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Tesla Semi-truck: What will be the ROI and is it worth it?

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Elon Musk’s announcement that a Tesla Semi will be arriving as early as September is the first step to what will eventually be a reinvention of an entire industry. We’ve discussed before what, exactly, that means, but given that the man in charge of the Tesla truck program is Jerome Guillen who has a history with Daimler (specifically Freightliner) and large Class 8 semi-trucks, it’s not hard to see where Tesla plans to go with this. That leaves only the question of how far, literally, they plan to take it. In tractor-trailer operations, there are two basic types of freight moving: short-haul and long-haul.

We’re going to look at each of these types of freight hauling and how the return on investment (ROI) for a battery-electric rig (such as that we expect Tesla to unveil) would be. If there is any. We’ll also consider what type of equipment this might entail, in a broad sense, and how that compares to current paradigms in tractor-trailer freight hauling.

Before we dive into that, a few words on what the trucking industry is like are needed. About 69.5 percent of the freight moved in the United States is moved on a commercial truck. The U.S. Department of Transportation (USDOT) also says that a staggering 92 percent of prepared foods are moved by trucks and 82.7 percent of agricultural products are moved by truck, as are 65 percent of pharmaceuticals. However you measure it, that’s a lot of goods being moved on highways and surface roads nationally.

Currently, the trucking industry is seeing a lot of change, internally, as technology improves the way that freight hauling operates. The Internet and faster communications, for example, has begun to erode the traditional consignee-broker-hauler paradigm in which someone with goods to haul contacted a freight broker who then contracted a freight hauler to move the goods, skimming a percentage off the top for the connection. The middleman is often cut out in today’s trucking, with many trucking companies having load brokers on staff.

Electronics and global positioning have also changed how trucks operate, with computers more efficiently organizing load and truck movements to minimize empty movement. The USDOT says that about 29 percent of all truck movement is pulling an empty trailer to or from a freight drop-off point, costing about $30 billion annually. That number, while high, has been dropping for some time and drops exponentially as networks of computers get more efficient at organizing trucking and trucking companies consolidate into larger and larger fleets.

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Finally, we should note that the longer the average trip (load to delivery) is for a tractor-trailer, the faster the truck’s ROI for the owner. Shorter hauls have higher per-mile maintenance costs than do longer hauls. Even discounting the cost of fuel, that becomes true as equipment maintenance costs beyond engine and fuel are still higher with shorter distances. There are several reasons for this, including how often brakes are used, how much time is spent not working (idling or sitting), and higher incidences of accidents. To name a few. Many short-haul operations are undertaken on less than ideal roads and in areas where any kind of breakdown, including a flat tire, can mean hours wasted waiting for repair.

Knowing those things, we can look at potential ROI for both short-haul and long-haul Tesla electric semi-trucks.

Short Haul

Conventionally, short-haul operations are defined as being tractor-trailer shipments moving 250 miles or less and long-haul is defined as being those same types of shipments moving more than 250 miles. Each of these has sub-categories, of course, but in the main, those are the two major markets for large Class 8 semi-trucks pulling freight. It should be noted that the overlap between short-haul and long-haul is large, as many short-haul shipments are being carried to a distribution location where it’s reassembled for longer distance hauling.

Of the two operations, short-haul has the most diversity in terms of machines used and types of freight carried. It’s in this category that we find items as aggregate as grain freshly harvested from fields to stones to specialized equipment being carried. Sometimes by the same truck and driver over the course of a year’s work. It’s also in this category that we find specialized rigs meant for entering pit mines, climbing steep grades on primitive dirt roads, moving overweight and outsized items, and so forth. For the most part, trucks in this category are “day cabs” meaning they have no sleeper unit attached for the driver to use as a rest quarters when not at the wheel.

So far, the electrified Class 8 vehicles we’ve seen actually enter the market have nearly all fallen into the short-haul category. These have included battery-electric, hydrogen fuel cell, and hybrid units working as “yard dogs” moving trailers around a dock area, as portage trucks moving containers and freight out of port to staging areas or local distribution centers, and local area urban and suburban delivery vehicles. Currently, there is a large push in California to make all port vehicles (including container-moving trucks) as zero-emissions as possible.

