The teslanomics of electric trucks

You have probably read that Tesla is finally delivering its full electric class 8 semi-trailer truck, only three years late. And among the many reasons this truck has been delivered with such tardiness, one of them is probably worth remembering: the battery physics and economics simply didn't work.

The magic of oil is that 500 Kg of diesel allows to move 20 tons of goods beyond 1,500 Km. But a fully electric truck? Not so much, as the weight of the battery that would allow doing this is around 6 to 8 tons. That's the paradox. Past a certain weight to carry around and a certain distance, most of the battery power is used to displace the weight of the battery itself.

In economics, this translates to losing 40 to 50% of your truck cargo while paying a huge premium on this new (not yet amortized) technology upfront. This is simply ludicrous in the supply chain business, where margins are razor-thin. And all experts in the field pointed out this simple reality when Musk announced his truck project (back in 2017!).

From an innovator's perspective, there might be the nagging sense that a Moore's law of sorts could be at play. Don't we have a power law giving us a geometrical rate of improvement of the weight/distance ratio for EV batteries? To some extent, yes. But certainly not enough to make a semi-truck economically viable before 2030 or even later. Don't we have new alloys and steels allowing for lighter-weight vehicles? We do, but gaining 5 to 10% on a truck structure is not a critical game changer.

So what makes Tesla trucks economically viable?

Well, by now, you guessed it: Russia and nearly doubled diesel prices in the U.S. The teslanomics of the supply chain have changed, and while oil is becoming more expensive, electric trucks have become ever so slightly competitive.

This and the fact that not everything carried by semis weighs tons. The first delivery of Tesla 100 trucks is allocated to Pepsi, and they will be tested at their Frito-Lay factory 🙃.

There are a lot of affordances when you're an industrial thinking properly about innovation. Remember that a hundred trucks amount to nothing in the total Pepsi fleet. Also, being among the first Tesla customers is a form of investment when the 2.0 version of the truck with lighter batteries appears. Meanwhile, you're also testing what it means in terms of charging, plotting deliveries, and operating this new type of transportation at scale.  

Innovation is a long game that often privileges those with staying power.