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Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

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Musk’s “Hardcore Smack-Down” To Gasoline Vehicles

Tesla roadster

Elon Musk unveiled Tesla’s new electric Semi truck, which he said “will blow your mind clear out of your skull and into an alternate dimension.”

The electric semitrailer would have a 500-mile range and will roll out in 2019, if all goes according to plan.

On top of that, Musk surprised the crowd gathered at the event with a new version of the Roadster, the high end sports car that originally got Tesla going about a decade ago. The new Roadster would have a range of 620 miles and is due out in 2020. Musk said the Roadster would have a zero to 60 miles per hour time of 1.9 seconds. “These numbers sound nutty,” Musk said at the unveiling on Thursday.

The truck will also have Tesla’s semiautonomous driving system, which will help assist drivers and also have the ability to drive autonomously with other trucks. The convoy system would allow a lead truck to guide a group of other autonomous trucks to follow close behind, a system that would save on labor and fuel costs.

Critics were quick to point out that the Semi event comes at a time of particular turmoil for Tesla. The Model 3 has run into production problems—it only produced 260 of them in the third quarter. Musk had promised to hit 5,000 Model 3s per week before the end of the year, but said that the company probably won’t hit that until towards the end of the first quarter of 2018.

But he hopes the hype over these new products will put the sheen back on Tesla’s share price, which is down nearly 20 percent since September.

It’s unclear how Tesla’s Semi will compete with existing trucks. Musk boasted that they would be cheaper to operate than diesel trucks and potentially cheaper than even freight rail. He cited fewer parts—no need for an engine, transmission or powertrain—which would significantly save on maintenance. No fuel costs would also trim the cost of operating a semi versus a diesel truck. Musk said that the all-in costs of the Semi would come in about 20 percent cheaper than its diesel competitors. However, he declined to offer a sale price.

There are reasons to be skeptical. Bloomberg New Energy Finance estimates that the amount of batteries needed to power such a large truck could alone cost $100,000; a hefty sum when considering conventional long haul diesel truck costs a total of about $150,000.

But the 500-mile range exceeded analysts’ expectations and would be within a distance typically traveled by a truck on a single haul. Tesla says it will install megachargers that allow the Semi to recharge in 30 minutes, giving the truck 400 miles of range. Related: China’s Mysterious Arctic Silk Road

“The specs on the new semi truck and sports car would put both vehicles at the top of their segments—assuming they can be produced and sold as part of a sustainable business plan,” Karl Brauer, executive publisher of Kelley Blue Book and Autotrader, told the Wall Street Journal. “So far that final element has eluded Tesla Motors, which makes it difficult to see these vehicles as more than ‘what if’ concept cars.”

Tesla will have competitors in the electric truck segment. Bloomberg reports that Daimler AG has shown some electric truck prototypes this year; Paccar Inc. has electric, hybrid, hydrogen fuel cell and natural gas trucks in the works—Volvo is testing its version of an electric semi, and Volkswagen rolls out an electric model out in 2019.

There’s been a lot of excitement about the coming electric revolution for passenger vehicles, but electrifying road freight is an entirely different matter, and would present another massive threat to crude oil demand.

“The point of doing this is to just give a hardcore smack-down to gasoline cars,” Musk told the crowd at Tesla’s design studio near Los Angeles.

The IEA notes that governments around the world have substantially raised the efficiency of passenger vehicles—an estimated 80 percent of global passenger car sales are subjected to fuel efficiency standards. This would put oil demand in permanent decline in about a decade, except that there are three sectors where the agency still sees oil demand growth: petrochemicals, aviation/shipping, and road freight. Related: Tesla’s Surprise Unveiling Reveals Fastest Production Car Ever

While most governments are targeting efficiency in passenger vehicles, only the U.S., China, Canada, India and Japan have heavy duty efficiency requirements (although the EU is in the process of implementing their own).

As such, the IEA shrugged off the threat of EVs to oil demand when it released its World Energy Outlook, largely because it assumes strong oil demand growth for road freight. That is, oil consumption for heavy duty trucks grows so much over the next 25 years, that it offsets all the reductions that will be made from the switch over from gasoline to electric vehicles.