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The good news for battery-electric truck makers and those who aspire to become them is that, according to the USDOT, about half of all of the shipments (by value) is moved less than 250 miles. That accounts for about 80 percent of the weight being moved around the country. The bad news is that in this segment, less is paid per ton for that freight to be moved and, according to the American Transportation Research Institute, this segment only accounts for about 25 percent of the trucks on the road. Equipment age also tends to be higher in this category, with trucks being used for more years (and generally fewer miles) than compared to long-haul trucks.

Nikola One all-electric Semi truck

In terms of cost, outside of maintenance, the most expensive items for a tractor-trailer, whether short- or long-haul, are fuel (38 percent), driver wages and benefits (34 percent), and truck-trailer lease payments and insurance (14 percent). These costs are about the same no matter what the truck is used for in most conventional operations, short-haul or long. Maintenance is about six percent higher in short-haul operations when compared to long-haul and insurance is usually a bit higher(1.5 percent), but not by so much that it can’t be averaged between them without skewing the numbers.

We can safely assume that a battery-electric semi-truck will have a higher price tag than its diesel-powered counterpart, which itself averages about $150,000 new. How much larger the electric truck would be is mostly conjecture, but we can probably be considered conservative to say it’s up-front costs will be at least 50 percent higher ($225,000) due to the expense of the batteries. Morgan Stanley’s report on electric and autonomous trucking assumed $75,000 for 500 kWh of battery storage, translating to roughly 150 or so miles of range in a fully loaded (80,000 pound) semi-truck. Given the current lithium crunch and the likelihood that economies of scale will take a lot of time to come to fruition, it’s easy to predict that more than half the Tesla Semi’s cost would be in batteries should it aim for a 250-mile range.

Over time, of course, that larger up-front price tag would be returned with fuel savings. In short-haul operations, about four years (250,000 miles) would be required to pay off $100,000 in battery premium with fuel savings. There are, however, other costs that would rise with the higher price of the rig. A higher-priced rig will have higher lease payments and higher insurance costs for replacement. This would stretch the ROI of the short-haul truck, by roughly another year, making it a five year investment return. If the truck stays in operation for the typical usage cycle in this segment, however, that would mean the truck pays for itself in about two thirds (70 percent) of its intended lifespan. Some percentage of the maintenance would also be lower in cost due to the nature of the electric truck, but much of it (tires, drivetrain, brakes, etc.) remains stagnant, further whittling at that ROI timeframe.

By and large, most forward-thinking fleet managers would jump at that. With one point of caution: by nature of their business and the long timeframes involved, most fleet managers are averse to change on a large scale. A few EV trucks here and there to prove out the technology and make the suits and ties happy are one thing. Jumping whole hog into the change is quite another. It would take some time (likely years) for fleet managers of short-haul fleets to decide that battery-electric trucks (or any type of unconventional powertrain) is a healthy decision. That, more than anything, will be the major delay towards adoption of something like a Tesla Semi.

Long-Haul Operations

Assuming that a Tesla Semi could be capable of hauling freight for 500-1,000 miles on a charge (the average long-haul trip is 600 miles per day), it would jump into a segment of trucking that accounts for more ton-miles than any other type of freight movement and that is growing faster than any other segment of commercial transportation in terms of both value and weight being moved. Further, the average turnover for a tractor in the long-haul business is 6.6 years (ATRI numbers) and the average mileage is over 110,000 miles per year per truck. ROI is typically faster as well, given the lower costs versus the miles driven.

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Coming up with an ROI for a long-haul electric semi-truck is much trickier here and may be nearly impossible without knowing more about the EV truck to be used. At this stage, a battery-electric Tesla Semi would be nearly impossible for long-haul given the size and thus weight of the batteries required. So something involving very fast charging, battery swapping, or similar would be required. That adds costs to the equation that we cannot easily quantify without knowing what those logistics are.

