Los Angeles Times
Tesla's Semi and Roadster impress, but 'production hell' raises doubts about follow-through
By Russ Mitchel and Tracy Lien
November 17, 2017
Elon Musk wowed the world with the introduction of a new Tesla Semi heavy-duty truck Thursday night, as well as a sexy new $200,000 Roadster sports car that goes from zero to 60 mph in an unheard-of 1.9 seconds.
The Roadster was a surprise, intended, Musk said, to “give a hard-core smackdown to gasoline cars.” Reserving one of the first few cars, which will arrive in 2020, requires a $5,000 credit card payment and a $245,000 wire transfer payment within 10 days, according to the Tesla website. (The deposit falls to $50,000 if you’re willing to wait.)
As with Tesla’s rollout of its Model 3 sedan, those deposits should bring needed capital to the cash-burning company.
Musk raised as many questions as he answered at the high-energy theatrical performance at Space X headquarters in Hawthorne.
The truck -- whose appearance drew general praise as “awesome” and “impressive” -- will sport a range of 500 miles between charges, a number that dropped jaws and raised eyebrows. Most electric trucks now barely top 150 miles.
But Musk said nothing about how that range will be achieved, or how much freight-hauling weight the truck will surrender to accommodate its battery. Nor did he offer details about the Roadster’s battery or how the vehicle will reach a top speed of 250 miles per hour. (Or where anyone could drive at such speeds, outside of barren salt flats.)
The truck will rocket from zero to 60 in 5 seconds, compared with 15 seconds for a diesel. It is unclear whether the heavy-duty truck market cares much about race-car speed. He also said it would climb a 5%-grade hill at 65 mph, compared with a diesel’s 45 mph.
Musk’s performance was unmarred by any talk of the problematic Model 3 sedan that Tesla has vowed to sell by the hundreds of thousands per year. The car's production has been delayed by the challenges of manufacturing a new, cutting-edge battery design and problems integrating robots into the sheet-metal assembly process.
Without a successful Model 3, the truck and the Roadster may be moot.
Tesla’s stock price Friday rose 0.8% to $315.05 a share. But many investors had hoped to hear about the electric auto maker’s ability to emerge from the “production hell” delays engulfing the Model 3, said Cowen analyst Jeffrey Osborne.
Thursday’s event “offered no new nuggets of information to ease these investor concerns,” Osborne said. “In fact, [it] raised more questions than answers."
When Musk launched the Model 3 — Tesla’s first mass-market product — in July, the company was anticipating a production rate of 20,000 Model 3s a month by the end of December. In the three months through September, though, Tesla produced only 260 Model 3s — about three cars a day.
Some other analysts, focused on the truck, were more positive. Adam Jonas at Morgan Stanley, who’s been bullish on Tesla, told clients the event was “even more ambitious than we had hoped.”
The specs for the new Semi “exceeded our expectations,” Oppenheimer analyst Colin Rusch said in a note to investors.
Industry leaders in the electric vehicle market were skeptical of the 500-mile range. With today’s technology, achieving that would require batteries so heavy and expensive as to render the truck unmarketable.
Maybe Musk has some amazing innovation up his sleeve, said Ryan Poppel, chief executive of electric bus start-up Proterra, which has a factory in City of Industry. He’s eager to find out. In the meantime, he says, the Tesla truck “is going to send shock waves through the heavy-duty market.”
Ian Wright, founder and chief executive of electric truck powertrain maker Wrightspeed, was scratching his head on the range claim as well. “It’s going to make it very heavy and expensive,” he said, in a tough business where low cost is king. Cost “is where the rubber meets the road.”
Wal-Mart Stores Inc. told CNBC on Friday that it plans to test Tesla’s electric truck and that it has pre-ordered 15 of them. But it will take large orders from huge shipping companies to make the Tesla Semi a success, Poppel said.
The technology is new, and “fleet managers will get really excited, but they won’t bet their careers on it.” Product testing in heavy vehicles takes two to three years, he said. “What will move this market is when you see Penske, Ryder and Wal-Mart buying them” in large numbers, he said.
