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Elon Musk’s Tesla Semi has fatal marketing flaw

Tesla CEO Elon Musk pitched the electric Tesla Semi as a “badass” big rig in 2017 — one with semi-autonomous features that could haul the maximum legal weight for 500 miles at highway speed.

Now, in 2023, we’re starting to see that Tesla’s plan to take over commercial trucking has some cracks. The biggest flaw in the Tesla Semi’s strategy: It’s geared toward a consumer audience, not a business one. 

“I’ve been taken aback by how little we actually know about this thing,” said Oliver Dixon, senior analyst at Guidehouse and a former truck driver. “It’s inherently suspicious when words like ‘badass’ are used to describe a truck. You don’t actually make money in the trucking industry by having lots of chrome and shiny things. You make money by making sure the trailer is packed.”

On the other hand, the simplicity of the truck could allow it to be quickly manufactured and distributed among customers waiting for their preorders from 2017. Those include giants like Walmart, FedEx and J.B. Hunt. Complex diesel engines are trickier to manufacture than the Tesla Semi’s electric powertrain.

“These trucks, due to their simplicity, are kind of plug and play,” said Mike Roeth, who is currently the executive director of the North American Council for Freight Efficiency, an organization dedicated to exploring fuel-efficient freight technologies.

Its mere existence in the market could also force other trucking giants to hasten their own EV aspirations.

Still, there are some issues for the Tesla Semi to address before that happens.

We don’t know how much this thing weighs 

There are a few key details that trucking companies, retailers and manufacturers need to know about the vehicles they order. One of them is how heavy the truck is. 

Trucks in the United States are allowed to weigh a maximum of 80,000 pounds, including the tractor, the trailer and everything you’re fitting inside. Electric trucks, like the Semi, are allowed to weigh 82,000 pounds. Companies typically want to haul as much as they can in a single truck, so getting close to that 80,000-pound limit is ideal.

However, Tesla, which did not respond to a press inquiry, has not released information on how much the truck actually weighs.

That limits what the Semi is able to haul, and for how long. Right now, snack and beverage behemoth PepsiCo is the only company to have received its Tesla Semis. It has three dozen electric big rigs servicing two California warehouses.

From one base in Modesto, California, 15 Tesla Semis are hauling Frito-Lay products up to 425 miles, according to a 2022 Reuters article. That means potato chips and other snack foods — a (literally) low-lift task. From another base in Sacramento, California, 31 Tesla Semis are hauling loads of soda. It’s a much heavier load, but these trips are around 100 miles, per Reuters. 

That would make the Tesla Semi a less versatile truck than a traditional option, where you know what it weighs and how long a distance it can handle. When communicating to a commercial audience, it’s crucial to include those details.

“You’re not buying a metal product anymore,” Dixon said. “You’re buying into a notion of confidence that the truck is part of your business model.”

The Tesla Semi charging network isn’t quite there

Buyers of a typical Tesla car are likely to go home each night and charge up their vehicle there. However, being a long-haul truck driver isn’t quite as predictable. Truckers need diesel stops (preferably with parking) all over the country to refuel.  To address the disparity between availability of diesel and that of charging stations, a joint venture in Europe with Daimler, Volvo and others is investing the equivalent of $534 million to build 1,700 charge points for electric trucks. TerraWatt, a U.S. startup, announced plans last year to build an interstate charging network for semi-trucks.

The Tesla Semi isn’t currently making cross-country runs. But, at 500 miles per charge, an interstate network of charging stations would be necessary for the truck to meaningfully compete with diesel incumbents. 

What’s more, according to Roeth, the Tesla Semi doesn’t appear compatible with other electric charge points. Intriguingly, at the Modesto facility, Roeth said there are only four chargers for the 15 trucks. 

That could undercut one big cost benefit of the Tesla Semi: fuel savings. The Tesla Semi’s webpage advertises that electric charging is “approximately 2.5 times cheaper per mile than refueling with diesel.” 

(Notably, this was based on diesel costs in California, which are usually far greater than in the rest of the U.S, and in 2022, a historically high year for fuel costs.) 

Having to charge fast and potentially during the day pushes up the cost of electricity, Roeth said.

The lack of a charging network is another major hurdle for the Tesla Semi to address if it’s going to challenge incumbent manufacturers. But, save for road trippers, a robust charging network is not as big of a concern for its core retail audience.

Maintenance could be Tesla Semi’s saving grace — or its biggest thorn

Motorists aren’t usually terribly concerned about having to leave a car in the shop for a few days; it’s easy enough to find a rental. But for a trucking company, lost revenue from not hauling freight can be the straw that breaks the camel’s back. 

Cheerfully, Roeth said electric trucks theoretically require less maintenance and downtime than cumbersome diesel engines. It’s still unclear how robust the Tesla Semi maintenance network really is. 

Social media posts these past few weeks have captured Tesla Semis stopped on the highway, with remote units tending to some. It’s uncertain what caused these Semis to retreat to the shoulders of the highway. 

Moreover, Tesla might want to sell more extra parts to generate more cash from the Semi business. Dixon noted that most heavy truck dealers make their profits from parts and service, rather than selling the truck itself. Take the most recent annual earnings report from Rush Enterprises, a new and used truck dealer in the U.S. and Canada:

Rush Enterprises typically earns less than 28% of its profit from merely selling new and used vehicles. But up to 67% is generated from “aftermarket products and service sales.” For Tesla, that could mean parts, maintenance or even a charging network. That groundwork isn’t there yet — and it’s not clear if it’s in Musk’s “badass” plans.

What do you think of the Tesla Semi? Email [email protected] with your thoughts.