What we can easily project is that the cost-benefit for a Tesla Semi in a long-haul scenario would not likely be nearly as compelling as it is for a short-haul fleet manager. A typical over-the-road truck sees about a million miles during its lifespan with a cost of about $400,000 in fuel and $100,000 in maintenance (ATRI) during that time. Most fleets own the truck for about seventy percent that time (700,000 miles), on average. So the cost of a truck, in terms of purchase price, fuel, and maintenance over its expected fleet lifespan is about half a million dollars ($280,000 fuel + $70,000 maintenance + $150,000 purchase = $500,000). This might begin to look very close to break even on a higher-priced EV truck by comparison, which would very likely save on fuel but would have higher up-front costs in balance. Further, those fuel savings might not be as good given the likelihood that logistics like battery swapping or more frequent stops for plugging in would be required.

Conclusion

A Tesla Semi would likely have a good return on investment for any fleet manager who is willing to look over the long-term and consider the cost-benefit. For the short-haul manager, however, the potential ROI is far more provocative than it would be for the long-haul manager. We can see a clear business case for a Tesla Semi for a large proportion of the short-haul industry, though we do caution that it will likely take some time for those in the industry to cast anything but a dubious eye towards an unconventional powertrain.

Aaron Turpen is a freelance writer based in Wyoming, USA. He writes about a large number of subjects, many of which are in the transportation and automotive arenas. Aaron is a recognized automotive journalist, with a background in commercial trucking and automotive repair. He is a member of the Rocky Mountain Automotive Press (RMAP) and Aaron’s work has appeared on many websites, in print, and on local and national radio broadcasts including NPR’s All Things Considered and on Carfax.com.

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Investor's Corner

SpaceX IPO is coming, CEO Elon Musk confirms

However, it appears Musk is ready for SpaceX to go public, as Ars Technica Senior Space Editor Eric Berger wrote an op-ed that indicated he thought SpaceX would go public soon. Musk replied, basically confirming it.

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elon musk side profile
Joel Kowsky, Public domain, via Wikimedia Commons

Elon Musk confirmed through a post on X that a SpaceX initial public offering (IPO) is on the way after hinting at it several times earlier this year.

It also comes one day after Bloomberg reported that SpaceX was aiming for a valuation of $1.5 trillion, adding that it wanted to raise $30 billion.

Musk has been transparent for most of the year that he wanted to try to figure out a way to get Tesla shareholders to invest in SpaceX, giving them access to the stock.

He has also recognized the issues of having a public stock, like litigation exposure, quarterly reporting pressures, and other inconveniences.

However, it appears Musk is ready for SpaceX to go public, as Ars Technica Senior Space Editor Eric Berger wrote an op-ed that indicated he thought SpaceX would go public soon.

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Musk replied, basically confirming it:

Berger believes the IPO would help support the need for $30 billion or more in capital needed to fund AI integration projects, such as space-based data centers and lunar satellite factories. Musk confirmed recently that SpaceX “will be doing” data centers in orbit.

AI appears to be a “key part” of SpaceX getting to Musk, Berger also wrote. When writing about whether or not Optimus is a viable project and product for the company, he says that none of that matters. Musk thinks it is, and that’s all that matters.

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It seems like Musk has certainly mulled something this big for a very long time, and the idea of taking SpaceX public is not just likely; it is necessary for the company to get to Mars.

The details of when SpaceX will finally hit that public status are not known. Many of the reports that came out over the past few days indicate it would happen in 2026, so sooner rather than later.

But there are a lot of things on Musk’s plate early next year, especially with Cybercab production, the potential launch of Unsupervised Full Self-Driving, and the Roadster unveiling, all planned for Q1.

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Tesla Full Self-Driving statistic impresses Wall Street firm: ‘Very close to unsupervised’

The data shows there was a significant jump in miles traveled between interventions as Tesla transitioned drivers to v14.1 back in October. The FSD Community Tracker saw a jump from 441 miles to over 9,200 miles, the most significant improvement in four years.

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Credit: Tesla

Tesla Full Self-Driving performance and statistics continue to impress everyone, from retail investors to Wall Street firms. However, one analyst believes Tesla’s driving suite is “very close” to achieving unsupervised self-driving.

On Tuesday, Piper Sandler analyst Alexander Potter said that Tesla’s recent launch of Full Self-Driving version 14 increased the number of miles traveled between interventions by a drastic margin, based on data compiled by a Full Self-Driving Community Tracker.