Other truck makers, including International, Volvo, Nikola and Mercedes-Benz are, like Tesla, also developing electric trucks with self-driving capabilities.
The profit margins for trucks are in the mid-teens, more than twice as much as for cars. Last year, 249,952 heavy-duty trucks were sold in North America. But the heavy truck business is slow-growing overall — only about 0.6% a year, a rate that consulting firm Deloitte expects to continue until 2026.
Because electric trucks are starting from a small base of less than 1% of the total truck market, the segment’s growth rate will be faster. Still, said Antti Lindstrom of IHS Markit, electric penetration of the big-rig market “isn’t going to be very significant until after 2025 or 2030. And even then, it will be very limited compared to the total number of trucks being sold.”
Stella K. Li, president of China-owned electric vehicle manufacturer BYD Motors Inc. — which builds heavy trucks and transit buses in Lancaster — was dismissive of Tesla’s threat to the industry. “Tesla doesn’t understand trucking,” she said. “Our truck teams know exactly what the customer needs.”
But Li acknowledged the buzz surrounding Tesla and Musk “serves as a marketing agent” for heavy electric trucks.
Before Musk’s Thursday night theatrics, reporters were led down a spotlighted outdoor corridor flanked by boxed hedges and into a large room that contained four big rigs: two Teslas, a Freightliner Cascadia, and an International. The point was to highlight Tesla’s dramatic departure from traditional truck design.
No diesel engine under the hood means plenty of room in the cab. Getting in and out is more like climbing stairs than ascending a step ladder. A tall man can comfortably stand in the Tesla cab. The steering wheel is center mounted, with a touch screen on either side. The dashboard is stark, with few gauges, buttons, stalks, or knobs.
The Freightliner and the International cabs were low-ceilinged, crowded and, by comparison, claustrophobic. Tesla representatives said they did not know the model years, though they did not appear to be the latest and the interiors were certainly not top of the line.
Tesla is touting greater safety, promising that the truck’s sensors will be able to “detect instability and react with positive or negative torque to each wheel while independently actuating all brakes,” according to a company handout.
“Jackknifing with this truck is gone,” Musk said.
“Megachargers” will be available “worldwide” to recharge trucks to a 400-mile range in 30 minutes. No detail on the megachargers was provided, except that they will be solar-powered.
Surround cameras minimize blind spots, Tesla said. The trucks will be equipped with enhanced Autopilot and other self-drive and safety features such as automatic emergency braking, automatic lane keeping and lane departure warning.
The Tesla Semi will share some components with the Model 3, most notably four of the electric motors used in the sedan. Tesla said the truck will have a different battery setup, more akin to those used in its Powerwall home and industrial storage units than to the batteries for its cars.
Although Tesla set the car industry afire by proving there was a market for cool-looking high-performance electric cars, the company is a fast follower in electric trucks. Most traditional truck makers — including Peterbilt, Kenworth and Mercedes-Benz — are developing battery or fuel-cell powered models. But most of the electric big rigs coming on the market will be built for short-haul routes, such as moving freight from an ocean port to a distribution center.
Michael Harley of Kelley Blue Book questions Tesla’s strategic direction in targeting long-haul trucks. “A more appropriate target … would be the short-haul, or so-called last-mile delivery.”
Platooning could change that equation. In a truck platoon, several big rigs pack up close enough together to be drawn along by the aerodynamic draft of the vehicle ahead, like cyclists lined up in a bike race. The distance between trucks is maintained by sensors and computers. That would extend the range of the batteries in the following trucks. Platooning is legal in eight states, including Michigan, Texas and Nevada, though not yet in California. Limited testing is allowed in Florida and Utah. Human drivers are required in each truck.
Tesla may have one enthusiastic user locked up: Company watchers would not be surprised if Musk starts using the Tesla Semi to ship batteries 240 miles from Nevada to the Fremont assembly plant.