Elon Musk unveiled Tesla’s new electric Semi truck, which he said “will blow your mind clear out of your skull and into an alternate dimension.”
The electric semitrailer would have a 500-mile range and will roll out in 2019, if all goes according to plan.
On top of that, Musk surprised the crowd gathered at the event with a new version of the Roadster, the high end sports car that originally got Tesla going about a decade ago. The new Roadster would have a range of 620 miles and is due out in 2020. Musk said the Roadster would have a zero to 60 miles per hour time of 1.9 seconds. “These numbers sound nutty,” Musk said at the unveiling on Thursday.
The truck will also have Tesla’s semiautonomous driving system, which will help assist drivers and also have the ability to drive autonomously with other trucks. The convoy system would allow a lead truck to guide a group of other autonomous trucks to follow close behind, a system that would save on labor and fuel costs.
Critics were quick to point out that the Semi event comes at a time of particular turmoil for Tesla. The Model 3 has run into production problems—it only produced 260 of them in the third quarter. Musk had promised to hit 5,000 Model 3s per week before the end of the year, but said that the company probably won’t hit that until towards the end of the first quarter of 2018.
But he hopes the hype over these new products will put the sheen back on Tesla’s share price, which is down nearly 20 percent since September.
It’s unclear how Tesla’s Semi will compete with existing trucks. Musk boasted that they would be cheaper to operate than diesel trucks and potentially cheaper than even freight rail. He cited fewer parts—no need for an engine, transmission or powertrain—which would significantly save on maintenance. No fuel costs would also trim the cost of operating a semi versus a diesel truck. Musk said that the all-in costs of the Semi would come in about 20 percent cheaper than its diesel competitors. However, he declined to offer a sale price.
There are reasons to be skeptical. Bloomberg New Energy Finance estimates that the amount of batteries needed to power such a large truck could alone cost $100,000; a hefty sum when considering conventional long haul diesel truck costs a total of about $150,000.
But the 500-mile range exceeded analysts’ expectations and would be within a distance typically traveled by a truck on a single haul. Tesla says it will install megachargers that allow the Semi to recharge in 30 minutes, giving the truck 400 miles of range.
“The specs on the new semi truck and sports car would put both vehicles at the top of their segments—assuming they can be produced and sold as part of a sustainable business plan,” Karl Brauer, executive publisher of Kelley Blue Book and Autotrader, told the Wall Street Journal. “So far that final element has eluded Tesla Motors, which makes it difficult to see these vehicles as more than ‘what if’ concept cars.”
Tesla will have competitors in the electric truck segment. Bloomberg reports that Daimler AG has shown some electric truck prototypes this year; Paccar Inc. has electric, hybrid, hydrogen fuel cell and natural gas trucks in the works—Volvo is testing its version of an electric semi, and Volkswagen rolls out an electric model out in 2019.
There’s been a lot of excitement about the coming electric revolution for passenger vehicles, but electrifying road freight is an entirely different matter, and would present another massive threat to crude oil demand.
“The point of doing this is to just give a hardcore smack-down to gasoline cars,” Musk told the crowd at Tesla’s design studio near Los Angeles.
The IEA notes that governments around the world have substantially raised the efficiency of passenger vehicles—an estimated 80 percent of global passenger car sales are subjected to fuel efficiency standards. This would put oil demand in permanent decline in about a decade, except that there are three sectors where the agency still sees oil demand growth: petrochemicals, aviation/shipping, and road freight.
While most governments are targeting efficiency in passenger vehicles, only the U.S., China, Canada, India and Japan have heavy duty efficiency requirements (although the EU is in the process of implementing their own).
As such, the IEA shrugged off the threat of EVs to oil demand when it released its World Energy Outlook, largely because it assumes strong oil demand growth for road freight. That is, oil consumption for heavy duty trucks grows so much over the next 25 years, that it offsets all the reductions that will be made from the switch over from gasoline to electric vehicles.
There are plenty of reasons to doubt Musk, and some argue that the unveiling of Tesla’s Semi only exacerbates the company’s growing credibility problem. But if Tesla is successful with its new Semi, the IEA’s scenario of robust oil demand for freight will quickly be thrown out the window.
By Nick Cunningham of Oilprice.com
