THE TESLA SEMI: DIESEL IS DEAD

SUMMARY
The Tesla Semi is here. It’s cheaper and safer than diesel semis, and it has plenty of range. Essentially unlimited range, in fact.

Production begins in 2019 and no direct competition has been announced.

Revenue from sales of the Tesla Semi could increase Tesla’s market cap as much as 37% from its all-time high.

Diesel is dead. Welcome to the future: electric propulsion.

The Tesla (TSLA) Semi was revealed last night. Production is planned for 2019. It is superior to diesel trucks on cost and safety. The Semi has enough range and charging speed that any more would be superfluous. For practical purposes, its range is unlimited because more range and faster charging would not allow the truck to drive any more miles.

COST: 17% TO 47% LOWER THAN DIESEL TRUCKS
Tesla estimates its total cost per mile is 17% lower than a diesel semi truck. This figure lines up exactly with independent research conducted by ARK Invest, which estimates a 18% reduction in cost per mile from electric propulsion.

The Tesla Semi has the capability to operate in convoy mode. That means a driverless Semi locks on to the back of a human-driven Semi using cameras and radar (and perhaps other sensors), and other driverless Semi locks on to the back of that Semi, and so on. A wireless connection between two Semis functions like a physical coupling between rail cars. In convoy mode, Tesla estimates the cost per mile is 47% less than a diesel semi truck.

This figure also lines up with independent numbers. Driver compensation accounts for 39% of the cost per mile of a semi truck. Spreading that cost across four Tesla Semis would cut the cost per mile by 26%. Combined with the 17% cost savings of electric propulsion, that’s a 46% cost reduction. Tesla’s math checks out.