Elon Musk says Commercial Trucks are all about Economics. He’s right, but it isn’t the Economics he thinks

In a presentation at Tesla’s Headquarters in Austin Texas on Thursday, Elon Musk spoke briefly about the Tesla Semi and announced he approved plans for volume production of the leading electric truck. He goes on to say “But for commercial vehicles the companies that make the buying decisions they just look at it and say like ‘what are the numbers?’ […] And the thing is the economics are a much better than [a] diesel truck. It’s basically a no brainer. If you’re a transport company and you don’t use an electric, the Tesla electric semi you’re just losing money, why would you do that?”

He’s right, the buying decisions for commercial semi truck fleets is all about economics, but it’s not just the economics he thinks. No questions asked, electricity rates are comfortably cheaper than diesel or hydrogen prices at the moment, and maintenance for battery electric trucks like the Tesla Semi are much lighter diesel or hydrogen powered trucks. That’s only two pieces to the economic puzzle though. A few of the major economic pieces to the puzzle are payload (how much weight a truck can haul at any given time), recharging/refueling time, and range, which in part plays into the refueling time. At Tesla’s shareholder meeting last week, Elon Musk said the Tesla Semi is a "no brainer" because truck purchase decisions are all about Economics. He’s right, but it isn’t quite the economics he thinks.

Don't get me wrong fuel cost and maintenance are clearly much cheaper than diesel or hydrogen counterparts for battery electric trucks like the Tesla Semi, but these are just two pieces to a much larger trucking economics puzzle. Elon says it's basically a no brainer, but implementing battery electric trucks like the Tesla Semi is only a no brainer for fleets that are minimally, or not at all inhibited by the compromises that come with battery electric trucks.

These compromises come in several forms:

- Low Range

- Slow Recharging

- Lower Payload

- Battery Degredation

- Encumbered by extreme weather

Just to name some of the major ones. Let's break these down a bit more:

Low range results in more time spent at the charging lot. This largely plays into how much time is spent charging on a daily basis. For short haul fleets, up to 500 mile range (rated at 82k lbs at 60mph) is plenty without any issues at any point even with the batteries having degraded, extreme weather, and driving 65+ mph. It's when you start getting into mid and long haul routes where range, and by extension time spent at the charger, becomes a huge issue.

Time is money, and trucking fleets generally don't have time to waste. Some might say, Hours Of Service (HOS) laws require truck drivers to take a 30 minute break every 8 hours of driving, and can only drive for 11hrs before taking a 10hr break every 24hrs. A few key things this misses is that, well, not all truck drivers follow HOS laws, unfortunately. Even if they all did, several hundred miles can be driven in comfortably under 8 hours. Just driving a Tesla Semi at highway speeds of 65-70mph, in which the driver would get less than the 500 miles rated range since they're driving faster speeds than what it's rated at 500 mi for, you'd still drive over 450 miles in just 7 hours. This is almost certainly a considerable amount more range than what the Tesla Semi would get at those speeds, but even if theoretically it did get the full 500 miles, that leaves almost no buffer (because you don't want to run your truck to 0%, or even close of course), and doesn't take into account any amount of battery degradation, or extreme weather that'd temporarily reduce the trucks range. When the truck driver does stop to charge, they're charging at a speed of up to 70% in 30 minutes, allowing them to only drive another 350 miles before having to stop to charge again, unless they want to charge for about an hour or so to get a full charge. This is a tame scenario, not even getting into more extreme cases such as teams driving, where multiple drivers drive back to back without stopping, and time is almost always of the essence. Not quite a no brainer to say the least.

Getting into payload, payload is how much weight a truck can get paid to haul at one time. Semi trucks are legally limited as to how much they can haul (including the weight of the truck and trailer). For diesel trucks, this is at 80k lbs, for 0 emission trucks this is 82k lbs, giving them an extra 2000 lbs allowance since they're heavier. The head of the Tesla Semi program who oversees its engineering, @danWpriestley, said in a presentation at ACT Expo recently, that 23,000 lbs was "very attainable" for the 500 mile range version when it officially goes into production late 2025. This is a massive stretch I'd say, and the Tesla Semi has yet to reach that low of weight after over 7 years of development, but let's say that somehow the production model achieves that number. Tesla has done some incredible things so maybe they can pull this off. Even with achieving that impressive feat, it'd still be about 5k lbs heavier than the average diesel truck resulting in about 3k lbs of less payload capacity. This would mean less cargo could be hauled, or the options of what loads could be taken as a for-hire carrier would be limited. This would mean they'd make less money, and/or it'd cost them more money to haul the same amount of freight. Payload is a huge part of the economics for commercial fleets and owner operators

A topic that is often forgotten in this discussion, is battery degradation. Battery degradation, put simply, is when the batteries lose their effectiveness over time as a result of regular use, as well as overheating. This is normal among Lithium Ion batteries like the ones in battery electric vehicles or the ones in the phones we all use on a daily basis. This could be especially the case since these battery electric semi trucks are charging at extremely high speeds all the time resulting in the batteries getting hotter and thus more susceptible to degradation. Over the life of the vehicle, this would result in a loss of about a 5%-20% roughly, varying based on many factors, meaning the range on day 1 won't be the same as the range year 2, 3, 4, and so on.

Lastly battery electric trucks are encumbered by extreme weather conditions such extremely cold or extremely hot temperatures. In these extreme temperatures, battery electric vehicles have shown to lose on average roughly 20% of their rated range, even ones with heat pumps, and that might even be on the conservative end. This isn't the case for diesel trucks, although it is for hydrogen fuel cell electric trucks to a much lesser degree as they still use some Lithium-Ion batteries.

With that all being said, it's not quite as simple as fuel and maintenance are cheaper so therefore it's a no brainer. Of course there's other benefits to battery electric trucks like the Tesla Semi as well, but as a whole the benefits don't necessarily outweigh the drawbacks. For most use cases they simply don't, but as battery technology improves the amount of practical and profitable use cases will increase.

The Tesla Semi has shown to be an incredible product there's no questioning that, but it's not a one size fits all solution in the trucking industry, and the economics are far from a no brainer across the board. Will the Tesla Semi sell well? I'm sure it will, it's an exceptional product and is no brainer for short haul fleets. This is not a jab at Elon or Tesla, Elon and his team clearly did a remarkable job on the Tesla Semi, as it has the best specs of any battery electric truck in development or on the market. Hopefully one day Tesla can come out with a 0 emission truck that is a no brainer for all fleets, I'd love to see that happen.