Elon Musk celebrated the December launch of the long-delayed electric Tesla Semi, gushing about its remarkable acceleration. But the EV company’s newest product is off to a slow start, with one customer and isn’t registered for generous California incentives.
By Alan Ohnsman, Forbes Staff
Elon Musk celebrated the launch of his long-delayed Tesla Semi last December in the mercurial billionaire’s preferred fashion: a staged, live-streamed event that kicked off with blaring electronic dance music, punctuated by his boasts about the electric truck’s “sick” looks and “badass” performance to an audience of employees and Tesla fans predisposed to cheering. Executives from PepsiCo and its Frito-Lay unit were there to take delivery of a few vehicles, bringing chips and drinks to the party.
“This thing has crazy power relative to a diesel truck,” Musk told attendees at Tesla’s Gigafactory in Sparks, Nevada. “This is not sluggish in the least. It’s fast. It’s fast to accelerate. It’s fast to brake. It’s really a step-change improvement in what it’s like to drive a semi-truck.”
Maybe. But when it comes to sales, Semi remains a slowpoke. The company hopes to produce at least 50,000 of them annually by next year, generating as much as $12.5 billion in revenue based on an estimated price of at least $250,000 per truck. To date, however, Tesla (with $81.5 billion of revenue last year) has only delivered about three dozen trucks to one publicly identified customer. It’s also excluded the model from its last two quarterly production reports. Even more unusual than the slow sales is–despite the fanfare of its launch–the minimal hype around the truck that Tesla and CEO Musk, with a net worth of $179.3 billion, are known for. Take an easy one. Tesla, whose CEO has notoriously rarely met a government incentive he didn’t like, is leaving money on the table: Tesla Semi isn’t listed among the zero-emission trucks that qualify for generous incentives from California worth $120,000 for battery-powered semis (and $240,000 for hydrogen models). Not because it doesn’t qualify but because the company hasn’t even registered for the program, according to the Air Resources Board.
Semi was also nowhere to be found at ACT Expo in Anaheim, California, last week, the country’s biggest showcase for zero- and low-pollution trucks and vans. That’s not unusual given Tesla’s habit of avoiding large auto and trade shows. But dozens of high-tech battery- and hydrogen-powered semis from companies including Volvo, Hyundai, Daimler, Peterbilt, Kenworth, Hino, BYD and startup Nikola were on display. And Tesla was conspicuous in its absence.
“One of the things that’s been quite remarkable about this show is the absolute lack of commentary on the Tesla product,” said Oliver Dixon, senior analyst for heavy trucks at researcher Guidehouse. “For what was at one time seen as the 800-pound gorilla in the room, I mean, it’s still a gorilla in the room, but it’s markedly more diminutive than it was.”
“It’s still a gorilla in the room, but it’s markedly more diminutive than it was.”
The market for battery- and hydrogen trucks is getting a push as California is barring new diesel commercial vehicles from being sold in the state by 2036 and allowing only zero-emission models by the mid-2040s. Just how fast sales will grow, however, isn’t clear. A survey of fleet operators by researcher Gladstein, Neandross & Associates presented at ACT Expo last week found that orders for electric semi trucks currently total just 6,000 units over the next few years, worth about $1.5 billion, from essentially zero last year. By the mid-2030s, as battery and hydrogen trucks reach cost parity with diesel models, they’ll dominate heavy-duty market sales, accounting for more than 200,000 units annually, according to a National Renewable Energy Laboratory study. That would be a market worth more than $40 billion a year. The push for non-polluting trucks will go beyond California as more than a dozen states, including New York and Washington, follow its strict air pollution rules and may adopt similar truck regulations.
Tesla had a chance to dominate the new electric truck space in the same way it’s led in battery-powered passenger vehicles. Still, early indications show it’s behind its competitors in the nascent field — despite Musk’s bluster. California, ground zero in the U.S. for electric vehicle sales, recorded only 134 sales of battery semis in 2022. Of that figure, most were made by China’s BYD; none were Teslas.
Shortly after the Semi was unveiled at a splashy event in Los Angeles in November 2017, numerous companies with big truck fleets announced plans to buy thousands of units. Nearly six years later, they’re still waiting. Trucking industry giants Ryder and J.B. Hunt told Forbes they don’t know when they’ll start receiving trucks. UPS said it’s in talks with Tesla and hopes to start getting them in 2024.
The company didn’t respond to a request for comment on its Semi program and estimated sales this year.
Tesla also didn’t provide Semi production and sales details at its March 1 investor conference or its April 19 quarterly results call. In the company’s latest 10-Q filing with the SEC, a sole reference to Semi in the 34-page document lists it as being in “pilot production” at the Nevada Gigafactory. Typically, that’s an industry term for a model that’s not yet a commercial product.
