays factory. If you’re worried about the challenges of hauling heavy loads as well as your massive batteries, there are few types of cargo more forgiving than featherweight pallets of potato chips.

Logistics is a huge and diverse industry with many niches where the electrified truck could find a place to thrive. Last mile deliveries from warehouses to shops and households offer probably the most comfortable environment – ​​but even in the more demanding realm of long-distance transport, the modern economy moves many low-density loads such as potato chips, pillows and clothing where batteries come in. Trucks may have a chance to shine. Buyers can afford to experiment: FedEx Corp. 20 Tesla Semis on order are a drop in the bucket compared to their 86,000-strong road fleet.

Musk may have repeated the trick he followed with Tesla’s original electric roadster. While the rest of the car industry struggled to build a competitive mass-market electric car, Tesla took the easy route to a premium sports coupe where price was not an issue. As the truck industry looks for ways to replace its most efficient workhorses, Tesla is biting off just enough stock to disrupt the market.

The battery technology to directly compete with the class 8 diesel trailer has not yet been invented. However, the Semi could get electric trucks close enough.

More from the Bloomberg Opinion:

• We let Tesla falsify reality. Is Nikola a surprise?: Liam Denning

An Uber for trucks encounters obstacles in China: Anjani Trivedi

Tesla’s power plant on wheels: David Fickling

(1) We chose diesel at $6.006/gallon and 24.1 cents/kWh based on Energy Information Administration figures.

This column does not necessarily represent the opinion of the editors or of Bloomberg LP and its owners.

David Fickling is a Bloomberg Opinion columnist covering energy and commodities. He previously worked for Bloomberg News, the Wall Street Journal and the Financial Times.

For more stories like this, visit bloomberg.com/opinion

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