How Tesla looks after Semi: is the company a sinking ship or a golden spaceship?

Tesla
Tesla supercharger battery – CC0 License – Pixabay

 

Elon Musk has presented recently the new electric truck called Semi, the first truck in the line of Tesla electric vehicles. The truck has been long awaited from both investors and electric enthusiasts, as it is an important test for Tesla and the electric market. The truck fleets represent more that 50% of the total vehicles circulating in the United States, and they are one of the first causes of Co2 emissions, in the country as in the rest of the world.

What we have heard during the conference sounds appealing. The Semi should be available from 2019 and it will run 500 miles with a single charge (30 minutes are required to fully charge the truck). The futuristic truck (the aerodynamic and the appearance are truly impressive) should be less cheaper then the diesel counterpart, and of course it will help to contain the pollution. Semi should operate $1.26 a mile to run, versus $1.51 for a diesel. At least, this is what Musk has promised.

A future between dream and reality for Tesla Semi: will it find a market?

It is important to states that Musk hasn’t revealed yet a price for the Tesla Semi, and it is unlikely that – many – transport companies will invest on this vehicle with blind eyes. An analysis published on ACS Energy Letters underlines that such vehicle would require a $400.000 battery pack. If we think that the whole truck will cost more then of $500.000, it will be necessary to drive more then one million miles before break even against a diesel truck, as stated by technologyreview.

We can rationally assume that a company thinks in terms of economic advantages, so the environment variable will not play the same role as in the others Tesla models. Tesla Semi will require strong government subsides, and I personally don’t think that the Trump administration will be favourable.

With all this said, the Tesla Semi looks like a technology gem. The (semi) autopilot will be without a doubt something that will affect the market, however, even other car manufacturers show progress on this field. That’s why I’m skeptical on the future of Semi.

Ok, Tesla is not profitable but the electric cars are gonna save the World. Or not?

The story of Tesla and of Elon Musk is quite funny. Tesla is one of the few companies, if not the only one, that runs from more then a decade without making one single dollar of profit (and has received tons of dollars). Behind Tesla there is an environment of investors that believe in a project rather then short term profits. And actually this is totally fine. Every business should run looking at the long term. So, what’s the problem here?

The problem here is that we can’t postpone the future indefinitely. Tesla is not a charity or a volunteer foundation. It is a business and as any business it should prove that it is profitable, since the investors can’t continue to lose money forever. And after 15 years of promises the future is about to knock the doors of Tesla headquarters. The release date of Tesla Semi (2019) will be crucial for the future of the company. This could have an impact on all Musk’s businesses.

Every business of Musk regards something about the future and the salvation of humanity, which makes this business man quite unique and extravagant. It’s also good to stress the fact that meanwhile he is making a lot of money out of it. We are talking about the same man that once said: “odds that we are not living in a simulated universe is one of millions”. A declaration that have no valid scientific support and it is incoherent with the rest of his plans.

Remaining in the electric car ecosystem, Tesla at the moment is proving that the production for the mass market is hard staff.

Car manufacturers will be happy to have a mass market for the electric car

If we think at the best case scenario – with EVs invading the market – it will be impossible for Tesla to serve the whole market. At that point other car manufacturers will jump in the electric revolution, and they couldn’t be more happy.

The numbers in the sector continue to shrinking, as the total fleet of vehicles in the United States declined in the last decade. It is a trend that was well anticipated by a report of Lester Brown. Forget the story that car manufactures want to defend the oil economy. At least, not anymore. They make money by selling  cars and a law that would force all the citizens to buy electric vehicles will make them happy.

On the other side we don’t have a clear picture of all pro and cons of this mass conversion. The analysts converge on the fact that the electric cars are the best option if we look at the entire life cycle, however, we know that any activity has its externalities, and the same is true for electric vehicles and renewable energies as well. The public expenditure required to turn all this into reality seems just too big, especially if we consider that the world population will continue to growth. Giving a car to almost every person doesn’t sound a good option. The video below shows the dramatic situation in China, just to give you an idea of what we are talking about.

At the contrary, the option of electric cars seems more in line to preserve the current life style instead of giving us a real solution for serious problems, and handle the mobility issues once and for all.

Tesla looks like a golden spaceship but it stinks (and the bad smell becomes more strong each passing year). It’s just a matter of few years before we’ll know if Musk’s plan is gonna succeed or not. The Semi will tell us a lot on the future of the company. Tesla is an impressive innovative company, and it will remain so even if the electric car will fail to hit the mass market. After all, It’s not impossible for Tesla to start to be profitable. It has just to accept its true objective: to serve the richest people on the planet. This goes for Tesla as the rest of Musk’s projects.

If you want to know more about Tesla vehicles you can read the monster article published on Absolute Reg.

About Raffaele Del Gatto

Former HR manager and World Editor of International Business Times Italy (Newsweek media group). Now CEO and Founder of The Business Globalist and Jobs Into Media.

Raffaele Del Gatto is a geek person obsessed by innovation, interested in geopolitics, economics and management, passionate about trading and video games.

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