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Article: Anheuser-Busch Orders 40 Tesla Semi Trucks (Brewer hasn't yet decided whether to buy vehicles outright or lease them as it seeks to cut fuel costs and vehicle emissions.

Forget the Clydesdales. Anheuser-Busch has reserved 40 of Tesla Inc.’sTSLA -1.15% all-electric Semi trucks, as the maker of Budweiser seeks to reduce fuel costs and vehicle emissions.

The U.S. subsidiary of Anheuser-Busch InBev BUD -2.22% NV plans to use the trucks for shipments to wholesalers within 150 to 200 miles of its brewery locations—well within the 500-mile range that Tesla Chief Executive Elon Musk has promised. The vehicles would be deployed among the brewer’s so-called dedicated fleets of about 750 trucks, which bear the company’s branding but are owned and managed by outside carriers.

One of the largest known reservations since the Semi was unveiled last month, Anheuser-Busch’s preorder is still tiny relative to the broader heavy-duty-truck market, which produces 250,000 to 300,000 big rigs a year.

Anheuser-Busch hasn’t yet decided whether to buy the vehicles outright or lease them, said James Sembrot, the company’s senior director of logistics strategy. It could also ask one of its dedicated carriers to buy or lease the trucks. The Semi won’t be available until 2019. “We put the reservations down so we can prioritize our place in line,” he said. “We don’t know who the carrier is going to be in two to three years when these things are actually produced.”

He declined to discuss the cost for the reservation, which he said was made before Tesla introduced the Semi in California last month. Tesla had set deposits at $5,000 at the time of the November announcement but has since raised the amount to $20,000. Tesla expects the trucks to list for $150,000 to $200,000; a new diesel-powered heavy-duty truck can sell for $150,000.

The Semi tractors are designed to travel as much as 500 miles on a single charge. Some question whether electric vehicles are a viable option for long-haul trucking, citing concerns about range and battery weight.

Still, companies looking to trim transportation costs are seeking to test out the Tesla truck. J.B. Hunt Transport Services Inc. and Wal-Mart Stores Inc., which each operate thousands of trucks, have reserved Semis, as has Deutsche Post AG’s DHL Supply Chain and truck-leasing and fleet-management company Ryder System Inc.

Fuel, along with labor, is historically one of the biggest expenses for trucking companies, according to the American Transportation Research Institute, an industry research group.

Anheuser-Busch spends about $120 million on fuel each year for its dedicated fleets and long-haul transportation by for-hire carriers moving beer between breweries and wholesalers, Mr. Sembrot said. The company wants to cut its carbon footprint by 30% by 2025, and has invested in alternative-fuel vehicles, such as leasing delivery trucks that run on compressed natural gas. It is also in discussions with Nikola Motor Co., which is developing hydrogen-electric semi-trucks.

Mr. Sembrot said Anheuser-Busch views the Tesla truck and the Nikola vehicle, which the company says will be able to travel from 800 to 1,200 miles on one fill-up, as potentially complementary technologies.

“We have needs for all those types of distances,” he said.

How much the Semi can haul remains in question, however.

“You don’t have a transmission, you don’t have an engine, but how much exactly does the battery weigh,” Mr. Sembrot said. “We’re not shipping cotton balls around, so the weight of the equipment matters to us.”

But many trucking companies, which move freight thousands of miles across the country, might not be as eager to test out the new Tesla trucks.

“We’re going to sit on the sidelines and watch that develop,” said James Welch, chief executive of YRC Worldwide Inc., one of the largest less-than-truckload carriers.

YRC trucks make both local and long-distance trips, and the Tesla truck’s 500-mile range would be a liability on long-haul routes, he said. The company would also have difficulty maximizing electric trucks’ time on the road because they need longer to recharge, compared with time needed to refuel a diesel-powered big rig.

“Recharging time has to be quick because you’re paying a driver whether he or she is running or sitting,” Mr. Welch said.

Question

What are the three key takeaway statements (please write a discussion)?

Answer 1

The three takeaway statements here would be:

Mr. Sembrot, Anheuser-Busch's senior director of logistics strategy said, "Anheuser-Busch spends about $120 million on fuel each year for its dedicated fleets and long-haul transportation by for-hire carriers moving beer between breweries and wholesalers. The company wants to cut its carbon footprint by 30% by 2025, and has invested in alternative-fuel vehicles, such as leasing delivery trucks that run on compressed natural gas." In light of this statement it is quite evident that the Tesla Semi truck will meet both of the company's objectives quite easily of reduction in fuel costs since battery charging costs will be quite lesser than other alternative fuel costs and also it would have a zero emissions. This makes Tesla semi truck a good choice for the company which they must be dying to experiment given the fact that the 500 mile range of Tesla mini truck meets theor needs.

Mr. Sembrot further said, "You don’t have a transmission, you don’t have an engine, but how much exactly does the battery weigh. We’re not shipping cotton balls around, so the weight of the equipment matters to us". This is very rightly said since the main purpose of buying/leasing a truck is to transport merchandise. But in the immediate case they are considering transport of Budweiser brewery which will be paying some load on the truck. Hence a better analysis of the semi truck can be made when these facts are out and the company would be able to make a decision combining the payload of merchandise it is planning to transport in each trip.

However a comment made by James Welch, chief executive of YRC Worldwide Inc., one of the largest less-than-truckload carriers needs attention here who said, "We’re going to sit on the sidelines and watch that develop. YRC trucks make both local and long-distance trips, and the Tesla truck’s 500-mile range would be a liability on long-haul routes, he said. The company would also have difficulty maximizing electric trucks’ time on the road because they need longer to recharge, compared with time needed to refuel a diesel-powered big rig. Recharging time has to be quick because you’re paying a driver whether he or she is running or sitting.". This is a very important deciding factor on the success of Tesla mini truck since this is the need of the industry. It would be important to see how Tesla is planning out quick recharge function for the truck and I am sure that Tesla knows this fact very well and mush have planned something to address this need of the industry.