How Much Will the Tesla Semi Actually Cost?

By Rosario Fortugno; Posted Nov 19, 2017

When Elon Musk stepped on stage this past Thursday and announced that the Tesla would have a 500-mile range and do 0-60 in 5 seconds, attendees at the event in Hawthorne, California and watching the live stream collectively dropped their jaws. How could an electric vehicle carrying up to 80,000 lbs, the maximum allowed on US highways, travel 500-miles on a single charge while accelerating 4x faster than a traditional diesel semi? 

Update: Tesla has announced pricing for the Semi. The 300 Mile-range variant will sell for $160,000 US and the 500 Mile-range variant will sell for $180,000. Pricing information can be found on Tesla's website.



Tesla Semi Pricing Breakdown (Updated November 23, 2017)

While Tesla was light on some important specifications of the Semi, specifically, how much it would actually cost, I noticed that they gave some important metrics related to lifetime cost that would allow someone with enough time on their hands to calculate selling price for the semi. 

 

Tesla’s website gives the following information: they note that the Semi has a range of either 300 miles or 500 miles per charge, depending on the model purchased, and an energy consumption of “…less than 2kWh / mile” – all of this information helped me calculate the selling point. Using that information, I calculated the size of the battery in the Tesla to be about 1000kWh (500 miles divided by 2kWh per mile). This is 10x the size of the battery in Tesla’s highest capacity vehicles being sold today – the Model S and Model X P100D.



The P100D sells for about $135,000 US, so, if the price scaled linearly by battery capacity we would be looking at a selling price of $1,300,000 for the Tesla Semi. Given that a diesel semi can be bought for about $120,000 US, brand new, this is obviously an impossibly high price and there is no way that Tesla would even sell one Semi at this price. I needed more information to figure out what the market price for the Tesla Semi would likely be.

Going by the cost of the battery alone, Tesla recently claimed that their cost of production of battery cells was below $190/kWh in early 2016. At this price, the Tesla Semi would have a battery that cost around $190,000 to manufacture. This is a much more reasonable figure than over $1 million for a 1000kWh battery. However, this still leaves unanswered the question of the actual cost for a buyer. What will the price be?

 

Tesla Semi - Fun Facts

During the event, Elon mentioned some important information about the Semi’s lifetime costs and how they were calculated. Namely, over its lifetime, the Tesla Semi would be 20% less expensive than a traditional diesel semi per-mile. Further, Tesla would provide wholesale electric energy to Tesla Semi owners at a cost of $0.07 per kWh. Tesla also mentioned that their assumptions relied on diesel prices of $2.50 per gallon, a conservative estimate, and that the maintenance costs would be lower than those of a diesel semi, with fewer replacement parts, regenerative braking and a stronger windshield.

So, what do all these numbers mean? Well, by themselves, not too much. However, we can take some industry numbers for the lifetime costs associated with owning a Class 8 diesel semi (the same class as the Tesla Semi) and work backwards to find out how much Tesla could reasonably sell the Semi for while still maintaining their claim of having a 20% lower lifetime cost of ownership than a diesel semi.

Traditional Class-8 Diesel Truck – Total Cost of Ownership

Based on a 10-year, 1-million-mile operating life (the same as Tesla has guaranteed for their Semi) and a fuel price of $2.50 per gallon, over its lifetime, you would spend an average of nearly $49,000 per year on fuel for a diesel semi. Including annual maintenance costs of over $20,000 per year, interest financing, insurance and administration costs, a class-8 diesel semi would cost about $118,000 per year to own over a 10-year lifespan.

This gives a total lifecycle cost of ownership, including purchase price, of around $1,182,000 – significantly higher than the initial purchase price. Note: I used $160,000 as the purchase price of the diesel truck to get the most conservative numbers possible and a price-ceiling for the Tesla Semi.

You can see the numbers I used and their sources here.

Tesla Semi – Cost Breakdown

 



At $0.07 per kWh and a total driving distance of 1-million-miles over 10 years, the Tesla Semi would have an average annual fuel cost of about $15,500. Assuming the only regular maintenance cost of the vehicle is tire replacement at about $2,900 per year, and adding in insurance ($7,500 per year) and administration costs ($31,000 per year), which both scale with total vehicle purchase cost, I was able to figure out the selling price for the Tesla Semi.

Taking the total cost of ownership of the diesel of about $1,180,000 over its 10-year lifespan, in order to maintain a 20% lifetime cost savings over a diesel semi, a Tesla Semi should cost no more than $945,000 over its operating life. Subtracting out annual maintenance, fuel and insurance expenses of $57,000 per year, for the Tesla, I arrived at a value of $375,000. This is the total cost of the Tesla, financed over 10 years at a 4% interest rate. Removing interest costs of about $12,500 per year, I arrived at our final selling price of about $250,000 US for the Tesla Semi.

The Tesla Semi will be priced at $250,000 US.

That’s right – you read it here first. In order to make the statements in their presentation hold up, Tesla must price the Semi with a 500-mile range at $250,000 US or less. This aligns well with the cost estimate of $190,000 for the battery, by far the most expensive component of the vehicle, and puts the Tesla Semi in the same price bracket as their Model S and X vehicles, which sell for about 2x the price of gas-powered vehicles in the same class.

If my estimates are accurate, and the Tesla Semi sells for $250,000, it could be a real competitor for the medium-long haul trucking market. Assuming Tesla can get their manufacturing woes behind them and get out of ‘production hell’ quickly, the Tesla Semi could be the disruptor that the transportation industry desperately needs in order to transition to a sustainable future.

Lifetime cost of ownership - Tesla Semi vs Diesel Semi

Tesla claims, on their website, that “Electric energy costs are half those of diesel. With fewer systems to maintain, the Tesla Semi provides $200,000+ in fuel savings and a two-year payback period”. Based on my calculations, that’s not far off. In year 3, the diesel becomes more expensive than the Tesla for total cost of ownership. This means that, if you own a Tesla Semi, it will pay for itself in about 2 years.

While a traditional diesel truck will cost about $95,000 annually to operate, the Tesla semi will only cost about $55,000 annually. It is this difference that makes the $250,000 price attractive for business owners. Over time, the Tesla will pay for itself in the form of lower energy and maintenance costs. If Tesla can really pull off a $0.07 /kWh wholesale energy price, the Tesla Semi could revolutionize the shipping and transportation industry. If these claims turn out to be true, what remains to be seen is if Elon Musk and company have the manufacturing chops to build it.

Annual operating costs - Tesla Semi vs. Diesel Semi


 

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