The Tesla Semi ‘Coin’ Has 2 Sides – Tesla Motors (NASDAQ:TSLA)


Every enterprise has two essential units of numbers – revenue and bills. That is actually the only method to take a look at any enterprise. As lengthy as revenue exceeds bills the corporate is worthwhile. Tesla (TSLA) simply doesn’t appear to care or perceive this necessary metric.

Elon Musk is all about electrification of the planet, with seemingly no concern for the prices of getting there. The presentation final Thursday was additional proof of this.

The Semi reveal

In the presentation, Tesla’s vans each had tandem rear axles and day cab configurations. “Day cab” simply means a truck with no sleeper unit, meant for shorter hauls the place the driving force exits the truck on the finish of his/her shift on the unique level of departure. These vans are for distribution middle deliveries out to shops and again to their unique place to begin when empty. If these vans are operated by proprietor/operators underneath a lease badociation they’re making no cash on the return journey, not like OTR drivers.

Day cabs can be found in two configurations. Single and tandem axle configurations. By eliminating one of many rear axles you cut back weight and working prices by eliminating an axle and 4 tires, however it additionally reduces the gross mixed weight from 80,000 lbs to 65,000 lbs. The single rear axle vans usually tow the shorter 40′ trailers generally utilized by grocers and short-haul supply providers the place weight per cubic foot is greater (canned items weigh greater than containers of clothes).

(pictures courtesy of Penske Truck Sales)

For now, it seems Tesla is simply going to serve the tandem axle 80,000 lb GVW market. Nothing incorrect with that if their badysis pointed to that being the bigger market.

But that is the place the water muddies. The single axle yellow truck is a 2015 Freightliner with simply over 100ok miles and is promoting for $77ok. The white truck is a 2013 Freightliner with 126ok miles and is priced at $58,000. Pretty cheap for any supply exercise with plenty of helpful miles left on every truck. We nonetheless haven’t seen the pricing for the Tesla Semi.

“Useful load” is a crucial quantity we didn’t hear from Musk on Thursday. Or even the empty weight of the vans. These are crucial numbers in trucking economics and I’ll clarify why. Useful load is how a lot cargo weight a truck can carry after subtracting the load of the truck, trailer, driver, and gas. A truck can not cross via a weigh station over 80,000 lbs as a result of it exceeds the truck’s authorized restrict.

From John Peterson’s article yesterday, it’s cheap to count on the Tesla Semi to wish a 1mWh battery pack to maneuver 80,000 lbs 500 miles. We already know batteries are heavy. The battery packs within the Tesla automobiles are the heaviest element of all. Published numbers are 1,200 lbs for the 85kWh pack. If we divide 1,200 by 85 after which multiply by 1,000 we get a battery weight for the Semi of about 7 tons or 14,000 lbs. The 4 motors and different elements needs to be about 1,000 lbs whole. That brings us to 15,000 lbs for the electrical drivetrain.

A diesel system is made up of about of two,700 lbs for an engine, 750 lbs for the transmission and let’s badume 500 lbs for the remainder of the elements. Then we add full gas at 160 gallons at 7 lbs per gallon or 1,120 lbs. That is a grand whole of 5,070 lbs.

That additional 9,930 lbs of weight for the electrical system have to be subtracted from a diesel semi’s helpful load. Various stories from on-line information put the helpful load of a single axle day cab at 30-35,000 lbs of cargo. Typical haul weights for a tandem axle are 42,000-46,000 lbs of cargo.

The flip aspect of the coin

Musk’s presentation on Thursday solely spoke about his supposed nice prices discount over a diesel truck dropping from $1.51 per mile to $1.26 per mile. 20% financial savings sounds good, proper? But now we should take a look at the flip (income) aspect of the coin. If I am now utilizing single-axle day cabs and hauling the max 35,000 lbs per load I simply lower my revenue technology or load capability by 28% by switching to an electrical drivetrain. If I am utilizing a tandem axle with the bigger trailer I simply misplaced 21% of my revenue technology and hauling capability. It additionally implies that if I have to ship 1 million lbs in a given time frame I’ll want extra vans and drivers to get the job completed.

Let’s say I am a grocer and I want 200,000 lbs delivered every morning. Until now I’ve been capable of measurement my mbades in order that my six shops every get one supply each morning. (Way low however let’s hold it easy). Where I used to be doing these six deliveries with six vans I now might want to make eight deliveries to get the identical 200,000 lbs delivered. And these two further vans might want to make a number of stops burning extra juice. Depending on the space between shops it may not work. If my trailers are refrigerated (which some at all times are for grocers) the influence is even better. That 20% financial savings in working prices versus diesel simply bought swallowed by the prices of working two extra vans and trailers, two extra drivers, 36 extra tires, and so on. Where am I saving any cash? I am not. This is the precise situation every distribution middle potential purchaser goes to come across.

ValueAnalyst had a very good article this morning additional breaking down the prices of operation which do certainly look engaging. But that solely lasts till we take a look at the flip aspect of the coin simply as there are two sides to each story.

Another complicated level on Thursday was Musk’s dialogue of a nationwide community of solar-powered “Megachargers” providing $.07 per kW energy. Why do you want a brand new community for these vans if the outlined market is day cab operators? Just promote them solar-powered Megachargers to be used on the distribution facilities or allow them to purchase their very own electrical energy. Guess that didn’t sound as thrilling.


Elon Musk can placed on all the “dog and pony” reveals he desires and he will definitely garner some reservations for these vans. But I doubt lots of them will final and change into orders as soon as Tesla releases all of the numbers. Useful load is much more necessary than the preliminary value of the truck which might certainly be overcome with time. But giant 20%-plus reductions in helpful load can not.

New airliners don’t promote gas financial savings by lowering the variety of pbadengers a aircraft can carry. They enhance efficiency whereas carrying as many or extra pbadengers. Until Tesla can produce an electrical truck with the identical or better payload capability as a diesel the Tesla Semi goes nowhere.

John Petersen was spot on with one other level in his newest article. Tesla already is battling the Gigafactory output. If it’s going to take 1 MW of battery cells for simply 1 truck vs 10-13 automobiles producing a lot greater whole revenues, what’s the level of constructing vans? Are vans going to promote for 10 occasions a Model S 100D?

Tesla already is shedding billions making an attempt to play the position of producer, vendor, and energy supplier with automobiles. I can not wait to listen to the CapEx funds for the brand new truck manufacturing facility, new truck gross sales/supply facilities, and the Megacharger community all which might be prepared in 24 months. Those numbers will definitely “blow your mind outside your skull, into another dimension.” Tesla board members – are you listening?

Disclosure: I’m/we’re quick TSLA VIA OPTIONS.

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