Toyota Beat Tesla In Race For Zero Emissions Semi Truck

| About: Toyota Motor (TM)
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Summary

Several companies are showing (proof of) concepts in the zero-tailpipe emissions large commercial vehicle area.

Unlike Tesla, Daimler, Volvo, Scania, Cummins and others, Toyota is going with hydrogen fuel cell for use in Long Beach port, California.

One key advantage of the hydrogen fuel cell solution is that it doesn’t add to the weight of the truck, still around 22,000 lbs.

Refueling to take place at the port, and all round trips to be below 150 miles. Assuming a reliable vehicle, this could be a strong use case.

Tesla will show a battery-electric truck in September, but will any technical performance claims be independently verified and even make sense?

Tesla (NASDAQ:TSLA) says it will unveil a prototype/concept of its semi truck near the end of September. This is one of the many attempts to get to zero tailpipe emissions for larger commercial vehicles.

All the major truck makers are experimenting with electric trucks of various sizes, ranging from Cummins (here), Daimler (OTCPK:DDAIF), Volvo to Scania (owned by Volkswagen (OTCPK:VLKAY)), among others. Given the heavy nature of batteries, however, a battery-electric truck is a most difficult - perhaps totally unrealistic - proposition.

The nature of a large truck is that it needs to be able to carry an enormous amount of weight. The biggest rigs can weigh 80,000 lbs. It is important that the truck itself weighs as little as possible in order to make room for as much cargo as possible. This is the key limitation in adopting a new powertrain technology.

Others have already pointed out this weight-centric problems with battery-electric Class 8 trucks: here.

For this reason, many battery-electric truck concepts have focused on smaller trucks which can do with fewer batteries. Perhaps they will make very local deliveries, where not much range is needed, and therefore fewer batteries mean that the weight of the truck is not impacted as much. In addition, some trucks also carry disproportionately less weight in those specialized circumstances, further lowering the burden on the battery constraints.

For all the optimism about battery-electric trucks, Toyota (NYSE:TM) may have them all beat, however - with a hydrogen fuel cell truck. And it does so by not adding weight to this new type of powertrain and fueling technology.

In this approximately 40 minute long video interview, Toyota's project manager for the hydrogen fuel cell truck explains the situation: here.

At 15:30 in the video, he explains that a regular truck-tractor trailer such as a Kenworth weighs approximately 22,000 lbs. However, Toyota's hydrogen fuel cell truck weighs 21,780 lbs - pretty much the same as a regular diesel Kenworth.

Toyota announced this project on April 19: here.

You will find links on that page to videos and timelapses showing how the truck was built, how it performs against a diesel-equivalent truck, and how it will be used.

So how will it be used? Every day, 16,000 (yes, that's sixteen thousand) of these huge trucks weighing up to 80,000 lbs go in and out of Long Beach Port in Los Angeles. They typically take these loads from the port to distribution centers all around the greater Los Angeles area. Some of these distribution centers are a few miles away from the port, while others are approximately 60 miles away such as those located around Ontario, CA.

One of the key insights here is that these trucks depart and return to the same place: The port of Los Angeles at Long Beach. This is where Freeway 710 pretty much begins, and you can stand there and witness these 16,000 truck departures and arrivals every day.

In other words, the range of these trucks don't need to be over 200 miles. With almost no destinations being much more than 60 miles away, very few of these trucks should go more than 150 miles on a return trip before they need refueling.

And where would they refuel? All of these trucks would refuel at the same place: the port. This is the other reason why this solution is so simple and elegant from an infrastructure perspective. Refueling would take 20-30 minutes (see 16:00 in the video), or not dramatically more than some diesel trucks of this size. A battery-electric truck? Would take many hours at best.

What else do you find in ports? Refineries. What's a byproduct of these refineries? Hydrogen (17:40 in the video). This is almost too elegant. Zero-emissions big-rig transport with fuel emerging as an on-premise byproduct. For these incremental trucks, that may be the most sustainable energy that can be realistically produced.

These 16,000 trucks going in and out of this port every day should just about double by 2030 (19:10 in the video) as the economy expands. Toyota's hydrogen fuel cell solution may be just what is needed to make this environmentally possible, given all the other technical and cost constraints.

Toyota partnered with Ricardo (ricardo.com) to build the first truck, which is expected to be followed soon by a larger test fleet. The first truck is currently undergoing "mileage accumulation" (24:00 in the video), i.e., durability testing. It is scheduled to be put into service in the port perhaps by the end of June 2017, if these tests can be concluded in a satisfactory manner, on schedule.

