Tesla Elon Musk unveils the Tesla Semi in November 2017 in Hawthorne, California.<\/p>\n
AFP via Getty Images<\/p>\n
Two decades ago, when Tesla was a scrappy Silicon Valley startup, California\u2019s pollution rules let it earn free money selling emissions credits to automakers hawking big gas hogs. Its wealthy, environmentally minded consumers became the backbone of its electric car business. That kick-started the modern EV industry and helped CEO Elon Musk become the world\u2019s wealthiest person.<\/p>\n
He has not been gracious about it.<\/p>\n
Musk moved Tesla\u2019s headquarters out of California in late 2021. He moved himself out a year earlier after ranting on an earnings call about \u201cfascist<\/a>\u201d rules requiring Tesla to briefly halt production at its Fremont plant at the start of the Covid-19 crisis and has said the state’s regulatory agencies are intent on making \u201calmost everything illegal<\/a>.\u201d He\u2019s claimed the idea that Tesla relies on subsidies is farcical. \u201cTake away the subsidies. It will only help Tesla,\u201d he wrote back in 2024<\/a>. \u201cAlso, remove subsidies from all industries!\u201d<\/p>\n Now the Golden State, with the country\u2019s most generous clean truck incentives and a vast trucking sector, is helping ex-Californian Musk yet again by serving as the main first market for Tesla\u2019s latest offering <\/p>\n For the latest in cleantech and sustainability news, sign up here<\/a> for our Current Climate newsletter.<\/p>\n The Tesla Semi \u2014 the battery-powered heavy-duty truck Musk debuted nine years ago and finally put into production in Nevada in April has so far drawn more than 1,200 California \u201cHVIP\u201d vouchers for buyers of zero-emission heavy-duty vehicles, worth $172 million. That\u2019s double the number awarded to Tesla\u2019s closest competitor. Those vouchers knock $120,000 off the Semi\u2019s sticker price, which ranges from $250,000 for a 300-mile version to $290,000 for the 500-mile model, based on a copy of Tesla\u2019s pricing sheet obtained by Forbes. And with an additional $1 billion<\/a> of new funding for non-polluting trucks announced on May 13, the state is poised to be even more critical to Tesla. <\/p>\n High interest in the latest offering from the top U.S. EV brand isn\u2019t surprising, particularly as diesel fuel prices have spiked nearly 50% since the U.S. war with Iran started on Feb. 28. But the truck\u2019s heavy reliance on generous incentives is sharply at odds with Musk\u2019s public stance on subsidies and on the state<\/a> itself. <\/p>\n \u201cA surprising number of people think that Tesla survives on subsidies,\u201d he said in 2024<\/a>. \u201cThat is true of our competitors, but not of Tesla.\u201d<\/p>\n Not exactly: California\u2019s electric truck rebates go to buyers, not manufacturers, but they prop up Tesla sales by making the pricey vehicles more affordable than they\u2019d be without them. Tesla is among the biggest federal welfare vampires around<\/a> having earned more than $13.5 billion from indirect government subsidies via pollution credit sales over the past 14 years, under programs overseen by California, the U.S. and the EU. And though Musk knocks the state and its \u201coverbearing regulatory agencies<\/a>,\u201d it\u2019s by far the biggest buyer of Tesla EVs in the U.S. The same will be true for the Semi. <\/p>\n \u201cThere\u2019s still $200 million of HVIP funding available for those that have fleets in California, so go ahead and grab it.\u201d\n<\/p>\n Dan Priestley, Tesla<\/p>\n California will be a big early market because the \u201ceconomics are really, really strong. That\u2019s where a lot of our early deployments will be,\u201d Dan Priestley, who manages the Tesla Semi program, said at the ACT Expo conference in Las Vegas<\/a> this month. He also reminded the audience that \u201cthere\u2019s still $200 million of HVIP funding available for those that have fleets in California, so go ahead and grab it.\u201d<\/p>\n Tesla also expects Texas, which has both cheaper electricity and diesel prices than much of the country, as well as states in the Southeast, to be strong markets, Priestley said. <\/p>\n But the California offer is the more compelling one. On top of HVIP vouchers, fleet operators can also seek funds from the new $1 billion Clean Fuel Reward Program, as well as incentives from local utilities, regional environmental agencies and the state\u2019s ports. Stacking those funds can cover up to 90% of a semi truck\u2019s purchase price for operators of small fleets, excluding state sales taxes, registration fees, and a steep 12% federal excise tax. <\/p>\n The state funds don\u2019t come directly from California taxpayers, but rather from its cap-and-trade program, which requires polluters to buy credits to offset their pollution, and revenue that utilities generate from its Low Carbon Fuel Standard, said Lindsay Buckley with the California Air Resources Board. <\/p>\n Elon Musk arrives to court at the Ronald V. Dellums Federal Building in San Francisco during the OpenAI trial.<\/p>\n Getty Images<\/p>\n \u201cHeavy\u2011duty vehicles are among the largest contributors to local air pollution, especially in communities near ports and freight hubs,\u201d Buckley said. \u201cBy accelerating the adoption of zero\u2011emission technology, these programs deliver cleaner air for Californians who suffer the most from exposure to harmful emissions.