What is the TRUE COST of a Tesla Semi?


– Tesla recently unveiled
their new Semi truck in Los Angeles, which might’ve
been a little overshadowed by the announcement of the
Roadster at the same time, but today we’re gonna take
a look at the Semi truck because this could be a
billion dollar product category for Tesla in the near future. The Tesla Semi is a
heavy duty tractor hauler aimed at disrupting the shipping industry. It classifies as a Class A truck
with a gross vehicle weight north of 80,000 pounds. The specs that Tesla has put
out are pretty ridiculous. With that full 80,000 pound load, which is about 3600 kilograms, it goes zero to 60 in 20 seconds. Without the load, it goes zero to 60 about as fast as my Model S does. Very crazy, that’s insane. Now, in the top end, this
new truck will go upwards of 500 miles on a single charge. That’s just over 800 kilometers. And, it has so much power
that it can go up a 5% grade at a constant 65 miles per hour, which is over 100 kilometers per hour, compared to the 45 miles per hour that a regular diesel truck can go. So, this is gonna make it be
able to travel a lot faster and get those deliveries
there even sooner. It has four independent motors
controlling the powertrain which can be improved over
time by software updates giving it potential for
over-the-air changes that will improve range and efficiency. The reported energy consumption is under two kilowatt hours per mile. Which if you multiply by
the 500 miles of distance, give you an estimated battery
pack of 1000 kilowatt hours, or one megawatt hour. Teslas estimates that a
company with the Tesla Semi will save around $200,000
in the life of the truck going upwards of a million miles. This begs the question, though,
what is the payback period? Meaning when I buy it, I’m
gonna have to pay more upfront. How long until I get that money back and then I really start
seeing those savings. Tesla puts the payback
period at only two years, practically the blink
of an eye when you talk about an industry like this
that is so longstanding and has so many big cycles. The Tesla Semi, as I
mentioned, is a Class A truck and that is aimed at tackling
these long-haul routes. While the range is only
500 miles per charge, after eight hours of driving,
the drivers are required to take a 30-minute break. And, coincidentally,
that is the exact time it will take to recharge the
truck with up to 400 miles of additional range at the
newly announced Megacharger. (hard rock music) Okay, sorry, just had to do that. Megachargers is such an awesome name. In the U.S., trucks move around
70% of the country’s freight and bring in over $700
billion in revenues. This is a ginormous market. Now, in comparison, the
cellphone market each year, which you may also think of ginormous, is only around $80 billion, so, almost a full order
of magnitude smaller than the trucking revenues. So, this really is a huge play for Tesla. Now, this industry is only getting bigger because we, as consumers,
continue to order things online and just get them delivered to our house. We’re not going to retail stores. So, the amount of trucks you need and the amount of products you’re shipping are just going up and up as
our couch-based consumerism here in the United
States continues to grow. Companies are already
jumping onboard here. And, Walmart recently reported
that they’ve already ordered 15 of these new Semis. And, there were many others at the event that Tesla pointed to in
the first part of the speech where they said, “Thank you for all “the orders you’ve placed.” Now, it’s unlikely we’ll
know exactly how many orders they have until maybe
a future earnings call, but I would say that right
now it’s safe to assume that they have probably
a couple hundred orders already placed for these trucks, enough, hopefully, for
them to fund the operations and manufacturing needed
to make the trucks. Tesla just recently
unveiled the expected price of the trucks to be $150
K for the 300-mile version and $180,000 for the 500-mile version. Considering this likely has
a one megawatt hour battery, this hints at a major
breakthrough in battery technology if they can sell them this cheap. Previous statements from Tesla
and others in the industry indicated that the price per kilowatt hour for a battery was around $145. So, if you have a thousand
kilowatt hour pack or one megawatt hour at $145 per kilowatt, you’d be looking at $145,000
before spending a dime on the cab itself, not to
mention the margin you need to cover the cost of producing the truck. This leads me to believe
that there are only a couple possible explanations here. One is that Tesla did indeed
make a battery breakthrough that lets them manufacture these at a dramatically reduced cost. Or, the second option, is that
they are selling these trucks at a loss. I’m inclined to go with number one because Tesla is operating on thin margins and burning through cash at
an exceptionally high rate. So, it’s unlikely that their investors and everyone else would really be onboard with them selling it at this
price and taking a loss. So, for the price of the truck
alone in our analysis here, we’re gonna put it at
$180,000 for our estimate. With diesel trucks you have a cheaper initial price for sure, maybe around 120 K depending on which options you go with, whether or not you use
sleeper cab, et cetera. Then you have over $20,000
a year on oil changes, tires, hard parts replacements,
and other issues that arise. Certainly the Tesla truck won’t be 100% free of these things. All trucks need new tires, for example, but considering you’ll never
have to replace the brakes– – The brake pads basically last forever. (audience applauding) So, you never need to replace
brake pads ever, ever. – [Ben] And, in addition,
the Tesla Semi has no engine, transmission, after treatment
system for differentials that require upkeep so
it’s really not a stretch to say that the cost of
maintenance and repairs, the annual cost just of
upkeep on the vehicle, could be 70% or less compared
to a regular diesel cab. Besides those other
savings, the fuel savings are gonna make a huge impact
on that higher initial price, making that payback period
of two years a reality. Now, Tesla estimates over
one million miles in a Semi will get you about $200,000 in savings, which is pretty good. But, the fascinating thing
here is that from day one, the fuel costs alone will save
you about 60% over diesel. At the event, Elon also dropped this bomb about the fuel costs for the Tesla Semi. – [Elon] We’re guaranteeing a seven cent kilowatt wholesale price. Wanna be clear about that. – [Audience Member] Yeah! – [Elon] This is real, these are real numbers.
