Musk's Last Laugh With Impossible Electric Truck
Comment of the Day

December 05 2022

Commentary by Eoin Treacy

Musk's Last Laugh With Impossible Electric Truck

This article from Bloomberg may be of interest to subscribers. Here is a section:

The first working models of the Semi were delivered last week to PepsiCo Inc., part of an order of 100 vehicles. That’s three years behind schedule, but it still happened. More sober carmakers are getting in on the act, too. Alongside Volvo, Daimler Truck Holding AG has had orders for 1,280 zero-emission trucks and buses in the first half of this year, and unveiled a prototype long-haul model in September.

What’s changed? If Tesla had made dramatic breakthroughs in battery density, Musk would be boasting about it, so that's not the answer. There’s one huge difference in 2022 compared to 2017, however: the cost of diesel.

The decline of domestic oil refining and 2022’s squeeze in energy prices have conspired to drive US truck fuel costs up to almost double what they were five years ago. Plug the current prices of Californian diesel and commercial electricity into the trucking expenditure calculator made by logistics-data company ACT Research Co., and even an electric rig that’s twice as pricey to buy as a conventional vehicle is getting 12% cost savings every mile, equivalent to nearly $17,000 a year at typical usage levels.1

That might not last as diesel prices fall back to earth, but it’s close enough to put electric trucking 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 only half what a Class 8 can do between refueling stops. It’s telling, too, that one of its first customers will be a Frito-Lays plant. If you’re worried about the challenges of hauling heavy loads as well as your massive batteries, few types of cargo will be more forgiving than feather-light pallets of potato chips.

Eoin Treacy's view

The first thing that comes to mind is virtue signalling. Putting a few hundred or thousand large electric haulage vehicles on the road will help reduce emissions inside cities. They will be visible to large numbers of people and everyone will feel good about “helping” the environment. Meanwhile the heavy lifting of haulage will continue to depend on diesel.

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