PepsiCo aims to roll out 100 heavy-duty Tesla Semi in 2023, when it will begin using the electric trucks to make deliveries to clients such as Walmart and Kroger, the beverage maker’s senior fleet executive told Reuters on Friday.
According to PepsiCo Inc. Vice President Mike O’Connell, the company, which placed an order for the big trucks in 2017, is buying them “outright” and updating its factories. This includes adding four 750-kilowatt Tesla charging stations at its California locations in Modesto and Sacramento. Part of the expenses are covered by a $15.4 million state grant and a $40,000 federal subsidy per vehicle.
“It’s a great starting point to electrify,” said O’Connell, who oversees the company’s fleet of vehicles.
“Like any early technology, the incentives help us build out the program,” he said, adding that there were “lots” of development and infrastructure costs.
PepsiCo is the first company to experiment with the battery-powered Tesla Semi as a way of cutting its environmental impact.
United Parcel Service Inc and food delivery company Sysco Corp have also reserved the trucks, while retailer Walmart Inc is testing alternatives.
PepsiCo’s plans to use the Semi have been reported, but O’Connell provided new details on how the company is using them and its timeline for deploying them. Tesla Chief Executive Elon Musk initially said the trucks would be in production by 2019, but that was delayed due to battery constraints.
PepsiCo said it plans to deploy 15 trucks from Modesto and 21 from Sacramento. It is unclear where the others will be based but O’Connell said the firm is targeting rolling out the Semis in the central United States next, and then the East Coast.
The company’s Frito-Lay division sells lightweight food products, making it a good candidate for electric trucks, which have heavy batteries that could limit cargo capacity.
The Semis can haul Frito-Lay food products for around 425 miles (684 km), but for heavier loads of sodas, the trucks will do shorter trips of around 100 miles (160 km), O’Connell said.
“Dragging a trailer full of chips around is not the most intense, tough ask,” said Oliver Dixon, senior analyst at consultancy Guidehouse.
“I still believe that Tesla has an awful lot to prove to the broader commercial vehicle marketplace,” Dixon said, citing Tesla’s unwillingness to offer information on payload and pricing.
PepsiCo has earmarked some of the trucks planned for the Sacramento location to make deliveries to Walmart and grocers such as Kroger Co and Albertsons Cos Inc. The trucks at the Modesto Frito-Lay plant have just gone to PepsiCo distribution centers, O’Connell said.
All of the Semis going to PepsiCo will have a 500-mile (805-km) range. O’Connell added that he is not aware of when Tesla will start deploying 300-mile (480-km) trucks. When Tesla starts building them, PepsiCo “will rotate those up” into its fleet, he said.
PepsiCo declined to share details on the price of the trucks, a figure that Tesla has kept quiet. Competing vehicles sell for $230,000 to $240,000, said Mark Barrott of consulting firm Plante Moran. He added that the 500-mile range Tesla Semi could be priced higher because its 1,000-kilowatt-hour (kWh) battery pack is about twice the size of many of its rivals.
“We keep the trucks for a million miles, seven years,” O’Connell said. “The operating costs over time will pay back.”
The Gatorade maker declined to share specifics on the weight of the trucks, another closely guarded secret by Tesla.
He said Tesla did not help pay for the trucks’ mega-chargers but provided design and engineering services for the facilities, which come with solar and battery storage systems.
O’Connell said that a 425-mile (684-km) trip carrying Frito-Lay products brings the Semi’s battery down to roughly 20%, and recharging it takes around 35 to 45 minutes.