\u201d <\/p>\n For now, the programs push the price of a brand-new electric Semi below that of a used diesel truck, which most small operators would otherwise buy, said Jason Roycht, whose Meridius Consulting firm works with companies in the electric trucking space<\/p>\n \u201cTraditionally, nothing around the country has really compared to what California\u2019s done in this space,\u201d said Roycht, a former executive with Bosch and electric truckmaker Nikola. \u201cKudos to California. They’ve got those big ports and are trying to do the right things to get the market going.\u201d<\/p>\n Some big fleet operators, including Costco, Ralphs, US Foods and Swift trucking, have received HVIP vouchers to get Tesla Semis. For now, the company\u2019s California customers don\u2019t include big retail and logistics companies such as Amazon, UPS and FedEx, based on current voucher data. The biggest single order for the trucks comes from WattEV, a Long Beach, California-based company specializing in electrified freight-hauling, which ordered 370 trucks worth about $100 million. <\/p>\n The spike in diesel prices driven by the war in Iran is doing real work for Tesla in the meantime. The cost per gallon nationwide has jumped from $3.81 a gallon on Feb. 23 to $5.63 on May 18. The price is even worse in California, owing to higher taxes and fuel requirements, where diesel currently costs $7.32 a gallon, according to the U.S. Energy Information Administration. <\/p>\n \u201cThere are other states that offer some form of subsidies, none are as generous as California’s, nor as well funded.\u201d\n<\/p>\n Ann Rundle, ACT Research<\/p>\n \u201cCalifornia has allocated a significant amount of money for the HVIP program, plus allowing `stacking,\u2019 where a buyer can apply [port-hauling] benefits in addition to standard HVIP subsidies,\u201d Ann Rundle, vice president of trucking industry consultant ACT Research, told Forbes. \u201cBut this is only in the state of California, and while there are other states that offer some form of subsidies, none are as generous as California’s, nor as well funded.\u201d<\/p>\n ACT previously estimated that overall U.S. sales of electric semi-trucks might be about 1,400 units this year. Rundle thinks it could be a bit higher, but hasn\u2019t revised the forecast yet.<\/p>\n Musk has said that Tesla will be able to supply up to 50,000 trucks a year, though it\u2019s not clear how quickly it will ramp up to that volume or if demand is actually that high. <\/p>\n Production is not the only constraint. Charging is too.<\/p>\n California has hundreds of electric trucks in operation, but the public fast-charging network for trucks the size of the Semi remains thin.<\/p>\n \u201cThere\u2019s a charging infrastructure mismatch\u201d in California, Roycht said. \u201cFive of the top 18 counties with Tesla voucher commitments have no operational [rapid] charging today.\u201d<\/p>\n In his Las Vegas comments, Tesla\u2019s Priestley said the company has \u201c50 stations in progress for public charging.\u201d Of those, more than half will be operating by the end of the year, he said. The company has also announced a partnership with truckstop operator Pilot to install heavy-duty truck chargers in California, Georgia, Nevada, New Mexico and Texas, with the first ones opening this summer.<\/p>\n For Tesla Semi or any competing electric truck to pencil out long-term \u201cyou’ve got to beat pre-war diesel levels.\u201d\n<\/p>\n Jason Roycht<\/p>\n Exactly how much it will cost to charge up at those stations isn\u2019t clear, though Roycht expects it to be at least 40 cents per kilowatt hour of electricity, based on current commercial charging rates. (In-house chargers operated by trucking companies will likely average closer to 30 cents per kWh.) The truck uses 1.7 kilowatt hours of power to go a mile, suggesting it costs about $200 to fuel up the 300-mile truck and more than $300 to go 500 miles. <\/p>\n At the current diesel price and with California\u2019s incentives baked in, the 300-mile Tesla Semi looks attractive for now, according to Roycht. The challenge is whether that will remain the case in the months to come if diesel prices revert to the pre-war level. <\/p>\n \u201cIf you believe you’re Nostradamus and say, \u2018I bet diesel is going to remain high. I’m going to purchase these assets and I’m going to use them for the next five years.\u2019 Well, if you’re wrong, then in two years you’re losing money on every single contract to a diesel engine,\u201d Roycht said. For the Tesla Semi or any competing electric truck to pencil out long-term, he said, “you’ve got to beat pre-war diesel levels.”<\/p>\n More From ForbesForbesTesla Semi\u2019s Biggest Rival Might Be Its Chinese TwinBy Alan Ohnsman<\/a>ForbesTesla\u2019s Semi Is Finally Hitting The Road. The Timing Couldn\u2019t Be WorseBy Alan Ohnsman<\/a>ForbesElon Musk Is A Billionaire Federal Welfare VampireBy Alan Ohnsman<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Tesla Elon Musk unveils the Tesla Semi in November 2017 in Hawthorne, California. 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