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Adoption of Tesla’s electric truck will be driven by regulation
It’s expected that the commercial trucking industry will begin to transform in the same way that the passenger automotive industry has. Fuel efficiency has become a new priority and electrification is now the go-to plan for achieving higher MPGs in heavy trucking. In much the same way that regulations pushed trucking towards lower pollution at the expense of efficiency in the 1970s, today’s trucking paradigm is seeing a push for more efficiency. At what expense?
A new report from Ravi Shanker at Morgan Stanley urges investors to consider electric and self-driving commercial trucking as an opportunity. Shanker says that regulations and economics will drive the industry towards electrification and autonomous technologies. The analyst says that this could happen as early as 2020, which is when new federal fuel economy regulations on heavy-duty vehicles begin to really gather steam. Although efficiency gains will be had with electrification and self-driving, Shanker makes it clear that this will be secondary to the demand created by regulatory pressure.
As usual, we look to California for a glimpse of what could be coming. California’s Sustainable Freight Action Plan calls for 100,000+ zero-emissions trucks to be on the road by 2030 in that state. There is debate as to whether this plan is realistic, but federal standards are also playing a large role. The U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (part of the federal Department of Transportation) have proposed emissions and fuel economy standards for heavy-duty vehicles. The first of these began with the 2014 model year.
For our purposes, the regulations affecting “combination tractors” (aka “tractor-trailer” or “18 wheeler”) models are pertinent. The 2018 standards are relatively loose and most in the industry believe they are achievable, but the EPA and NHTSA have proposed further standards to begin in 2021, with incremental increases thereafter through to 2027. The goals are largely aimed towards lower CO2 emissions with reductions of about four percent (depending on the vehicle type) being the goal. The reduction is not the issue with industry insiders, however, it’s the test cycle to be used, which some argue is less realistic and which disfavors other emissions that also have requirements to be met. This Phase 2 of the federal efficiency standards for heavy trucks is not yet finalized, but will very likely be the driving force behind national changes in trucks.
Equating these changes into standard numbers that the general public would understand is difficult. Heavy-duty trucks can range in fuel efficiency from 20 mpg or better down to 2-3 mpg. For most tractor-trailer combinations, MPG averages of 4-9 mpg are the norm, depending on load, tractor type, and area of operation. Most analysts calculate efficiency using fuel use in tons per mile with a relatively long distance (100-500 miles) being the average. Using this method, for example, in my time driving a tractor pulling a refrigerated trailer across all 48 states, my fuel economy average was about average for that sector of the industry at roughly 60 ton-miles per gallon. Today, these numbers are slightly higher, according to the latest U.S. Transportation Energy book. Using this method of calculation, a 2015 Toyota Prius is about a third as efficient at moving freight as was my truck.
This doesn’t mean there isn’t room for improvement, of course. There are more companies than Tesla working towards deleting the smoke stacks from big trucks.
In Europe, Volvo trucks is working hard towards a zero-emissions (at the tailpipe anyway) trucking solution with several approaches being tested. An overhead tram-like charging system has been deployed for a short stretch of highway in Sweden, aiming to improve plug-in trucks’ range in EV mode. Short-haul battery electrics and two different versions of autonomous (or semi-autonomous) systems are also being tested.
Here in the States, Volvo’s Mack Trucks is working on a handful of electrification options for heavy-duty drivetrains. So is Daimler (Freightliner, Western Star in the U.S.). Startups like Nikola also have eyes on this electric trucking future. Other startups have hoped to get into the mix as well, but the failure rate is high with companies like Smith Electric, Vision Industries, and Boulder Electric having designed and marketed innovative commercial truck options that ultimately never caught on.
Meanwhile, the largest maker of electric heavy vehicles is Chinese maker BYD, who branched out from making gadget batteries into building electric buses, trucks, and more. They are currently filling contracts internationally for buses and trucks in places as disparate at California, Malaysia, and Europe. BYD builds battery-electric, hydrogen fuel cell electric, plug-in hybrid, and hybrid drivetrains and machines for several commercial market sectors.
So we can guarantee that changes to the trucking industry are coming, but no one can say how fast or how much change that will be. Current federal regulations will drive the industry forward until 2018 and it’s likely that new standards will be in place to keep carrying change forward after that. California’s ambitious plans for adopting electric trucks will be largely regulation and incentive driven, but that has down sides as well. Many of the startups we’ve seen who’ve created electrified big rigs or delivery trucks ultimately failed when the incentives began to dry up.
For Tesla, this could mean that the financial case for the Tesla Semi will need to be more economics-based and less dependent on single market, incentives-based plans. This means that Elon and Co should be looking beyond California and it’s 100,000 vehicle plans into a broader market. We’ll discuss the potential economic case for a Tesla Semi in a future editorial.
Tesla has made two big interior changes to several Model Y vehicles in its lineup, and the changes come just as the new model year begins production.
Last year, Tesla launched the Model Y Standard, which separated the previous models into the “Premium” category. The Standard vehicles lack several features, including more premium interior materials, acoustic-lined glass, and storage.
@teslarati There are some BIG differences between the Tesla Model Y Standard and Tesla Model Y Premium #tesla #teslamodely ♬ Sia – Xeptemper
The Model Y “Premium” trims are now getting several new upgrades, which come after the company launched a seven-seat configuration of the vehicle last night in the North American market for an upcharge of $2,500.