(audience cheering) – [Ben] That is insane and
is gonna be a major reason why the trucking industry will likely soften their stance against Tesla. So, if we take the seven
cents per kilowatt hour, which they can guarantee
because they control the entire system, the solar
energy, that’s building up the actual electricity,
storing it in a power pack and then providing it in a Megacharger, really there’s no outside
influence that would affect that so they can guarantee that price. And, it takes two kilowatt
hours to go one mile, more or less, then we’re
looking at 14 cents per mile in the Tesla Semi compared to 36 cents with the diesel prices with
the estimates we had earlier, giving us over a 60%
savings on fuel alone. Now diesel prices, along
with gasoline prices, fluctuate over time making it difficult for trucking companies
to control their costs and remain profitable. Let’s unpack this for a second. Trucking companies have
three general cost categories for their trucks: fixed costs,
variable costs, and salaries. Fixed costs are the ones
that don’t change regardless of how much you use your truck. They’re things like the
truck payment, insurance, permits, and any tags or
anything that you need to go on your routes. Variable costs or the
other category do change. For example, the more you
drive your truck, the more fuel you need and the more
maintenance you’ll have. So, these things can
change but usually shift with the use of the truck. So, it’s always almost a good thing when these costs go up because
that means you’re making more money as well. Unless you have things like
maintenance and repairs that at certain points in a truck’s life, it skyrocket as we see in
typical, conventional cars. And lastly, you have salaries. Now, these generally refer to the drivers, but also to the people that
keep the truck running smoothly and handle coordinating the loads and figuring out dispatching
and all those kind of things. When it’s all said and
done, Tesla estimates that from day one, you’ll see
a 20% lower cost of ownership and as Elon put it… – I wanna be clear, this is from day one. – [Ben] And, while it’s
hard to say how exact those numbers are, they’ll
definitely win in the long run. That’s a guarantee. Now, all of this doesn’t take into account the convoy option in which
one driver leads a convoy with two driverless Semis behind him. Yeah. That’s an 80,000 pound truck
traveling at 65 miles per hour without a person behind the wheel. As scary as that may sound,
it’s not really that crazy if you consider that
they’ll likely only use this on known routes in
excellent road conditions. And, in the end, all these
trucks that are in the convoy are really doing is
following the front truck. They’re not really driving on their own. They’re just having to
make a few decisions about how to stay in the
lane and how fast to go. Now, in this scenario, Tesla
puts the true cost of ownership of a regular diesel truck
at 2X the cost of a Semi. They even tout that this
is cheaper than rail. Now, that is a stretch but one
that they may be able to make especially as the
Megacharger network grows. Now, these numbers do
make sense considering one of the most expensive
costs is the driver and you’d be cutting out two to the three in this scenario. I’m sure by now you’re dying to get your hands on one, right? Well, like all Tesla models,
you’re gonna have to wait a little while. Elon reported that
production begins in 2019. But, like we’ve heard before, I would add at least six months to
that or maybe even more to be realistic here. The reason I say that besides
their history of delays, is that they don’t actually have a place to make the truck right now. Elon has famously said
that the Fremont plant is bursting at the seams and
that they’re in the middle of production hell right now trying to get the Model 3 out the door. Let’s not forget that
the Model 3 is the reason for Tesla’s existence and the cornerstone to their entire mission. So yeah, that’s definitely
the priority right now. But, how will they even build it? Well, we don’t have hard
answers on that yet, but most people I’ve talked to
with knowledge in this space agree that it would make
sense for them to buy an old plant somewhere in
North America and retrofit or perhaps have a large chunk of the truck be made by someone else and
then maybe final assembly is done by them in a smaller
facility that’s easier to get up and running. This is a common practice in the industry but not one that Tesla
typically has embraced with their vertical integration approach. Given the dramatic cost savings for fuel, maintenance, repairs, and
potentially some of the drivers, the Tesla Semi could be north of $400,000 and still make economic
sense for a company looking to save money. Of course, many large companies
have short-sightedness due to how the stock market works and often how executive
compensation is directly tied to the quarterly earnings,
so it may be a challenge for them to think in those kind of terms. But, with merely a
two-year payback period, it isn’t likely that the
added cost of the Tesla Semi would reduce adoption really in any way. As we’ve seen, this could be a major win for shipping companies
looking to save money. If the convoy scenario
is legal and possible, they could be saving upwards
of 60% on the driver costs, one of the largest
expenses that they have. Not to mention locking in
the rate of seven cents per kilowatt hour and basically
all of the maintenance and repairs being
completely eliminated here with the exception of tires. So, in the end I think
the truck looks fantastic. I’m most excited about the
reduction in emissions. And, also this could reduce shipping costs for a lot of companies, helping boost the economy here in the United States and economies elsewhere
as they start to expand beyond just North America. So, I’d love to know what you think. Leave me a comment down below especially if you have
experience in this industry. This is one that’s pretty new to me, but I’m doing my best to understand all the context behind it. And, as all industries are,
there is a lot of nuance here. So, I’d love to learn from you. Please let me know any other
things that I missed here and how I could better
understand the costs and analyze that for
you and then present it in a future video. And, if you like this video,
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