Tesla’s Semi Truck Could Shake Up the Auto Industry

Tesla hasn’t had a blockbuster hit since launching the Model Y sport utility vehicle on sale in 2020.

But early reviews of the Tesla Semi, an electric heavy-duty truck, suggest it could be a much-needed hit for the company. And it could shake up the established truck business in the same way that Tesla’s cars took the auto industry by storm.

After years of delays, Tesla has begun taking orders for the Semi, which is expected to cost around $290,000 for a version that can travel up to 500 miles on a single charge, far less than heavy-duty electric trucks sold by Daimler, Volvo and other companies, which typically sell for at least $400,000, according to estimates by the International Clean Transportation Council. Tesla said the Semi will also have a more affordable model that can go 350 miles on a single charge. Both options would travel further than other vendors’ trucks.

Cost and range are two of the main reasons many logistics and delivery firms are reluctant to buy electric trucks, which cost at least twice as much as diesel models and represent only a fraction of heavy-duty truck sales.

“The problem with the technology that’s out there now is that their range is limited. They’re pretty heavy and they’re very expensive,” said Jennie Abarca, owner of King Fio Trucking in Long Beach, Calif., who ordered 20 Tesla Semis. “This is something new coming to the market that answers all these problems.”

Demand for the Semi appears strong. California trucking companies have asked the state government for subsidies to help them buy more than 1,200 Tesla trucks. That’s more than all applications for other electric trucks since the state’s incentive program began in 2019.

Ivan Torres, a driver for Nevoya, a trucking company based in San Francisco, is a big fan of the Semi. Last month, behind the wheel of one, he was hauling power tools from the Port of Long Beach to Ontario, California, 60 miles away. Nevoya only operates electric trucks.

As the truck climbed the steep hill that separates Ontario from greater Los Angeles, Mr. Torres marveled at its strength. “It carries a load like nothing, just up,” he said from the padded driver’s seat, which sits on a shock absorber that smooths out bumps. Screens on either side of the steering wheel provided a view of the traffic around him.

Mr Torres said the Semi was quieter than the diesel rigs. And it can run the air conditioner while waiting for cargo to be unloaded. This is sometimes not possible for diesel trucks because California limits how long these vehicles can park in residential areas or near schools and hospitals to minimize pollution.

If Tesla can push the trucking industry toward battery power, the environmental impacts could be significant. Heavy-duty and medium-duty diesel trucks make up a small percentage of all vehicles in the U.S., but are responsible for 45 percent of road traffic nitrogen oxide emissions, according to the Union of Concerned Scientists. Nitrogen oxides cause asthma and bronchitis and are a major component of smog.

Tesla’s timing can also be random. Diesel prices have increased by around 50 percent since the start of the war with Iran, making batteries more attractive. Electricity is much cheaper per mile—even in California, where utility bills are relatively high.

So far, Tesla has produced the Semi in limited numbers for a few customers such as Pepsi and Nevoya. But the company said last month that it had started an assembly line in Sparks, Nev., designed to produce up to 50,000 trucks a year.

If Tesla meets this goal, the Semi could bring in tens of billions of dollars in revenue. That’s still a pittance compared to the trillions of dollars Tesla CEO Elon Musk expects to make from self-driving taxis and humanoid robots.

Wall Street investors believe the company will dominate these two futuristic technologies. But Tesla has yet to perfect them or make a lot of money from them.

The Semi “could be a very nice additive source of revenue,” said Ben Rose, president of Battle Road Research, which follows Tesla closely. “But it’s not going to be a blockbuster like some of the products they’re working on.”

Tesla did not respond to a request for comment.

Most of the electric trucks on the road today are in California, New Jersey, New York and other states that offer incentives to buy them. Such vehicles tend to transport cargo over relatively short distances.

Ms. Abarca’s company specializes in shipping containers from the Port of Long Beach in the Southwest. Tesla is building chargers powerful enough to add 300 miles of range in half an hour, putting cities like Las Vegas within reach, she said. Half an hour is the standard amount of mandatory rest time for truck drivers.

Whether Semis save their owners money depends on how they use them.

“The more you drive it, the more fuel savings you get because electric is cheaper than diesel,” said Jacob Richard, truck project manager at Calstart, a nonprofit group of power producers, automakers and other businesses promoting clean energy.

More than a decade ago, Tesla changed the automotive industry forever when it introduced the Model S sedan, proving that electric cars can be practical and fun. Established automakers initially dismissed electric cars as a marginal product. But they later spent billions of dollars trying to catch up to Tesla, which still accounts for about half of US electric car sales.

“It’s the same movie,” said Adam Browning, director of strategy at Forum Mobility, which provides charging and other services for electric trucks, about the Semi’s potential to disrupt the industry.

Still, established truck makers say they’re not worried the Semi will lure away their customers.

“I don’t think it’s disruptive,” said Peter Voorhoeve, president of Volvo Trucks North America. The Swedish company’s VNR Electric heavy truck has a range of 275 miles.

Mr. Voorhoeve said Volvo, which owns Mack Trucks, plans to introduce a new model next year that will have a longer range, but declined to provide details. Volvo, with its many years of experience, provides the service and reliability that fleet owners demand, he added.

John O’Leary, president of Daimler Truck North America, which owns Freightliner, said electric trucks aren’t suitable for long trips because there aren’t enough high-powered chargers. “Infrastructure continues to be a challenge,” he said.

Volvo and Daimler say they are committed to cutting emissions, but have filed a lawsuit to prevent California from enforcing clean air standards for trucks it agreed to by 2023. The manufacturers say they are caught between the state government and the Trump administration, which is rolling back the regulations.

Trucking companies say they’re impressed by Tesla. The company invited potential customers to tour the Nevada factory, made sure to provide vehicle services, and outlined plans to install chargers along major highways in California, Nevada, Arizona, Texas and other states. Tesla independently operates America’s largest fast-charging network for electric cars.