Toyota doesn't intend to bring this largest of trucks to market by building it completely by itself. That would probably not make economic sense. Instead, just like Toyota bought the engine-less existing Kenworth for this proof of concept, it would likely sell the hydrogen fuel cell powertrain to the other truck makers, such as Kenworth, Daimler, Volvo, Scania and others. Instead of "Intel inside," it would be "Toyota inside."

How does this compare with what Tesla will show in terms of a semi truck in September? Of course we have no details whatsoever about the Tesla truck. Elon said it will supposedly accelerate fast or handle well - which the Toyota also does, as you can see in Toyota's demo video where it's done side-by-side with an equivalent diesel truck. Then again, being able to accelerate all that fast is of limited desirability and utility in a truck this heavy.

This leads us to what Tesla will have to prove in order to be remotely competitive with Toyota. Toyota said (15:20 in the video) that it is not aware of a battery technology which can be light enough to avoid increasing the truck's weight - and still keep a decent range, say 200 miles at a minimum, with 80,000 lbs on board.

Basically, those are the minimum requirements for Tesla as it tries to compete with Toyota for these 80,000 lbs trucks:

  1. Can the Tesla truck handle 80,000 lbs without the batteries adding to the weight of the truck, thereby reducing cargo capacity?

  2. At the standard 80,000 lbs of undisturbed weight, can the Tesla truck have a range of at least 200 miles?

  3. Can the Tesla truck charge these batteries in less than half an hour?

  4. Can Tesla prove the reliability of this truck?

  5. Can Tesla prove the total cost of ownership of this truck, which would presumably include depreciating the batteries as part of the period-cost?

Toyota seems to imply that of those five points, Tesla will have a hard time proving even the first one. And if Tesla can't solve the weight problem, the next four constraints are moot.

This will be what we need to see from Tesla in September. Will Tesla be able to back up all the requisite performance claims with evidence? Two years ago, when introducing the stationary storage product (PowerWall), we heard plenty of promises for orders and sales. It has been shown over and over how all of these sales goals failed miserably. Stationary storage promises here. And solar panel factory promises here.

It's obvious that Tesla's past promises about getting into new products have been miserable failures, as was documented so well. The pattern is well-established by now: Tesla hosts a big launch with loud rock music, a demo with flashing lights, perhaps a robot that moves something across the stage, and a lot of promises about the product being the best and the least expensive, coming very soon.

...followed by missing every target by the widest of margin, in some cases by an infinite margin (as in the Buffalo solar panel plant case).

Maybe the Tesla semi truck will be different. Maybe as Elon Musk said at the shareholder meeting it will be in production in 18-24 months from now. Maybe the order book will be full already by this September. Maybe the truck factory started construction already a year ago.

Talk is cheap. Showing a concept truck without any independent verification is easy. Remember that solar roof presentation last October? Were those roofs "real" in that they were hooked up and working? Or were they as real as the rest of the facades at a Hollywood movie studio?

The Kenworth diesel and the Kenworth-by-Toyota hydrogen fuel cell truck both weigh approximately 22,000 lbs. Will the Tesla truck weigh no more than 22,000 lbs and handle 80,000 lbs in total? All with a range of over 200 miles when fully laden, and with a refueling (recharging) time of under half an hour? Will reliability be proven? Will independent organizations (not just selected customers) verify the TCO?

Those are the hard questions for Tesla. Toyota has put its truck into durability testing and it is scheduled to be operating in the Los Angeles port of Long Beach potentially in as little as weeks from now, performing real 80,000 lbs duty.

It looks to me that until proven otherwise, Toyota is way ahead of Tesla in terms of actually bringing a realistic and proven zero-tailpipe-emissions 80,000 lbs truck to market. Depending on the outcome of Tesla's September-to-be truck spec and performance claims being independently verified, perhaps infinitely ahead. We shall see.

Toyota is not known for the largest trucks. That's the providence of brands such as Kenworth and Volvo in the U.S., and Scania and Daimler in Europe. But perhaps Toyota can become the "Intel inside" for all of them, thanks to Toyota's hydrogen fuel cell technology.

It will take Toyota several years to conduct durability testing and bring this product fully to market at scale, presumably with the other truck makers as partners. It will likely take Tesla much longer to get there, if ever.

Disclosure: I am/we are long F, GM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: At the time of submitting this article for publication, the author was long GM and F. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.