The new Model Y seven-seat configuration did not come with just an additional row of seating; it also came with a slew of other goodies that now come standard and were previously only available on the Model Y Performance, which was launched late last year.
All Black Headliner
The new Tesla Model Y Premium trims will now come standard with a black headliner, something that many owners have been requesting for some time.
The previous grey headliner and trim within the vehicle is now gone; it will be all black on all of the Premium trims from here on out, a welcome change:
Credit: Tesla
Larger and Higher Resolution Center Touchscreen
The center touchscreen in the new Model Y Premium configuration is now larger and has a higher resolution than the previous version.
In last year’s Model Y configurations (apart from the Performance), the center touchscreen was 15.4″. Now, Tesla has decided to go with the 16″ version across all Premium trims, which is a nice step up. It was nice to see this in the Performance, but it is really great to see Tesla include this in the Model Y’s more Premium trim levels.
Tesla Model Y Seven Seater
Tesla launched the latest iteration of the seven-seater for the Model Y on Monday night. Traditionally, the Model Y seats five passengers in total, but there were calls for a more spacious version several years ago.
Tesla released it, but it was extremely tight in the back, basically reserving those back seats for only small people or children.
Credit: Tesla
The new configuration looks to be slightly more spacious in the third row, but not as much space as most would require or want. Instead,
Elon Musk
Lufthansa Group to equip Starlink on its 850-aircraft fleet
Under the collaboration, Lufthansa Group will install Starlink technology on both its existing fleet and all newly delivered aircraft, as noted by the group in a press release.
Lufthansa Group has announced a partnership with Starlink that will bring high-speed internet connectivity to every aircraft across all its carriers.
This means that aircraft across the group’s brands, from Lufthansa, SWISS, and Austrian Airlines to Brussels Airlines, would be able to enjoy high-speed internet access using the industry-leading satellite internet solution.
Starlink in-flight internet
Under the collaboration, Lufthansa Group will install Starlink technology on both its existing fleet and all newly delivered aircraft, as noted by the group in a press release.
Starlink’s low-Earth orbit satellites are expected to provide significantly higher bandwidth and lower latency than traditional in-flight Wi-Fi, which should enable streaming, online work, and other data-intensive applications for passengers during flights.
Starlink-powered internet is expected to be available on the first commercial flights as early as the second half of 2026. The rollout will continue through the decade, with the entire Lufthansa Group fleet scheduled to be fully equipped with Starlink by 2029. Once complete, no other European airline group will operate more Starlink-connected aircraft.
Free high-speed access
As part of the initiative, Lufthansa Group will offer the new high-speed internet free of charge to all status customers and Travel ID users, regardless of cabin class. Chief Commercial Officer Dieter Vranckx shared his expectations for the program.
“In our anniversary year, in which we are celebrating Lufthansa’s 100th birthday, we have decided to introduce a new high-speed internet solution from Starlink for all our airlines. The Lufthansa Group is taking the next step and setting an essential milestone for the premium travel experience of our customers.
“Connectivity on board plays an important role today, and with Starlink, we are not only investing in the best product on the market, but also in the satisfaction of our passengers,” Vranckx said.
Elon Musk
Tesla locks in Elon Musk’s top problem solver as it enters its most ambitious era
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla has granted Senior Vice President of Automotive Tom Zhu more than 520,000 stock options, tying a significant portion of his compensation to the company’s long-term performance.
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla secures top talent
According to a Form 4 filing with the U.S. Securities and Exchange Commission, Tom Zhu received 520,021 stock options with an exercise price of $435.80 per share. Since the award will not fully vest until March 5, 2031, Zhu must remain at Tesla for more than five years to realize the award’s full benefit.
Considering that Tesla shares are currently trading at around the $445 to $450 per share level, Zhu will really only see gains in his equity award if Tesla’s stock price sees a notable rise over the years, as noted in a Sina Finance report.
Still, even at today’s prices, Zhu’s stock award is already worth over $230 million. If Tesla reaches the market cap targets set forth in Elon Musk’s 2025 CEO Performance Award, Zhu would become a billionaire from this equity award alone.
Tesla’s problem solver
Zhu joined Tesla in April 2014 and initially led the company’s Supercharger rollout in China. Later that year, he assumed the leadership of Tesla’s China business, where he played a central role in Tesla’s localization efforts, including expanding retail and service networks, and later, overseeing the development of Gigafactory Shanghai.
Zhu’s efforts helped transform China into one of Tesla’s most important markets and production hubs. In 2023, Tesla promoted Zhu to Senior Vice President of Automotive, placing him among the company’s core global executives and expanding his influence beyond China. He has since garnered a reputation as the company’s problem solver, being tapped by Elon Musk to help ramp Giga Texas’s vehicle production.
With this in mind, Tesla’s recent filing seems to suggest that the company is locking in its top talent as it enters its newest, most ambitious era to date. As could be seen in the targets of Elon Musk’s 2025 pay package, Tesla is now aiming to be the world’s largest company by market cap, and it is aiming to achieve production levels that are unheard of. Zhu’s talents would definitely be of use in this stage of the company’s growth.
Tesla makes two big interior changes to several Model Y vehicles
Lufthansa Group to equip Starlink on its 850-aircraft fleet