(Click to enlarge)

There are plenty of reasons to doubt Musk, and some argue that the unveiling of Tesla’s Semi only exacerbates the company’s growing credibility problem. But if Tesla is successful with its new Semi, the IEA’s scenario of robust oil demand for freight will quickly be thrown out the window.

By Nick Cunningham of Oilprice.com

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  • Kr55 on November 19 2017 said:
    More unmarketable junk that a handful of people will buy because "it's cool" to distract from how Tesla is going to just continue to do nothing but burn through money until competition makes them irrelevant.
  • adec on November 19 2017 said:
    If you want one of their alleged "Super-Roadsters" you need to ante up $5,000 now plus $245,000 more within 10 days by wire transfer.

    Note that the car will not be "ready" and "deliverable" for three years according to Master Touter Musk.

    What happens if "three years" turns into "never"?

    You flushed $250,000 down the toilet.

    May I remind you that Tesla is a money-losing enterprise and has been since it was founded. It has never made a profit, it has zero in retained earnings and you will be an unsecured, back-of-the-line creditor with your "reservation" -- which they will spend the minute it comes in the door.

    If the "Reservation" was a modest amount of money this might be defensible. $5,000 as a punt on a "supercar"? Sure, why not.
  • AD on November 19 2017 said:
    Anyone who watched the semi debut has noticed that Tesla didn't want to disclose the spec for the battery - the most crucial element for an electric vehicle! If the semi carries a large enough battery pack to run 500 miles, how much is left for the cargo? This is another fundraising event with a "product" Tesla has no intention to finish just like intercontinental travel by rockets or a trip to Mars.
  • jaxgab on November 19 2017 said:
    Typical Musk smoke and mirrors, bought by the news media hook, line and sinker.
  • erin wells on November 19 2017 said:
    It is called "Spreading the jam too thin!".
  • EdBCN on November 20 2017 said:
    There are a lot of dismissive comments here. Whatever you think of Tesla and Musk, it's is pretty hard to ignore the rapid changes being wrought by ever cheaper and more powerful batteries. All these electric drones you see being used everywhere would be impossible without modern batteries. Ditto a whole host of bikes, skateboards, single wheel scooters, etc. not to mention grid storage batteries that are making 24-365 renewable electricity cheaper than fossil fuel in places like Hawaii and Australia. It's not just Tesla pushing electric trucks either: BYD, Daimler and others are also moving rapidly into heavy electric vehicles. I've been saying for years that big, heavy vehicles that get a lot of use will be the part of the market that gets electrified fastest. Now EV makers are seeing the writing on the wall.
  • Chris on November 20 2017 said:
    @adec: There is everyday a fool with his money to be parted soon.
    How can Elon Musk get away with this BS?? This guy has not made a 1$ profit yet, and soon his EV tax incentives will run out. Nobody wants to say "checkmate". The Wall Street music band keeps on playing, and people keep on dancing:)
  • Themacway on November 20 2017 said:
    Tesla (as it sits now) will be out of business by 2019-2020. They might have enough money for a few more fiscal quarters at current cash burn - that is about it - then serious scale back scenarios kick in. He cannot unleash much more stock due to series 3 woes. No obama bux heading his way, and p.t. barnum he is not.

    Short tesla stock. Soon.
  • Markp1950 on November 20 2017 said:
    All of GM's experience and Money and NOBODY has a real answer to the Tesla Model S P100D....
    Even with 1/2 of a car and a pile of engine they still can't beat the P100D.
    It will carry 7 passengers and has 2 trunks. Yet a 2 passenger Corvette with a dinky trunk can not compete. Same for other flashy "supercars". THEY CAN NOT COMPETE!
    WHERE is their 5 star SUV to compete with the Tesla Model X...
    And GM is what? $70 Billion in debt and still behind in tech....
    What 5 years down the road?
    And if they want to get into EVs.... Where is their battery factory?
  • KAR on November 20 2017 said:
    Hmmm....where are the "cheaper than regular roof" solar tiles? Wasn't it expected on mass this month? Sometime I think he doesn't even understand reality. He hires far too many engineers and burns through far too much cash, in both Space X and Tesla. Both lose money hand over fist but he is some Tony Stark. He can think of a way to get people to Mars, but no idea of how to live there. The hard parts are the doing.
  • Josh Gregner on November 20 2017 said:
    I think people here are making one huge mistake: dismissing Tesla as incapable.

