The semi cannot be under estimated what it means to Tesla. When I think of Tesla Energy, there is all the consumer and utility related products that are all fine and innovative and will be a growing and an accelerating business for some time. But to me, its really nothing compared to what Tesla as its own customer with superchagers and megachargers. Better yet, the announcement that Tesla is going to partner with clients like DHL, Pepsi co. and all the other companies that have placed orders, to install charging at their locations. This could be a combination of Mega and Super charging. It would more then likely include very large solar installations and battery installations. Why this matters is that big companies pay very high electrical rates because they are peaking in energy demand when supply is at its most expensive. If they can have Tesla come in and smooth out this demand and supply imbalance with Solar and Batteries, they can save money on more then just their fuel cost and rates for recharging the Tesla Semis. The entire facility can save with lower and more stable rates. In some places, they can actually get paid for some of their own demand usage. I can see a situation where Tesla's charging infrastructure, world wide, would be the largest utility on the planet. Think about that. The biggest generator and consumer of electricity in the entire world. The value of this has not been really thought out. I truly believe that whether Tesla partners with customers or builds out charging themselves, it will be a very profitable business. The margins on the Semi will be fairly small but the margins for charging and installing charging and TE at customers sites will be extremely profitable. At a minimum, 30% GM as a blended rate across all Semi related recharging and TE. Elon always said that the Solar city acquisition would make sense and I think this, more then solar tiles and consumer products is what he meant.
Putting this into context. I own 2 EVs, but I supercharge a lot. If I only charged at home. my cars would nearly triple my electric bill, as it is it doubled. Of course my gasoline bills went to 0 or nearly 0, I still have a riding lawnmower at about $2 a week for half the year. Now imagine if half my neighborhood converted to EVs and had the same thing happen to them. The Utility would be doubling or more the amount of electricity sold into my neighborhood and many like mine. The simple math goes like this. $450 in Gas turns into $300 in electricity which turns into a $150 solar loan which now takes that $300/mo. in Electricity and turns it into peanuts. Tesla gets that cash up front and they have no installed charging infrastructure at my home, which will be here 30 years whether im hear or not. Now in this case Tesla wont be the Utility, but they will still make a good deal of money from the install.
Now if I was a Tesla semi customer, my semi would typically cost me about $4200 a month in fuel for 10,000mi/mo at 6-7mpg and $3 diesel. With Megacharging, that same 10,000mi/mo is 1MWh x .07/KWh or $70 for 500 miles, x2 x10 or $1400 for 10,000 miles. A lot of assumptions there but if the pack is actually smaller then it might be a bit cheaper. That is $4200 taken away from Big Oil and Gas and converted to Tesla. Lets say the margins on that fuel is %10 or $420/mo. At 30%, the $1400/mo is $420/mo. So Tesla, only using TE and Megachargers can completely offset and take over the profits of the entire oil and gasoline supply chain. As everyone knows, the margins on gas are slim at the retail level, but the inefficiency of getting that oil out of the ground, transporting it half way around the world, refining it and then transporting it all over the country, then taxing the crap out of it, leads to very little profit margin. Now take this and multiply it by 1000 class 8 semis, or 100,000 a year starting in 2022. That's $42 million in profits (compounded annually so that its $4.2B a month in 10 years with a million semis on the road) siphoned from oil and gas and directly into Tesla's coffers as the largest utility on the planet. Whether they partner with customers and get paid up front for hardware or they put in the hardware and charge for the energy. I realize this is capital intensive but there is a huge difference between raising capital for this type of effort where you have a captive customer who might sign an agreement to buy electricity for 30 years, vs the risk of buying equipment to build EVs that people might not even want.. yeah right. but you get the point. The other important thing to note is that Tesla will not sell a single Semi if you cant charge them, so a charging network is not an optional thing here, its mandatory. Tesla knows this more then anyone else as they would not have sold many model S's without charging.
You can argue that Tesla cannot make any markup from Charging at 7c/KWh. This is still tbd, but there is evidence that Solar + Battery costs can give you electricity at costs that would allow 30% GM. This is at today's rates and lets not forget that Tesla is going to be making their own panels and makes their own batteries so if wholesale rates already allow these margins, Tesla should be able to make sure that they have enough margin to make it all work. Elon did not pull that 7c number out of his rear end. If I am smart enough to do the basic math above, so is Tesla. Scale has a way of making all of this stuff work. Building one micro grid for megacharging may not work, but working with Local governments, utilities, customers like Pepsi, and you have a lot more places where you can work deals to keep costs down. Remember, utilities will like this because Its Diesel being converted to Electricity. Its new business for them and in many places, they are under regulatory pressure to buy more renewable energy. They do not have a choice. If they dont buy it, they need to buy credits to compensate. I know, because some are buying my credits for solar that I generate and consume myself. They dont even get the energy, they are paying me to use my own solar. This is not an insignificant amount and equates to about 20% of my total cost to go solar. My point is that batteries will not always be necessary, as net metering can be used as a battery. Batteries would only be used to offset higher rates from demand related fees. These are typically assessed for businesses that have very high demand during peak times. A system can be designed to fully leverage every option available. Big companies are spending a lot on energy and there is a tremendous opportunity for TE to give them a much lower blended rate while also making it much cheaper to transport their goods. The Solar city acquisition is looking better and better.
Anyway.. I know I preach a bit to much and some might call me a hyper bull or whatever, but I think people are missing the boat on why the Semi is so important. If the specs are anywhere near what they are hoping, then it is probably a more important vehicle then the model 3. A 100,000 semis is equivalent to 2.3 million model 3s in terms of consumption while only being about a million Tesla's in terms of battery requirements. Tesla didnt make buses for a reason. They didn't bother with a econbox for a reason. They believe in margins and they need them for the mission. The Semi is no different. I believe the scale required for the Semi will also make every Tesla cheaper by enabling massive economies of scale. For example, if you are going to build a billion battery cells, you can use custom machines that run faster then a machine gun pumping out cells. You can have raw materials come in one side and leave as completed packs and motors out the other end. This massive scale gives you a lot of power when it comes to securing natural resources. For example; Think about what happens If Tesla comes to you and says we will buy your entire supply for the next decade, just load up the Tesla semis when they show up.
