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Tesla Hints At Semi Sales In China

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Published on March 21st, 2019 |

by Jennifer Sensiba

Tesla Hints At Semi Sales In China

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March 21st, 2019 by Jennifer Sensiba

During the recent unveiling of the Tesla Model Y, Elon Musk discussed the future Shanghai Gigafactory (Gigafactory 3). The Tesla Semi appears in renditions of the future factory. Was that just for illustration, or would the Tesla Semi be a good truck for the Chinese market?

The image above shows the Tesla Semis in the rendition of the Gigafactory. It took some zooming in and minor sharpening, but with their distinctive faces, the Semis are hard to mistake for other trucks. On the one hand, it could be possible that the Semis were included just for illustration and decoration, but the Chinese market might be a good fit for the Semi. It’s likely that Tesla would also sell the truck in that market. It certainly seems as though Tesla is planning to use the Semi for its own shipping needs. Indeed, Jerome Guillen, President of Automotive and head of the Semi program since the beginning, recently told CleanTechnica that Tesla was excited to use the truck first for company logistics.

Chinese Trucking Is Booming
Forbes explains just how powerful the industry is in China. It’s growing, and there are definitely growing pains. The market for medium- and heavy-duty trucks is over four times larger than in the United States. China’s economy is almost indescribably huge, and the inland areas being served by trucks is where much of the growth is.

This growth has, until recently, mostly been a local issue. Local truck builders serve local truckers, who make runs from their local area to and from larger manufacturing centers. The growth of e-commerce fuels growth in outlying areas, increasing the need for long-haul trucking. Now, Uber-like websites and apps are enabling independent truckers to find loads more effectively.

There is a broad variety of manufacturers with varying truck types available for sale.

The Chinese Government Is Responding To Environmental Issues
Look toward the edges of nearly any Chinese city, and you’ll find large parking lots filled with idling trucks, waiting for loads. The Chinese government is concerned about not only the congestion, but the emissions, which can be downright disgusting near larger lots.

In response, government officials are cracking down on overloaded trucks and requiring the purchase of newer, lower emission trucks to help reduce the issues. This may be a great opening for a Tesla Semi, but competition in that space will be stiff. BYD, already dominating the electric bus market inside and outside of China, is gearing up to be a big player.

It’s likely that the government will push for electrification of cargo trucking as part of its push to get rid of internal combustion sales entirely by 2040.

Lower Operating Costs Are Important
Despite arrests and crackdowns, Chinese truckers are protesting on and off. Driving trucks can be an incredibly difficult way to make a living in China. Work hours aren’t heavily regulated the way they are in the United States and other countries, and to make ends meet, some drivers are working for 24 hours and only sleeping for 4 hours. American semi trucks, with relatively large sleepers, are downright luxurious compared to the trucks Chinese drivers are using.

Between fuel costs, payments on trucks that had to be replaced, and stricter enforcement against overloading, truckers are taking home less and less. Many share small apartments with others in larger cities, and still don’t have enough to send home to cover the family’s bills.

A truck like the Tesla Semi could be a good fit here. Payments would be higher, but lower maintenance costs, lower fuel costs, and better safety systems could make a big difference. Enhanced Autopilot will not only help tired drivers stay in their lane and avoid collisions, but it would also safely bring the vehicle to a stop in the event a driver falls asleep completely.

Final Thoughts
While the Semi’s appearance in Musk’s slide might just be a fun illustration, the Chinese market is definitely a good fit for the Semi. It really boils down to whether Tesla wants to enter that market and whether the Chinese government will help support the transition.

About the Author

Jennifer Sensiba Jennifer Sensiba is a long time efficient vehicle enthusiast, writer, and photographer. She grew up around a transmission shop, and has been experimenting with vehicle efficiency since she was 16 and drove a Pontiac Fiero. She likes to explore the Southwest US with her partner, kids, and animals.

