There is no denying that EVs are here to stay, or that as the technology improves so does their range of movement. It is indeed this range, or lack thereof that has deterred so many people from relying on EVs as their main means of transport. But as battery technology steadily improves, along with the infrastructure that ensures a charging point is never far away, this range anxiety becomes less and less of an issue. The viability of EVs as personal transportation that has long been in doubt has rapidly become a relative certainty, and even though, currently, total sales pale in comparison with internal combustion engine (ICE) vehicles, they are set to turn the entire industry on its head. It seems then, that in a very short space of time the implausible has become assured, but what if we take that implausibility and step it up a gear?
The shift from transport of people to that of freight is indeed massive, as surely are the expectations of potential customers. The inconvenience of range anxiety, ie the fear of being stranded with no means to reach your destination, becomes a legitimate logistical concern with enormous implication for profit margins, and ultimately the very survival of a business. If goods don't reach their destination on time, why would a customer continue to have faith in your promise to deliver? With this in mind the question of whether a gap in the market for an electric semi-truck even exists is certainly a valid one, and if so, is it able to be filled?
In April of last year Tesla seemingly answered both of those questions with the announcement of its semi-truck, with its usual reticence for details. At the unveiling of the truck last November, Tesla finally released some very impressive specs, but these specs posed more questions than they answered, with some asserting that they defied the laws of physics. Related: MIT's Miracle Energy Breakthrough
Tesla’s assertion that it can produce a truck capable of taking on tried and trusted diesels is empty unless it can find companies that have faith in its ability to deliver. As of January of this year there are 19 companies with that faith, including companies for whom delivery is their business, such as UPS and DHL, as well as companies like WalMart and Pepsi that rely on logistics as the backbone to their profitability. What are the factors that are encouraging such companies to have this faith in a product with a higher initial investment and a lack of certainty about performance?
That higher initial investment is between $25,000 and $55,000 based on the price of the average diesel semi. This may seem high at first, but when the running costs over the lifetime of the vehicle are considered it begins to look like a small price to pay. Given the comparative costs of fuel (assuming diesel remains constant at today’s prices) and maintenance, how long would en electric semi take to pay for itself? Obviously this depends on annual mileage. AJA global insight state that the average daily run for a long-haul, over-the-road truck driver is nearly 500 miles. Assuming a 5 day working week that works out to 2,500 miles per week, or 135,000 miles per year. Related: Iran Could Lose 500,000 Bpd If Trump Trashes Deal
At the unveiling of Tesla’s semi, Elon Musk stated that it would cost $1.26 per mile to operate, compared to diesel’s $1.51, a difference of 25c per mile. This equates to $33,750 annually, which is more than enough to pay for the increased outlay of its base model truck. To pay for the top model would require another 7.5 months - just under 20 months in total. This confirms the statement made by Jim Monkmeyer, president of Transportation at DHL Supply Chain. Whether Tesla can actually deliver on its lofty promises remains to be seen, but with potential savings of $300,000 per truck over a 10 year period, the haulage industry must surely be watching very closely.
Tesla is by no means the only company developing game-changing trucks. At least 9 other companies have announced plans to release vehicles that look set to change the shape of haulage, and we can only assume that there are still more that are yet to be announced. Their viability is by no means a certainty, as the specs on paper need to be proven in the real world, but given the rapid pace of EV development, the industry won’t need to hold its breath for long.
By Gary Norman for Oilprice.com
More Top Reads From Oilprice.com:
- Should OPEC And U.S. Shale Collaborate For Survival?
- Something Unexpected Just Happened In LNG Markets
- Analysts Expect Oil Prices To Rise This Year