Key Tesla customer PepsiCo had made initial payments for 100 Tesla Semis in 2017, with plans to use them to transport their products. However, as of this month, PepsiCo has only been using 36 of the promised 100 electric trucks. This revelation highlights the challenges Tesla faces as it aims to become a major player in the truck-manufacturing business. Other companies like Sysco, UPS, and Walmart Canada, who are interested in purchasing Tesla Semis, have turned to rival electric-truck makers due to the delay in deliveries.
This shortage of Tesla Semis comes at a difficult time for the company. Tesla has already experienced a slowdown in growth for its consumer electric vehicles, leading to price cuts and reduced margins. Moreover, the cancellation of Tesla’s anticipated affordable car has disappointed investors who were hoping for further growth.
One of the main reasons why companies are interested in electric trucks is the need to reduce greenhouse gas emissions. Diesel-powered 18-wheelers are a significant source of pollution, which makes electric trucks an attractive option for companies committed to sustainability goals. The Biden administration’s subsidies for electric trucks further incentivize companies like PepsiCo to invest in such vehicles. PepsiCo secured government grants and federal subsidies amounting to over $20 million to cover the cost of 32 Tesla Semis.
While Tesla has not commented on the issue, a PepsiCo spokesperson noted that their plans for the Semis are subject to change, depending on technology advancements and infrastructure development. Originally, PepsiCo was expected to receive all 100 Teslas by 2023, but now they are primarily focused on maximizing the use of their current fleet of 36 trucks.
Tesla has been striving to establish itself as a truck manufacturer for several years. The company initially aimed to have the Semi in production by 2019 and projected manufacturing 50,000 Semis by 2024. However, Elon Musk admitted in June 2023 that Tesla was facing a battery shortage, hindering volume production. He expected the battery problem to be resolved by 2024.
The delays in Tesla Semi deliveries have frustrated some customers. Svein Sollie, the transportation director at ASKO Norway, used his personal credit card to make an initial deposit on 10 Tesla Semis in 2017 but has yet to receive any trucks. UPS, which reserved 125 Semis in 2017, is still working with Tesla to determine a delivery date.
As a result of the delays, UPS, Walmart Canada, Sysco, and Schneider National have turned to Daimler Truck and its eCascadia electric big rig as an alternative to the Tesla Semi. Although the eCascadia has a lower range than the Tesla Semi (230 miles vs. 500 miles), companies like Schneider National have already incorporated nearly 100 eCascadia trucks into their fleets.
Despite these setbacks, Tesla does have a fleet of almost 100 Semis that travel between its factories in California and Nevada. Moreover, logistics provider Martin Brower conducted a pilot program using two Tesla Semis for deliveries to its restaurant customers earlier this year.
Tesla has plans to expand its manufacturing of the Semi in Nevada and is considering producing it in Europe as well. However, for companies like PepsiCo, building the necessary infrastructure to support an electric fleet remains a crucial step before fully adopting electric vehicles.
PepsiCo, though optimistic about the future of electric vehicles, has faced reservations from investor Green Century Capital Management regarding the company’s timeline for deploying Tesla Semis. The investment firm urges PepsiCo to consider the environmental impacts of its transportation choices.
In the waiting period for Tesla Semis, ASKO Norway has turned to Scania and Volvo for its electric semis in Europe, where Tesla has prioritized deliveries to U.S. customers like PepsiCo.
Overall, Tesla’s challenges in fulfilling orders for its Semi trucks highlight the difficulties of scaling up production in the truck-manufacturing business. The delays have prompted companies to explore alternatives and turn to rival electric-truck makers. Tesla must address battery supply issues and focus on meeting customer expectations to establish itself as a reliable truck manufacturer in the industry.