Thoughts on the Tesla Semi and New Roadster
Last night I was able to attend the Tesla Semi event at Tesla’s Design Studio in Hawthorne. As usual, gobs of Tesla enthusiasts cheered and were blown away by what Elon and his team shared about the Tesla Semi and the unexpected new Tesla Roadster.
Now, let’s get started with the obvious. The Tesla Semi is amazing. 0-60mph in 5 seconds and even temps a person like myself to want to own one. In person, I was able to walk around the two Semi prototypes and it’s clear that Tesla has spent a lot of time trying to reinvent the semi truck in almost every way possible. The wheels looked like a special version of aero wheels. The semi truck panels seamlessly connect with the trailer to reduce air friction. The cockpit seemed luxurious, modern and futuristic. There really is not much to not like about the Tesla Semi. If Tesla is able to pull through with their claims regarding significantly lower cost of ownership, then this is a very, very big deal for the trucking industry. I’m not sure how any trucker or trucking company will not want to own these.
However, I think there’s some tension with the Tesla Semi and Tesla’s plans for autonomous driving. It’s Tesla’s obvious goal to create a fully autonomous vehicle as soon as possible. And if and when Tesla succeeds, this means that a driver won’t be required to drive Tesla semi trucks. Thus, it’s kind of strange to see a driver’s seat in a Tesla Semi and for Tesla to pitch the Tesla Semi to current truck drivers, when in due time it’s the jobs of truck drivers that might become obsolete with Tesla’s new Semi. However, one can argue from a more practical view. It’s going to take some time before Tesla can reach full autonomy for passenger cars, and it might take even longer before that full autonomy can be transferred to semi trucks. I’d imagine it to be much more difficult to achieve full autonomy for a semi truck, especially in urban conditions, due to the sheer size and weight of the vehicle. While Tesla might achieve full autonomy for passenger vehicles that’s on par with the average driver within 2-3 years, there might be a much higher standard they need to reach in terms of autonomy for their semi trucks. Perhaps, the safety of Tesla’s fully autonomous systems need to be 5-10 times safer than the average human driver in order for semi trucks to go fully autonomous. However, this might take up to 10 years time. Let’s say Tesla reaches full autonomy for their passenger cars on par with the average human driver in 2020, then let’s say they reach full autonomy in passenger cars that’s at least 5 times safer than the average human driver 3-4 years later in 2024. Then, to apply Tesla's autonomous system to semi trucks so that they’re at least 5 times safer than the average human driver might take another 3-4 years, so in 2027-2028. So, there you go. It might not be until 2028 that Tesla’s semi trucks will be fully autonomous and no human driver will be required. Now there might be some intermediate step where Tesla semi trucks are able to go humanless for large stretches on the freeway and then a human driver would need to take over to go into the city. However, for there to be true and fully autonomous driving for semi trucks, it’s going to take a while.
So, that’s the context of why Tesla is not just working with trucking companies but also willing to adapt and target truck drivers. Tesla doesn’t see the truck driver job becoming obsolete until another 10 years or so. And even after 10 years, some truck companies could adapt and becoming autonomous fleet owners and it’s possible that some will become even more profitable than now. However, the reality though is that the Tesla Semi is an invention that will eventually lead to the disrupting of the entire trucking industry and will completely revamp how trucking is done. This is the beginning of robot taking over our semi trucks. Welcome to the future.
When looking at the Tesla Semi, it’s important to remember how Tesla rolls. Tesla introduces an amazing prototype and gives a super ambitious but unrealistic timeline goal. They tend to miss most of their timeline goals, but end up delivering a stellar product. However, the first version is not what their sights are on. Tesla is looking to do three iterations of the product to get it to the place where they’re very happy with it. This is why some of Tesla products, like the Powerwall, take much longer than people expect. Tesla is not expecting the first two versions of the Powerwall to sell millions. But they are expecting the third version (probably coming within 2 years) to be a megahit. In similar lines of thought, I don’t think Tesla is expecting to sell tens of thousands of these semi trucks within the first few years. I think production will be a little late and slow to ramp. Maybe a dozen vehicles in 2019, 300-500 in 2020, and 1000 in 2021 (note, these are my wild guesses). The slow rollout will give Tesla time to refine the product, roll out megachargers and make progress toward their second and third major iterations of the product. But the time the third iteration of the Semi hits the market in 2028 or so, it will be fully autonomous and it will be the end of the truck driver job as we know it.
The trucking industry is massive. In the U.S. it’s about 5% of the GDP. There are over 750,000 semi truck drivers, and that’s just in the U.S. I don’t think you can understate the impact of the Tesla Semi and what it eventually means. Over time, there are potential challenges with 750k jobs being displaced. These people need to transition into other jobs, but this might be challenging for some (or many?) because of the disruption taking place with robots and AI taking over more and more of what humans can do. These challenges are not only social, political and but also threaten to shake the very existence of our freedoms and way of life. On the other side, the efficiencies created by AI robots taking over jobs, including trucking jobs, will lead to economic growth on the whole and can free up some people to not need to work as many hours as before. But all these points are clearly debatable and the future is always in flux. However, I think what’s going on with AI and robots is truly historical and significant, and might be the greatest and most impactful social, economic, political change in history. I just have my doubts if the ultimate end will be positive or not.
Already, if one looks at the past 20 years, the Internet and globalization revolution has created megarich companies and growing economies, but also displaced workers and a growing rich-poor gap that is fueling political instability around the world and threatening the personal freedoms we have gotten used to. The AI and robot revolution will likely prove to be far more disruptful and much more ruthless in its displacement of workers and it’s impact on the rich-poor gap. These are issues and challenges we will be thinking about for many years to come, but also need to be taken seriously now. I have a lot to say on this but will save it for later.
Last night Tesla also unveiled a new Roadster, which came as a surprise to many. I can say that the car looks even better in person than in photos or video. It’s truly a gorgeous and stunning car, and also the specs are insane. Not only can it do 0-60mph in 1.9 seconds (which is hard to fathom) but it also has a 200kWh battery that can go over 600 miles. This is stuff that most didn’t think was even possible. I don’t expect Tesla to sell tens of thousands of these annually and I don’t think Tesla thinks they will also. I think their main intention is to show a proof of concept that the ICE car is truly dead. In no way can a ICE car be better than the new Roadster. Basically, last night Elon and Tesla gave the ICE their farewell. Sure it will take many years before ICEs stop getting produced, but last night was the final reason why - because ICE suck compared to what electric can do for cars. And that’s the significance of the new Roadster.
Finally, if you’re in the market for a new Model S/X, check out teslacost.com for a cost of ownership analysis. It’s run by a friend of mine and he’s been generous enough to add my referral code (ts.la/david7556) there for the next several weeks.