UPS PRE-ORDERS 125 TESLA SEMI ELECTRIC TRUCKS

UPS owns a lot of trucks. According to Quora, as of 2015, it had “104,926 package cars, vans, tractors, and motorcycles.” Of that total, 7,200 were “alternative fuel and advanced technology vehicles.” It also has about 25,000 trucks dedicated to its supply chain delivery operations.

The company is always looking for ways to lower its costs of operation. It uses sophisticated route planning software so each vehicle drives the least number of miles on each route. It even goes so far as to avoid left turns against oncoming traffic whenever possible. Waiting for an opening takes precious seconds, and time is money.

UPS announced today that it has placed the largest pre-order yet for Tesla Semi electric trucks — 125. Until this latest announcement, PepsiCo had pre-ordered the most Tesla Semi trucks at 100 units. The Tesla trucks are expected to sell for $200,000 each, which is about $75,000 more than the company pays for a typical diesel powered tractor. But it expects significantly lower fuel and maintenance costs will more than offset the price difference over the useful life of the trucks.

Scott Phillippi, senior director for automotive maintenance and engineering for international operations at UPS, tells Reuters that his company has already provided real-world data to Tesla on how its trucks perform on normal streets. “As with any introductory technology for our fleet, we want to make sure it’s in a position to succeed,” he says.

The 125 Tesla trucks will be used primarily in the United States. Although, the precise routes they will follow has not yet been determined. Tesla will provide consultation and support on charging infrastructure. “We have high expectations and are very optimistic that this will be a good product and it will have firm support from Tesla to make it work,” Phillippi said.

Reuters claims Tesla has received 410 pre-orders for the Semi, which is not slated for production until 2019 at the earliest. Tesla has not yet said where it will manufacture the Class 8 electric tractor.

410 orders at an average price of $200,000 would total $82 million in revenue for Tesla. Here, again, is a hypothetical look at Tesla revenue and profits based on various estimates and hypotheticals. 

Orders	Average Price	Total Revenue	Profits based on 7% Gross Margin	Profits based on 10% Gross Margin	Profits based on 15% Gross Margin
410	170,000	$69,700,000	$4,879,000	$6,970,000	$10,455,000
410	200,000	$82,000,000	$5,740,000	$8,200,000	$12,300,000
8200 (hypothetical)	170,000	$1,394,000,000	$97,580,000	$139,400,000	$209,100,000
8200 (hypothetical)	200,000	$1,640,000,000	$114,800,000	$164,000,000	$246,000,000

Elon Musk Says He Is Working on Tesla Semi

Not content with taking on franchise car dealers across the country, the US Congress, NHTSA, NTSB while landing rockets safely back on land for reuse, Elon Musk says he is working on vehicles for the rest of the automotive market. That includes SUVs, pickup trucks, buses, and tractors to haul freight.

We have heard about a number of companies who say they have the answer to the pollution from heavy trucks. Some are fairly realistic, like Ian Wright’s garbage trucks that use batteries and an onboard gas turbine to keep them charged. His company, Wrightspeed, has working prototypes on the road and has recently signed a deal with a company in New Zealand to re-power its fleet of diesel buses.

Wright was one of the founders of Tesla Motors, but decided to go his own way after Elon Musk came on board. Wright thought building a sports car was a silly idea when heavy trucks are responsible for far more carbon emissions than passenger cars. The turbine he invented runs so clean, it doesn’t require a catalytic converter to meet California’s stringent emissions standards.

The problem with electric trucks is that batteries large enough to move heavy loads long distances would be prohibitively expensive. They would also be so large and so heavy they would take up a good chunk of the available space for cargo. Earlier this year, we ran a story about a company in Florida that said it had developed a battery that could haul an 80,000 lb load 400 miles on a single charge. That claim turned out to be vaporware.

Another entrant in the electric truck sweepstakes is Nikola Motors, a rambunctious startup that claims it will build a tractor with 2,000 horsepower and 3,700 lb-ft of torque. it will have a 325 kWh battery. 6 wheel drive with torque vectoring, and 1,200 miles of range. The company says it already has 7,000 pre=orders worth about $2.3 billion. Of course, it has no factory and no battery making facility. It also relies on a natural gas turbine to charge the battery along the way.

How will Tesla resolve the size/weight/cost/range conundrum presented by all-electric heavy trucks? We have no idea, at the moment. But it’s in Elon’s Master Plan Part Deux, so somewhere within Tesla Motors the wheels are turning. Elon says we can expect to see something in about a year’s time. Figure by the end of the decade, knowing Musk’s reputation for flexible timetables.

Solving the freight truck dilemma is a big part of Musk’s avowed goal to get the world off fossil fuels. Diesel trucks spew far more pollutants into the atmosphere than all the Volkswagen diesels combined. To make matters worse, they are often on the road for a decade or more, pumping toxins out their tailpipes for millions of miles before they are replaced. Anything that can cut those emissions significantly will be good news for the environment.

Photo credit: Nikola Motors