Which industry generates almost $700 billion in annual revenue and employs 6% of American workers?

Something “techy,” surely?

It’s trucking.

There are about 4.8 million commercial trucks on U.S. roads. About 4 million of them are Class 8 18-wheelers — the “big rigs” that haul freight over long distances.

Commercial trucks comprise 1% of all U.S. vehicles. But they produce 40% of vehicular carbon emissions. Their diesel engines also emit about 70% of nitrogen oxide and ozone pollution, both of which are linked to cardiovascular disease.

But big U.S. jurisdictions such as California are determined to change that. So is the European Union, the United Kingdom … and even China. All of them have strict emissions reduction targets, and trucks are no exception.

That means trucks are going to have to come clean, and quickly.

The stock market is starting to realize that. This year has seen big run-ups in the stock price of alternative powered truck designers like Nikola Corp. (Nasdaq: NKLA), Hyliion which merged with Tortoise Acquisition Corp. (NYSE: SHLL) and Workhorse Group Inc. (Nasdaq: WKHS).

I investigated the alternative fuel trucking industry from an economic perspective for your September issue of The Bauman Letter. (You can access that here.)

I was surprised at what I found … but not as surprised as unwary investors will be when they discover the truth about the future of clean trucking.

Tesla’s Truck Fiasco

Millions of investors are enthralled by electric carmaker Tesla Inc. (Nasdaq: TSLA) and by its chief cheerleader and CEO, my fellow South African Elon Musk.

With his customary panache, in 2017 Musk announced the arrival of the Tesla “Semi,” an 18-wheel tractor-trailer powered by four Tesla Model S battery packs. He claimed the high-end version could go up to 600 miles on a single charge.

He also made a big deal about the Semi’s ability to go from 0 to 60 in five seconds.

Unfortunately for Musk, that’s totally irrelevant for the trucking industry.

The only thing that matters to truckers is the cost of moving a pound of freight from point A to point B. Everything else is at best tangential, and at most, irrelevant.

That’s why trucking experts quickly concluded that the Tesla Semi is a non-starter, at least as far as current battery technology is concerned.

There are three major barriers:

  • The batteries will cut into the freight payload. U.S. law fixes the maximum weight of a Class 8 truck plus freight at 80,000 pounds. The typical fully fueled diesel tractor and empty trailer weighs about 32,000 pounds. That leaves 48,000 pounds for payload.
  • According to an analysis by the American Chemical Society, with today’s technology, the battery pack required to achieve the Semi’s 600-mile target would weigh over 35,000 pounds. When combined with the weight of the tractor and empty trailer, those batteries would reduce the maximum potential payload by 25%, to 36,000 pounds. And more energy would be spent hauling the batteries and motors than the actual payload!
  • The Semi’s maximum range is less than the average long-haul freight trip. The average Class 8 truck travels around 750 miles per trip. This is easily achievable with existing diesel fuel tanks. The Semi, by contrast, would have to stop between 500 and 600 miles to recharge. And it’s not like stopping at a gas station to fill up. Recharging could take several hours. To truckers, time is money.
  • The technology is unaffordable. A 600-mile Semi battery pack would cost around $250,000 … and need to be replaced every few years. An equivalent diesel-powered truck sells for only $120,000.

Ditch the Charging

It’s important to understand that the problem with Tesla’s Semi isn’t electrical power per se. The problem is where that electrical power comes from.

Battery technology makes sense for cars. They’re lighter than trucks. They typically don’t travel as far. So they can use smaller batteries that charge fairly quickly.

But as I’ve shown, scaling up that technology to trucks is impractical … and entirely unnecessary.

You see, the only reason the Tesla Semi needs such massive batteries is that Musk insists that the electricity to charge them must come from a solar-powered distribution network he plans to build. That means the batteries must be able to store more power between charges. And that makes them uneconomical.

But there’s another way to charge batteries … generate electricity on the go.

Thousands of Toyota Prius’ on American roads already use this approach. But using a gasoline engine to charge the battery, as the Prius does, isn’t the only way to produce electricity.

Two technologies already in widespread use can provide enough electricity to keep 18-wheelers’ batteries running for over a thousand miles at a time by providing a constant “trickle” charge.

These power plants weigh the same as existing diesel technology, so there’s no reduction in payload or profits.

But only one of these two technologies is truly carbon neutral. That’s why I am absolutely convinced that the future of clean trucking lies with companies pursuing this technology.

That technology? Hydrogen fuel cells.

Not only is the technology clean, in prototypes already in production, the combined weight of hydrogen tanks, fuel cells and batteries is nearly identical to conventional diesel engines. That means they could haul the same freight for the same revenue.

And current projections show that HFC-powered trucks could cost 30% less than diesel vehicles to own and operate by 2030.

In the latest Bauman Letter report, I identify the one company uniquely positioned to take the lead in this market. I predict a 60% gain in the next year or so … and triple digits beyond that.

Kind regards,

Turn Your Images On

Ted Bauman

Editor, The Bauman Letter