Navigant Research Blog

Why Tesla Should Sell Trucks

Lisa Jerram — December 13, 2013

If you want to attract media attention for an idea, attach Elon Musk’s name to it.  Any technology he proposes taking on instantly attains a higher profile, whether it’s autonomous vehicles, high-speed public transport, or space travel.  Musk is also not afraid to buck conventional wisdom: he announced that Tesla would explore battery swapping immediately after battery swap pioneer Better Place declared bankruptcy.  Now, you can add electric pickup trucks to the list of challenging new transportation technologies that Musk wants to tackle.  A Tesla pickup truck would not have quite the same cachet as a Model S, but Musk says he wants to develop one because of their popularity in the United States.  He has mentioned modeling a Tesla electric pickup after the best selling Ford F series pickups.

The pickup truck vehicle segment actually seems like a good target for better fuel efficiency in the United States.  In spite of the move toward more fuel efficient passenger cars, pickup trucks continue to be among the top-selling vehicles in the United States, with the Chevy Silverado and Dodge Ram set to join the Ford F series among the top 10 best-selling cars in the United States in 2013.  Some of this may be due to pent-up demand, as these are quite likely to be work vehicles for contractors, landscapers, and other businesses that have been in a belt-tightening mode following the global recession of 2009.  But since pickup trucks are consistently big sellers in the United States, they represent an obvious target for any efforts to reduce overall transportation fuel consumption.  Musk specifically says he isn’t interested in developing an electrified commercial truck, like those used by Fedex or UPS, since that market is much smaller.   In 2012, the Ford F series, Dodge Ram, and Chevy Silverado combined for sales of 1.36 million.  By contrast, Navigant Research projects that U.S. sales of all medium and heavy duty trucks – the primary models sold to commercial users ‑ will be just over half a million in 2013.

Thanks, No Thanks

However, as I found researching for an update of the forthcoming Navigant Research report, Hybrid and Electric Trucks, U.S. automakers are not terribly interested right now in electrifying this vehicle segment.  GM announced it will be discontinuing all of its hybrid truck models in 2014.  Chrysler produced 35 Dodge Ram truck plug-in hybrids for testing with utility customers but has not announced any plans for commercial production.  Ford has announced that it is working on a hybrid system for its rear-wheel-drive pickups and SUVs; however, the company does not plan to introduce a commercial version until the latter part of this decade.

The reason is simple: low sales.  GM reported 2012 sales of around 2,800 Silverado, Tahoe, Escalade, and Yukon hybrids.  The major challenge for this market is that the businesses buying these cars are very price-sensitive and have rigorous performance requirements.  Edmunds found that the 2013 Silverado hybrid had limited towing capacity and fuel economy compared to the (non-hybrid) Dodge Ram, which cost thousands less.

The main companies in this space now are XL Hybrids and VIA Motors, both startups.  XL Hybrids is developing a hybrid drive that can be retrofit onto a Chevy Express van chassis or a Ford E Series chassis.  VIA Trucks has developed a plug-in hybrid powertrain to be integrated into Class 2 light trucks and vans, like the Chevy Silverado and Chevy Express van.   The company just announced it was beginning production in its factory in Mexico.  These two companies are still in the very early stages of producing commercial products, and it remains to be seen if they can succeed where the big OEMs could not.

No doubt Elon Musk will learn from these examples.  Succeeding in this market will require a vehicle with impeccable performance and significant fuel savings benefits, at a reasonable price point.

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