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Elon Musk just sent his second email this month to employees explaining Tesla’s store closure plan

Patrick T. Fallon | Bloomberg | Getty Images
Elon Musk, co-founder and chief executive officer of Tesla Inc., speaks during an unveiling event for the Tesla Model Y crossover electric vehicle in Hawthorne, California, U.S., on Friday, March 15, 2019.

Tesla CEO Elon Musk sent his second email to employees in a month to clear up confusion around its store closures, according to a copy of the memo viewed by CNBC.

The email says Tesla stores with high foot traffic and sales will remain open. It also says Tesla will open more stores if it thinks it can increase sales. Musk's memo also said customers will still have to buy cars from their phone or a computer, even if they do so in a store.

Tesla originally caused a stir with its February announcement that it would shift to online only sales. At the time, Musk confirmed this move would involve reducing the headcount in Tesla's sales and retail force. On March 10, Musk addressed employees directly in an internal email to all employees, saying its plans had changed and Tesla would “retain more stores than previously announced.” The company also published a blog post to explain its shifted mindset to the public, saying that upon review, it had decided to close fewer stores.

As a tradeoff, the company said, “Tesla will need to raise vehicle prices by about 3% on average worldwide. In other words, we will only close about half as many stores, but the cost savings are therefore only about half.”

In the latest email to employees sent Wednesday, Musk said he hoped to clarify some confusion around the new plans around retail locations.

“Stores with a high visitation rate and that lead to significant sales will absolutely not be closed down,” Musk said in the email. “It would not make any sense to do so, except in rare cases where the rent is absurdly high. Moreover, Tesla will continue to open stores throughout the world that meet the above criteria.”

He also cleared up some misconceptions around Tesla's decision to sell online only.

“What is meant by 'all sales will be online' is just that the act of purchasing a Tesla will always be done via the potential new owner's phone or computer,” Musk wrote.

Tesla was not immediately available to comment.

Read the full memo below:

From: Elon Musk
To: Everyone
March 27, 2019
Subject: Tesla Stores & Sales
There [is] still some uncertainty around Tesla stores and the sales team. Hopefully, this note clears things up. Please let me know if there is anything I've forgotten to address.
– Stores with a high visitation rate and that lead to significant sales will absolutely not be closed down. It would not make any sense to do so, except in rare cases where the rent is absurdly high. Moreover, Tesla will continue to open stores throughout the world that meet the above criteria.
– Stores that are in a location with low visitation rates (ie empty most of their opening hours) and lead to low sales will gradually be closed down. This is analogous to seeds on barren ground. There is no reasonable way to justify keeping such stores open.
– Stores that are somewhere in the middle will be evaluated over time to see [if] there is some way to allow them to cover their costs. If there is, they will remain open, otherwise not. However, these stores will be given a fair opportunity to prove their case.
The above principles also apply to the sales team. No one who is a major contributor to demand generation will be let go. That would make no sense. However, sometimes, in a company with 45,000 people, things happen that make no sense. I will do my best to remedy issues when brought to my attention directly or through emdesk@tesla.com.
What is meant by “all sales will be online” is just that the act of purchasing a Tesla will always be done via the potential new owner's phone or computer. This is true whether they are at home or in a store. Unlike buying from other carmakers, ordering a Tesla doesn't require any *physical paperwork*.
This is very different from normal expectations for buying from other carmakers and is simply meant to emphasize that ordering a Tesla is super easy and can be done in 2 minutes from your phone or laptop at Tesla.com. Ordering a Tesla is not much harder than ordering an Uber, but hardly anyone knows this!
However, many potential Tesla owners will still want to talk to a Tesla representative in person or want a test drive from a Tesla representative. Stores also have a small number of Tesla vehicles available to drive away immediately for customers that want a car right then and there.
This is why stores and Tesla product specialists and owner advisors will always be of critical importance to our long-term success.
Thanks,
Elon

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