“Be kind, for everyone you meet is fighting a hard battle” - Often attributed to Plato but likely from Ian McLaren (pseudonym of Reverend John Watson)

Sunday, December 17, 2017

Tesla class 8 truck, part 2

Image credit: Matchmakerlogistics.com
In my previous post I estimated the weight penalty imposed by the need for a battery pack that will enable the Tesla Truck to have a range of 500 miles. Next, I'll take a look at the pricing situation.

As most know, battery packs of the size to supply energy to road vehicles are very expensive. In fact, in the opinion of many, the U.S. Government subsidy is the only reason the BEVs (battery electric vehicles) have sold as well as they have, especially in the relatively lower price classes such as those occupied by such cars as the Chevrolet Bolt, the Nissan Leaf, and the Honda Clarity EV.

It's not easy to get a handle on the price of a battery pack, but synthesizing various sources, it seems likely that battery packs from the Gigafactory will cost Tesla something like $150/kWh in the 2020 time frame. That would put the cost of the estimated (by me) 1,145 kWh pack for the claimed 500 mile range at $171,750. We see here though that
The electric semi trucks will run between $150,000 and $180,000, depending on range, with a fancy "Founders Series" of semis coming in at $200,000.
It's not an easy thing to figure what the cost of a semi truck cab, wheels, etc. (i.e., the entire semi minus the engine and transmission) is but I've tried to get a handle on it by looking at some pricing of so-called "glider kits." Here, I found that a rolling glider could cost from $75,000 to $97,000. Assuming something like a 20% markup, the cost to produce the glider would be $60,000 to $77,600. Using the lower number, Tesla might spend $60,000 on the body, frame rails, axles, etc.

Next, my understanding is that the Tesla truck will utilize four 192 kW permanent magnet electric motors (the same as the Tesla Model 3 motor). I've found it to be EXTREMELY difficult to get an accurate estimate for the cost of such a motor, here we find a source to purchase Tesla 3 drive units  (Tesla motor, inverter, gear box, dash display and control unit, throttle pedal, and two axles) for $11,900. I'll estimate that the markup is 50% and so the cost of the unit is $7,933. I'll further estimate that the parts needed for all four motors (since we won't need four throttle pedals, etc.) represent 2/3 of the cost, so three of the units cost 3*(2/3)*$7,933 or $15,866. Add the full $7,933 for the fourth unit to get a total cost of $23,799 for the entire set. Call it $24,000.

So we have an estimated cost to Tesla of $171,750+$60,000+$24,000=$255,750. And there's no question that I've left a few things out. And, assuming that Tesla would like to make a profit of, say, 20%, the price out the door would be $306,900. That's over 70% higher than the cited price of the 500 mile range truck. Where may I have gone wrong? Conversely, if Tesla is selling a 500 mile range truck at $180,000 and is making some incremental profit on the sale then their cost would be, at most, $150,000 using the same 20%. And this doesn't include the subsidy that Tesla is offering for charging (I'll take up charging in a subsequent post).

It's unlikely that the cost of materials (aluminum, steel, plastic, carbon fiber, etc.) will decrease sufficiently to reduce Tesla's cost by something like 40%. My conclusion is that they are banking on some combination of manufacturing efficiencies, economies of scale, and improvements in the actual battery chemistry to reduce the cost per kilowatt hour of their battery packs.

In order reduce the cost of a truck by some $100,000 (turning now to very round numbers) by reducing the cost of a battery, the cost would need to come down to somewhere in the $63/kWh. Below we see a graph of costs projected out to 2030. And, while the cost has come down considerably and is projected to continue to do so, I've not found a credible projection that hits anything close to $63/kWh even out 13 years, let alone three years. WebPlotDigitizer quickly shows that the projection is for $170/kWh in 2020 and $75/kWh in 2030. Note that my calculation above used $150/kWh! 

The bottom line is that I see no way that a 500 mile range class 8 semi powered by batteries can be sold for $180,000. It's true that Elon Musk and Tesla have accomplished amazing things and have made skeptics eat their words, but it's also true that Musk has a habit of over promising on time frames and production numbers. A fair number of significant companies with lots of money to spend on research and lots of analysts to evaluate capital expenditures have placed their bets that Tesla will succeed in delivering as promised. It won't be long until we know!

Note: This is the unedited version of this song. While I don't condone and, in fact, I unequivocally and vehemently condemn any sort of homophobia, I consider that the unedited version is geared toward criticizing rather than supporting such a toxic attitude. Additionally, I loathe censorship in all its forms (and yes, I realize that the government was not responsible for the edited version).

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