The Extraordinary Economic Benefits of the Tesla Semi
After 3+ years of delay due to pandemic-related supply chain issues, Elon Musk has announced that the first deliveries of the Tesla Semi will happen before the end of this year. This truck is still an operator-driven vehicle, not fully autonomous yet, although the Tesla Semi will have semi-autonomous driving technology built in to improve safety and driving efficiency.
In spite of Musk’s statement, many industry observers believe the release date will be in 2023. He has a lot on his plate at the moment, but many of us watching this space hope his trucks hit the road sooner than later.
Regardless of the date, this is welcome news. The extraordinary economic and environmental benefits of this technology certainly suggest a rapid transition to electric semis in the very near future.
Tesla isn’t alone in this space. Volvo Trucks, Nikola, and others are preparing to deliver their own electric trucks and Daimler already has their version on the road.
The Operational Economics
A back-of-the-envelope calculations making the rounds in the blogosphere demonstrates the incredible economic benefits of the Tesla Semi, and by extension, Tesla’s competitors as well.
At today’s fuel prices, the cost to move a block of freight 200 miles in a diesel-powered semi is $170, compared to $28 in electricity costs for a Tesla Semi. That’s an 84% savings, which yields a payback period of around two years, according to the company.
Tesla claims that big rig maintenance and repair costs will be reduced as well, given Tesla Semi’s simpler, less-mechanical operating systems.
Tesla Semi batteries will initially provide a range of 500 miles and can be recharged in roughly 2 hours using Tesla’s Megacharger, a technology the company promises to deploy widely. By 2025, the range will likely double and the recharge time, cut in half.
Government Incentives Add to the Value
Musk claims he doesn’t need government incentives and tax credits to make his Tesla Semi cost-effective. But provisions in the recently passed Inflation Reduction Act certainly will make the economics even more appealing, provided the vehicles from Tesla and the other U.S. electric semi-truck manufacturers qualify with respect to their use of parts and batteries made in the U.S.
Under the new law, purchasers of a qualifying heavy-duty electric truck will be eligible for a $40,000 tax credit – which may represent as much as 15% of the cost of the typical diesel-powered semi-truck – although the sticker price for many of the electric versions still remains a bit murky.
Additionally, major states, including New York and California, are offering voucher programs to rebate a portion of the cost of heavy-duty electric semi-trucks purchased in their states.
Where Will All That Electricity Come From?
Some observers are skeptical about the environmental benefits of electric vehicles (EVs), and they may have a point … up to a point. How is generating the electricity to power an electric semi-truck necessarily less environmentally damaging than the operation of the diesel-powered big rig itself? That depends, of course, on how the electricity that’s charging the electric semi-truck is generated.
We dove deep into that issue in a future of energy column earlier this year. And since that time, given Russia’s increasing weaponization of oil and natural gas, I’ve become more convinced than ever that our future energy sources must be centered around nuclear power – especially the new technologies related to thorium-based reactor systems. If the electricity delivered from our vehicle charging stations comes from nuclear and other non-polluting sources, we truly will reap all the environmental benefits from shifting to electric semi-trucks.
Those benefits will be huge. Commercial freight and trucking account for one-fifth of the fuel used in the U.S., and that proportion is on the rise. This transportation mode is on track to account for 40% of the increase in demand for oil in the next 10 years, according to International Energy Agency, an international non-governmental organization.
Other Benefits from Electric Semi-Trucks
And if the economic and environmental benefits aren’t enough, consider these other advantages of electric semi-trucks:
- We’ll have reduced noise pollution in urban areas, not to mention the highways.
- With that reduction in noise, it will be possible to develop housing communities closer to city centers along highways and major routes. This will slow the encroachment of suburbs on vacant open spaces.
- The Tesla Semi and its counterparts will be easier and more comfortable to operate, likely increasing the attractiveness of the truck-driving profession. According to the American Trucking Association, the U.S. was short 80,000 truck drivers in 2021, which is expected to double by 2030. Electric semi-trucks will slow and possibly reverse that trend.
- The fuel efficiency and reduced operating costs of electric semi-trucks will put downward pressure on consumer prices since transportation costs can represent as much as 10% of the price of a consumer good.
- Electric semi-trucks reportedly will have improved torque and acceleration, so they’ll keep better pace with personal vehicles along the highways and especially on hills. This will reduce traffic backups and make the highways safer overall.
- Many municipalities prohibit diesel truck operations at night, including loading and unloading, because of noise. With the quieter electric semi-trucks, those noise restrictions won’t be an issue and trucking transportation will become a more efficient delivery option.
- With these more flexible delivery and pickup options, retailers will be able to minimize inventories, to an extent, operating more efficiently to improve profits or allow for price discounts.
- Given the massive amounts of energy electric semi-trucks can store, in the event of a disaster with power outages, truckers could band together to create microgrids to power hospitals, communication centers, and other essential services.
- The new electric truck designs will have a lower center of gravity, resulting in fewer rollovers. This means improved safety and fewer accident-related road closures.
Clean energy is all around us. It won’t be long until the range for an electric semi-truck is augmented with solar panels arrayed on the trailer and the top of the cab. That energy will also be tapped to maintain refrigerated trailers.
The challenge for the EV industry today is the demand for more range and more and faster-charging stations. But this is no different than what we have today.
Until then, electric semi-trucks will have to remain on shorter, closer-to-home runs and roundtrips, the same dilemma their smaller EV siblings face today.
Thanks for your analysis. I doubt Nikola will be one of the manufacturers. I look forward to the transition. Especially if nuclear is ramped up to produce the electricity needed. As these companies solve the tech hurdles, we will all benefit.