Electric-car maker Tesla first broke into Mercedes-parent Daimler’s territory with a luxury car, the Model S, in 2012. This week the auto pioneer was at it again, with the launch of an electric truck that looks ready to roll right over the German car maker’s other revenue pillar: trucks.
Tesla’s ambitious boss, Elon Musk, presented the Semi on Thursday in Los Angeles, unveiling an electrically powered rig that can haul a gross weight of up to 80,000 pounds (36 metric tons) and drive up to 500 miles (805 kilometers) with a maximum load. The truck, which will go on sale in 2019, will be 20 percent cheaper to operate thanks to the lower costs involved in recharging batteries rather than fueling up with diesel, Mr. Musk said.
Although the Semi’s price is expected to be higher than a conventional truck, Tesla’s competitors are still anxious. The successes of the firm’s Model S and Model X, an SUV, served as wake-ups calls for VW, BMW and Daimler. It has also launched a mass-market car, the Model 3.
Tesla’s new truck could have the biggest impact on VW, which owns the MAN and Scania brands, and Daimler, by far the world’s largest maker of semi-trailers. In addition to the Mercedes Benz name, Daimler sells trucks and buses under various US brands such as Freightliner, Western Star, Detroit Diesel and Thomas Built Buses, as well as Bharat Benz and Fuso in Asia. Daimler’s total truck sales came to around €33 billion ($39 billion) in 2016.
“Tesla will learn the hard way how difficult the business is.”
Tesla’s truck will initially target the North American market, where $30 billion of semi-trucks are sold each year in the heavyweight class alone. Daimler has a market share of more than 39 percent there, a lot to lose if Tesla’s Semi is rampantly successful. The dynamics of this contest are interesting because Daimler actually helped Tesla stay afloat financially in 2009 when it bought a 9 percent stake in the US startup; it sold its stake five years later. In 2010, Mr. Musk recruited Jerome Guillen from Daimler; the latter is now heading Tesla’s truck operations.
At the North American Commercial Vehicle trade fair in September, the head of Daimler Trucks downplayed the threat of newcomers such as Tesla. “It’s always easy to build prototypes,” said Martin Daum when he presented the company’s electric light truck, the Fuso eCanter, “but this vehicle is built for reality.” At a small press conference later, he added: “Tesla will learn the hard way how difficult the business is.”
Mr. Daum likes to cast aspersions that Tesla only wants to generate dramatic headlines – but he is not entirely impervious to the machinations of his American rival. At an automotive trade fair in Tokyo a few weeks ago, Daimler unveiled its electric E-FUSO Vision One, with a cargo load of 11 metric tons (22,000 pounds) and a range of 350 kilometers (217 miles). The presentation was deliberately scheduled for exactly one day before Tesla’s original date for the presentation of the Semi, which was eventually postponed.
Tesla, which was founded in 2003, is not the only newcomer Daimler has to fear. The Chinese manufacturer BYD, partially owned by Warren Buffett, is already offering electric trucks in three different weight classes. It recently delivered an electric waste truck to the municipality of Palo Alto in Silicon Valley, where Tesla has its headquarters. BYD also counts UPS, tire maker Goodwill and BNSF Railway among its customers. US supplier Cummins is working on an electric truck with a range of 160 kilometers that will be produced from 2019. German automotive supplier Bosch is developing a semi-truck together with the US start-up Nikola Motor that will be powered by hydrogen and will be launched on the market in 2021. VW’s truck subsidiary MAN is investing hundreds of millions in electromobility.
Whether electric trucks can forge a breakthrough in logistics depends on several factors – but one in particular is crucial: “total cost of ownership,” which includes the purchase price, maintenance, fuel and other costs over the lifetime of the vehicle. An electric semi is expected to be more expensive to buy due to battery costs but on the other hand there are fewer moving parts in an electric engine, which reduces wear and tear.
Tesla itself will have to prove it can launch another model in this relatively new market. The company is currently experiencing acute production problems with its new Model 3. “Tesla is setting itself extremely ambitious targets with its foray into business with commercial vehicles,” said Axel Schmidt, an automotive expert at management consultancy Accenture. “That’s no doubt it also intended to keep investors happy.”
For Daimler, VW and other truck makers, Tesla’s production problems are cause for a deep breath. Those issues could give them a reprieve – and a little more time to drive their own electric semis to market.
Thomas Jahn is Handelsblatt’s New York bureau chief. Gilbert Kreijger, an editor with Handelsblatt Global, contributed to this article. To contact the author: firstname.lastname@example.org