Is Tesla Inc.'s Semi on the verge of doing to the trucking industry what the iPhone did to telecommunications?
Probably not -- but the decarbonization of road freight may still upend both the logistics business and the oil industry.
To see why, have a look at the International Energy Agency's estimates last week for future oil demand. Consumption by passenger vehicles, buildings, industry and generators has all but peaked, according to the IEA's scenario. By 2025, demand from cars and buses will increase by about 1.4 million barrels a day from 2015 levels -- equivalent to about 1.5% of the global daily output of 92 million barrels. From there, it will begin an inexorable decline.
Demand growth will really depend on three sectors: petrochemicals, aviation and shipping, and road freight.
Tesla Semi Specs
|Acceleration 0-60 mph with 80k lbs||20 sec|
|Speed up a 5% Grade||65 mph|
|300 or 500 miles|
|Powertrain||4 Independent Motors on Rear Axles|
|Energy Consumption||< 2kWh/ mile|
As Julian Lee has argued in Gadfly previously, the petrochemicals part of that story -- essentially, that use of plastics is set to grow dramatically in the coming decades -- could already be starting to biodegrade. AP Moller-Maersk A/S is exploring using LNG as an alternative fuel for its fleet, which may erode demand from shipping, too.
Aviation and road freight will be the toughest nuts to crack. Use of both tends to increase with economic growth, so we're likely to see many more ton-kilometers over the coming decades as China, India and other emerging economies grow richer. More to the point, the vast power demands of aircraft and heavy-duty trucks present major challenges to current rechargeable-battery chemistries.
The problem is energy density. Batteries take up far more space and weight for a given output of energy than gasoline and diesel. That issue is becoming irrelevant in lighter vehicles like cars and smaller vans because they don't require much power. But it looms large when it comes to the heavy-duty longer-distance trucks that consume about half of road freight fuel, and are expected to see the biggest demand growth.
Take a look, for instance at Daimler AG's Urban eTruck, the first fully electric heavy-duty vehicle to go into production earlier this year. The 2.5-metric-ton battery alone on this beast weighs as much as a Chevrolet Suburban, one of the largest SUVs on the road. Furthermore -- as the name indicates -- it's only intended for deliveries within cities, with a maximum range of 200 kilometers. That's not going to do much damage to long-distance routes: A typical semi-trailer can carry enough fuel to travel at least five times that distance.
The specifications emerging for the Tesla Semi suggest it may be able to improve on that, with a range of about 800 kilometers when carrying a 36-ton maximum load. There's no word yet about the weight of the Semi's battery, but it would have to be colossal to achieve those sorts of specs. That's probably not the best route to energy efficiency, given that about 25% to 30% of the time trucks are driven empty. A significant slice of the Semi's energy will be spent hauling around its massive power plant.
Tesla Semi's Range: 500 miles/ 800 km
That explains why the numerous competitors to the Semi already out there are mainly focused on shorter-range urban logistics networks. It's going to require technological breakthroughs -- such as the development of commercial lithium-air cells, which could have gasoline-style energy densities -- for batteries to really eat into the oil consumed by long-haul trucking and aviation.
If that sounds pessimistic, it shouldn't. The global trucking industry doesn't really need battery-powered big rigs to significantly reduce its emissions. The IEA's modern trucks scenario, which envisages a less carbon-intensive global freight fleet, sees oil demand falling to about 6 million barrels a day in 2050 from the current 17 million barrels, relative to a 22 million barrel central scenario.
Just 16% of that improvement comes from a shift to electric vehicles. Instead, efficiency and productivity improvements and biofuels have the bigger impact. Energy demand from heavy trucks is essentially unchanged from current levels, with most of the savings in the light- and medium-weight vehicles that are already being deployed by the likes of United Parcel Service Inc. Even among heavy trucks, trailers powered along trunk routes by rail-style overhead power lines may be as important as plug-in battery vehicles, in the IEA's view.
As a result, the oil industry's hopes of demand growth from road freight will probably be dashed -- as they'll have to be, if the world is to avoid the worst effects of climate change. But expect the big shifts in the coming decades to be in warehousing, urban delivery vans, and digital technology, rather than battery-powered road monsters.
Tesla's Semi may look impressive, but the diesel-powered big rig will keep on trucking for a long time to come.