As described in Rei’s diary, Tesla’s truck announcement is hugely important. I wrote a comment that turned into a diary… So here’s my view as a former owner of a medium-sized regional distribution business and fleet owner:
1. My driver would take our (leased, more in a moment) semi rig to the Mobil-Exxon refinery in LA (Torrance, about 110 miles) and pick up a full load of dry ice, then deliver to two aerospace companies nearby, then back on the 405 to the 101N and drop a portion of the load at Amgen and other medical/pharma companies in Thousand Oaks, then hit two more stops before returning to Santa Barbara. Maybe 250 miles round trip, plus some slow-speed delivery to different buildings in the industrial complexes. This Tesla rig would work beautifully for that sort of daily trip.
2. Most of the SoCal deliveries—retail such as Trader Joe’s, Safeway, Beer trucks, CostCo; industrial loads to factories and warehouses, etc., plus all the fuel delivery trucks (the ultimate ironic commentary: an EV semi delivering gasoline and diesel)—make daily round trips of 250 miles or less.
3. Further, most of the container traffic from the Port of LA and Long Beach (the busiest port in the country) is driven to huge facilities outside of LA, to be distributed from there. Trucks run every day and night, hooking up to a container and driven to so-called “inland ports” located in places like Riverside CA, about 75 miles. Trains haul a lot of those containers, but they have to be distributed from there to companies for further distribution. A single rig (with different drivers working shifts) will run day and night, back and forth, LA harbor to Riverside. From the “inland port” the containers are hauled to warehouses and distribution points all over SoCal and to other points beyond. This is true all over the U.S. and many of these distribution trips are under 500 miles.
4. Think of the thousands of trucks you may see in a metropolitan area like LA, and realize that the vast majority are making LOCAL (under 200 miles) trips and deliveries.
5. Now, about finances: the majority of trucks are leased. Very large fleet owners may purchase their fleets, but honestly, leasing makes maximum sense for a business for tax, maintenance, and capital investment points of view. Now take a **million mile** lifetime on the Tesla rig with almost no maintenance and very few on-the-road breakdowns (which is one of the core advantages of EV design), and you are seeing significant return on investment even with a higher initial price, a longer lease period, which means that you may very well see a wash on costs, even the possibility of net lower costs.
6. The cost of running a rig on diesel is huge, and loaded with variation which can destroy a business's net revenue performance. When diesel hit $5/gal 8 or so years back, every business I knew or worked with was caught in a situation where their costs exceeded their profit. Everything Runs On Diesel is the reality of our civilization, and the variations of diesel costs drive every C-level exec or owner nuts in trying to plan a year’s income/costs/profits, deal with fluctuations in costs due to some bullshit excuse (or real issue such as hurricanes, refinery fires, and yearly refinery shutdowns for maintenance) by the oil companies to raise prices and profits or, you know, political bullshit to squeeze whatever country is in the wringer today. The elimination of diesel to an operator is HUGE for all concerned. Add in the cost in time and money for regular maintenance of the engine and drivetrain of a truck, most of which is eliminated in an EV, and the cost savings are significant. I should mention here, probably worthy of a separate diary, that every warehouse, factory and retail outlet has a huge flat roof that’s just waiting for a solar installation, tied into the grid, and potentially integrated into an industrial-sized Tesla battery pack to facilitate charging station on the loading dock. In the half-hour to an hour a truck is at the delivery point, it can be charging, extending the range. Tesla will offer industrial-sized solar installations and battery packs, on lease, and they may be able to make it financially viable to the building owner and operators.
So that’s my business/market view. But wait, there’s more! As a former Tech product manager:
7. In designing an EV truck fleet product line, the semi is the perfect initial product that logically leads to an entire transport product line. It has the size and load-carrying capacity to be able to utilize existing batteries today, and through lighter-weight and aerodynamic design, not compromise the load-carrying capacity. The semi can also enable debugging and refinement—via on-the-road experience—of the design, allowing further focused development of the electromechanical details by using potentially thousands of on-the-road test beds traveling millions of real-world miles.
8. Which in turn offers a future of progressively smaller trucks and buses. Think of the number of smaller, under-26,000 pound rigs you see every day on the road, from mid-sized trucks to delivery vans, including UPS and FedEx and Postal vehicles of all sizes. This is a giant market and one that’s ripe for the picking—an EV delivery vehicle with more than a hundred-mile range that’s capable of carrying an equivalent load and has a network of fast-charge stations (or better, on-sight charging at the fleet lot) is a true game-changer. Especially considering the lower costs of fuel, maintenance, and the potential leasing cost equality or reduction.
9. Oh, and one last thing: Musk/Tesla can only refine the capacity, lower the weight, and slash the cost of batteries if they are able to produce and sell large volumes at a profitable price. Moving into trucking and transport further develops the market and brings higher-volume sales, leading to this capacity and cost advancement.
People still dream of a hydrogen future for transport, but that would require an entirely new and separate infrastructure for production, transport, storage, and delivery of a new liquid fuel, costing many billion$ of investment capital to install over at least a decade. An EV-based transport system requires nothing but grid and solar facility tie-in and a network of serious charging stations—a far cheaper solution, even ignoring the lowered cost of EV maintenance and the potential savings in longer operation hours/miles.
Thanks for reading. As a geek I’ve been talking about this for a decade with my bored but patient friends and family, and now here it is, finally starting.
