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The Tesla Semi Truck Will Change Freight Industry

Judah Levine

Freight innovation frequently focuses on moving data better – like visibility, eBookings, and the new generation of forwarders and brokers.

But changing infrastructure is no less critical. Which is why one of technology’s most respected minds is now fundamentally overhauling land freight (and he’s not just stopping at an electric truck).

Meet the Tesla Semi Truck

Coca Cola, UPS, and others already use electric delivery trucks. Now it’s turn for the big rigs. Many major truck manufacturers are now investing in electric rigs, with one projection having them reaching a 25% market share by 2025.

But Tesla’s Semi Truck launch on November 16′ is bigger. It’s tangible evidence of Elon Musk, the brains behind PayPal, Tesla, SpaceX, and more, transportation infrastructure play, with the power to disrupt both domestic trucking and international freight.

What The Tesla Semi Means For Domestic and International Freight

So far, Tesla Semi’s pre-launch has been widely heralded by the sustainability media. That’s understandable, given the US Energy Information Administration estimates that large trucks consume nearly 7% of all energy in the U.S.

Tesla Semi’s clean technology will certainly reduce emissions, but for most truckers, it’s cost and power that matters. The cost of power that these trucks will take from the grid is 70% cheaper than diesel. On top of that, the Tesla Semi has more grunt than diesel, with Musk boasting that it will out-torque any diesel semi uphill.

For now, range is the biggest constraint. However, a third of all semi truck trips are regional, with travel distances within the truck’s current capability. And Tesla are working on making long-distance electric trucking feasible too.

But in the long term, the more trucking is automated, the more attractive it will become for tech giants like Amazon and Uber to extend their operations into freight. Amazon and Alibaba already have last mile and international freight in their sights;  trucking is likely there too. With half a million carriers –  mostly small operators –  moving 82% by value of all US freight, the industry is ripe for the picking by capital-rich company that bring their own supply and demand.

And beyond just the trucking industry, electric rigs becoming commonplace may even impact port behavior. More transpacific imports due for the Midwest may pass through US West Coast ports (where freight rates are some 60% cheaper) once long-haul trucking is more affordable.

…there are two other types of electric vehicle needed: heavy-duty trucks and high passenger-density urban transport…We believe the Tesla Semi will deliver a substantial reduction in the cost of cargo transport, while increasing safety and making it really fun to operate.

Tesla Master Plan, July 20 2016

What Elon Musk’s Blueprint Means For The Freight Industry

Elon Musk recently described his motivation: “I’m just trying to think about the future and not be sad.”

Electric rigs, autonomous vehicles, and everything else he plans to introduce may be driven by sustainability principles, but he must also prove that they are being cheaper, better, and/or safer than their eventual replacements.

Standing in the way of Musk’s vision of tomorrow’s transportation infrastructure has been congestion and delayed transit time on long-haul trucking. Overhauling the US Interstate system is due, being built over half a century ago, when US vehicles drove a sixth of their current 3 trillion miles per year. And the case for overhauling urban transport goes without saying.

So he’s going underground.

Musk is slashing tunneling costs as he digs The Boring Company’s first tunnel. Combined with pressurized capsules and vehicle elevators, this new infrastructure will literally shoot vehicles across the country.  He’s received provisional approval to start digging in Maryland, in what might potentially become part of a DC to New York link, in turn potentially part of a massive underground Hyperloop network.

Such a grand plan, if he can pull it off, is still many years away. But investors, bolstered by his success with Paypal and the Tesla electric car, have showed they believe in his big ideas.

The Tesla Semi launch on November 16 is about much more than just batteries.

It’s about how real innovation (not the hyperbole that often passes as such) combines vision, capital, technical know-how, and drive to make a vision reality.

Henry Ford famously preferred to give people a car, not a faster horse. Seems like the car’s replacement may not be so far away.

Judah Levine

Head of Research, Freightos Group

Judah is an experienced market research manager, using data-driven analytics to deliver market-based insights. Judah produces the Freightos Group’s FBX Weekly Freight Update and other research on what’s happening in the industry from shipper behaviors to the latest in logistics technology and digitization.

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