    Mercedes, BMW, Audi & Co. all thought that first the Model S and then the Model X can't be built. Guess what? They are building some 100k of these cars a year now. That's a few billion USD of revenue that the Germans are not taking home.

    Will the Tesla Semi takeover all world trucking in the coming 3 years? Of course not, that's a silly proposition. Will the Tesla Semi be late? Most probable.

    But will it be coming to market and disrupt things? I would bet good money on that. The problem is not the trucks that Tesla builds, the problem with Tesla is, that they shame, push, bully and harass the rest of the automotive industry into doing electric vehicles. And that's what will kill oil demand.

    Don't believe me? Look at Cummins share price (ticker symbol is CMI) and how it plunged after Tesla unveiled the Semi - that's what I mean with bullying. Rest assured that they will build electric trucks and many of them. That's their only chance.
  • halfachimp on November 20 2017 said:
    There are many comments about Tesla not turning profit. Do a search on historical revenue chart and Ebitda growth. A company in a growth hurry does not need to show profit ( check also how long Amazon took). which other company has a supercharger network to really promote electric vehicles. And why do nonengineers suspect Tesla's Megachargers. If one goes to eia site and plot the electrical grid along with all the transformer stations one can easily envision Megachargers at major truckstops. There is no dearth of electricity and power, just bright ideas which Tesla has plenty. All Tesla has to do is same what it did for cars and superchargers.
  • Roger Spring on November 22 2017 said:
    I'm having a hard time with the idea of a Tesla truck hauling much cargo through the Rocky Mountains.
    Another Tesla problem is loot, their burn rate is phenomenal and it would be foolish to send them a nickel until they have a product available. Owners of this stock are certainly brave, as this company will only have a future after a bankruptcy, so they can ditch their debt.
  • Ray on November 25 2017 said:
    While it would be a wonderful achievement to get off the oil addiction, there are way too many investors in the oil industry to just let anyone come out with a way to not buy gasoline. America and the world are united in preventing this from becoming an environmentally friendly way to stop air pollution. Trillions would be lost and the efficiency of this relatively new technology is like expecting Santa to bring you a multi-millon dollar wining lottery ticket. I really like the idea of a clean propulsion system but even this technology does not have a clean footprint. Anything that needs batteries is not something I would invest heavily in. There is a 100% way to have this technology with a totally green footprint, but I would want to ensure that it did not displace millions from having work or giving the oil tycoons the jitters. We are at a juncture in our society where we need to be looking out for one another and to find ways to make life more successful without destroying current technology and those employed by them. Mr Tesla, much new technology is available............
  • brian jones on November 26 2017 said:
    "I think people here are making one huge mistake: dismissing Tesla as incapable.... "

    I dont dismiss him as incapable.

    Simply dishonest.
    He is a self-promoter of epic proportions, and as people enjoy being fooled they line up for him, for as we all know "This Time Is Different!"
    My name for him and his endless delusions is I.T. Barnum, a modern version of P.T. Barnum, the legendary conman of yore.
    Lots of promises, delays, and attention-shifting away from the current rubble to The Next Big Thing!!
    And an endless supply of starry-eyed True Believers treating cant-miss predictions of inevitable results no more than 5 or 10 years off...
  • Josh Gregner on November 29 2017 said:
    @brian jones: he may be a huge self-promoter. However, he is the guy that made the original roadster (still no other car you can buy that matches the specs of the roadster today more than 10 years after the initial launch), the Model S (same thing), the Model X (again, same thing). He built the biggest and fastest charging network, he has done that (almost) globally.

    Tesla is the 2nd oldest American car company (both Chrysler and GM had to take billions of USD from the US government, go bankrupt and would not be here today if capitalism was alive in the US).

    In his side job, he makes rockets that supply the IS, get telcoms satellites up in the orbit and land back on earth.

    All of the above was ruled by many experts as straight-up impossible.

    So do I like the guy? Who cares
    Would I want to bet against this guy? Heck no!
    Would I ever want to own a business in competition with him? NEVER!

    Again, he maybe - whatever we want to call him. But betting against him? Many people have paid a very high price for that...
  • Homer on December 04 2017 said:
    When nobody believed EV is possible, it was Elon who put his personal wealth to save the planet from ICE vehicles.

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