Tesla says the Semi is available in versions ranging from 300 to 500 miles with a full charge and fully loaded. Those figures, and Tesla’s claim that users could save $200,000 in fuel costs over three years, haven’t been independently verified. The company doesn’t list a price for the vehicle, how much it weighs or how many tons of cargo it can carry. At an April event in Sacramento, Pepsi told local reporters the trucks go 400 miles per charge.
Murky Production Status
Last November, before handing over trucks to Pepsi and Frito-Lay, Musk said Semi production would ramp up through 2023. “As I think everyone knows at this point, it takes about a year to ramp up production. We’re tentatively aiming for 50,000 units in 2024 for Tesla Semi in North America.”
Then in January, the company said it would build a dedicated assembly line for Semi at its Nevada plant as part of a $3.6 billion expansion there. Musk said production would be “limited” this year but reach high volume next year, without elaborating.
“The pace of production of the Tesla Semi has been very slow and the Street awaits a ramp in the second half,” said Dan Ives, an equity analyst for Wedbush Securities. “The demand is there. It’s all about producing them, which has been disappointing.”
PepsiCo, the only publicly identified Semi user so far, has said it expects to get 100 this year. Spokespeople for both PepsiCo and Frito-Lay did not respond to numerous requests for comment on the truck purchases and how they’re performing.
By comparison, smaller competitor Nikola, which also sells battery-powered semi-trucks, made 258 Tre BEVs last year and delivered 131 to dealers. The company said this week it plans to build up to 500 battery and hydrogen fuel cell semis in 2023.
Tesla hasn’t said much about Semi’s sales stats, but the National Highway Traffic Safety Administration has shared some details. In March, the safety regulator recalled Semi for a parking brake glitch that could cause the massive vehicle to roll away. In doing so, it revealed that there were just 35 Semis on the road. (Nikola and Volvo battery trucks have also had early recalls.) A separate filing by Tesla with the U.S. Department of Transportation shows the company has a fleet of 291 trucks, though many are likely prototypes it’s been testing since Musk first showed it off in 2017—and said it would be on sale by 2019. That fleet filing also reveals that nine people have been injured in Tesla-owned trucks, though it doesn’t specify the make.
Not Registered For Clean Truck Incentives
Pepsi has highlighted its Tesla Semis, particularly the 18 trucks it got in April, as evidence the company is greening its fleet because it cares about the environment. But those initial trucks were heavily subsidized with public funds. So far, it’s received $5 million for 18 Semis and charging systems at its facility in Sacramento—home to a bottling plant as well as the state capital and regulators—and $5.3 million for 15 trucks and chargers at its Frito-Lay snack factory in Modesto. The Tesla Semi also qualifies for a $40,000 federal tax credit for zero-emission trucks created by the Inflation Reduction Act. The need for heavy subsidies raises some questions about the adoption of Semi and battery-powered rivals in areas where such incentives aren’t available.
“We enable these fleets by providing incentives to get companies into these cleaner, zero-emission technologies that otherwise wouldn’t probably happen without the public dollar,” said Alberto Ayala, executive director of the Sacramento Metropolitan Air Quality Management District. The Tesla Semi costs about $250,000, he said.
In the Los Angeles region, home to the most cars and commercial vehicles in the country, the South Coast Air Quality Management District said it’s provided grants for customers to buy electric Volvo trucks. It told Forbes it hadn’t had applications for Tesla Semi purchases.
“The demand is there. It’s all about producing them, which has been disappointing.”
Despite California’s incentives and new regulations, shifting the trucking industry away from diesel will be difficult. That’s because electric and hydrogen trucks are still more expensive even with generous incentives. Then there’s the cost of installing high-powered charging stations to handle multiple trucks simultaneously and need for a more robust grid to handle the 750-kilowatt charger Tesla’s truck uses. For hydrogen fuel cell models, which promise longer range and faster refueling time than battery models, the main issue is bringing down the cost of hydrogen and finding cheaper ways to ship and store the fuel.
Should Tesla ultimately crank up Semi production, there’s another challenge ahead for it and newcomers like Nikola: convincing fleet owners to switch from dominant suppliers like Peterbilt, Volvo, Daimler and Freightliner that have their own green trucks.
“You’ve got a number of legacy players here who’ve been around for quite some time,” Guidehouse’s Dixon said. “For a non-legacy player like Tesla, Nikola or whoever, to come in and take market share is going to have to come from those guys. They’re very nice people to speak to but they do not play particularly nicely.”
MORE FROM FORBES
The post Elon Musk Said Tesla’s Semi Would Transform Trucking. 6 Years Later, Customers Are Still Waiting appeared first on Crunchbase News Today.