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The data shows there was a significant jump in miles traveled between interventions as Tesla transitioned drivers to v14.1 back in October. The FSD Community Tracker saw a jump from 441 miles to over 9,200 miles, the most significant improvement in four years.

Interestingly, there was a slight dip in the miles traveled between interventions with the release of v14.2. Piper Sandler said investor interest in FSD has increased.

Full Self-Driving has displayed several improvements with v14, including the introduction of Arrival Options that allow specific parking situations to be chosen by the driver prior to arriving at the destination. Owners can choose from Street Parking, Parking Garages, Parking Lots, Chargers, and Driveways.

Additionally, the overall improvements in performance from v13 have been evident through smoother operation, fewer mistakes during routine operation, and a more refined decision-making process.

Early versions of v14 exhibited stuttering and brake stabbing, but Tesla did a great job of confronting the issue and eliminating it altogether with the release of v14.2.

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Tesla CEO Elon Musk also recently stated that the current v14.2 FSD suite is also less restrictive with drivers looking at their phones, which has caused some controversy within the community.

Although we tested it and found there were fewer nudges by the driver monitoring system to push eyes back to the road, we still would not recommend it due to laws and regulations.

Tesla Full Self-Driving v14.2.1 texting and driving: we tested it

With that being said, FSD is improving significantly with each larger rollout, and Musk believes the final piece of the puzzle will be unveiled with FSD v14.3, which could come later this year or early in 2026.

Piper Sandler reaffirmed its $500 price target on Tesla shares, as well as its ‘Overweight’ rating.

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Tesla gets price target boost, but it’s not all sunshine and rainbows

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Credit: Tesla Europe & Middle East/X

Tesla received a price target boost from Morgan Stanley, according to a new note on Monday morning, but there is some considerable caution also being communicated over the next year or so.

Morgan Stanley analyst Andrew Percoco took over Tesla coverage for the firm from longtime bull Adam Jonas, who appears to be focusing on embodied AI stocks and no longer automotive.

Percoco took over and immediately adjusted the price target for Tesla from $410 to $425, and changed its rating on shares from ‘Overweight’ to ‘Equal Weight.’

Percoco said he believes Tesla is the leading company in terms of electric vehicles, manufacturing, renewable energy, and real-world AI, so it deserves a premium valuation. However, he admits the high expectations for the company could provide for a “choppy trading environment” for the next year.

He wrote:

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“However, high expectations on the latter have brought the stock closer to fair valuation. While it is well understood that Tesla is more than an auto manufacturer, we expect a choppy trading environment for the TSLA shares over the next 12 months, as we see downside to estimates, while the catalysts for its non-auto businesses appear priced at current levels.”

Percoco also added that if market cap hurdles are achieved, Morgan Stanley would reduce its price target by 7 percent.

Perhaps the biggest change with Percoco taking over the analysis for Jonas is how he will determine the value of each individual project. For example, he believes Optimus is worth about $60 per share of equity value.

He went on to describe the potential value of Full Self-Driving, highlighting its importance to the Tesla valuation:

“Full Self Driving (FSD) is the crown jewel of Tesla’s auto business; we believe that its leading-edge personal autonomous driving offering is a real game changer, and will remain a significant competitive advantage over its EV and non-EV peers. As Tesla continues to improve its platform with increased levels of autonomy (i.e., hands-off, eyes-off), it will revolutionize the personal driving experience. It remains to be seen if others will be able to keep pace.”

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Additionally, Percoco outlined both bear and bull cases for the stock. He believes $860 per share, “which could be in play in the next 12 months if Tesla manages through the EV-downturn,” while also scaling Robotaxi, executing on unsupervised FSD, and scaling Optimus, is in play for the bull case.

Will Tesla thrive without the EV tax credit? Five reasons why they might

Meanwhile, the bear case is placed at $145 per share, and “assumes greater competition and margin pressure across all business lines, embedding zero value for humanoids, slowing the growth curve for Tesla’s robotaxi fleet to reflect regulatory challenges in scaling a vision-only perception stack, and lowering market share and margin profile for the autos and energy businesses.”

Currently, Tesla shares are trading at around $441.

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