PepsiCo Executive Says The Company Will Deploy 100 Tesla Semis By 2023

PepsiCo plans to deploy 100 heavy-duty Tesla Semis in 2023, when it will begin using the electric trucks to deliver to customers such as Walmart and Kroger, according to the soda maker’s top fleet official, who spoke to Reuters on Friday.

PepsiCo Inc, which ordered the large trucks in 2017, is buying them “outright” and upgrading its plants, including installing four 750-kilowatt Tesla Inc (TSLA.O) charging stalls at its Modesto and Sacramento locations in California, according to PepsiCo Vice President Mike O’Connell. Part of the costs are offset 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 test battery-powered Tesla Semis in order to reduce its environmental impact. more info

The trucks have been reserved by United Parcel Service Inc (and food delivery company Sysco Corp), while retailer Walmart Inc is testing alternatives.

PepsiCo’s plans to use the Semis have been reported, but O’Connell provided new details on how the company intends to use them and when they will be deployed. Tesla CEO Elon Musk initially stated that the trucks would be available in 2019, but this was delayed due to battery constraints.

PepsiCo plans to send 15 trucks from Modesto and 21 trucks from Sacramento. It is unclear where the others will be based, but O’Connell stated that the Semis will first be introduced in the central United States, followed by the East Coast.

The Frito-Lay division of the company sells lightweight food products, making it an ideal candidate for electric trucks, which have heavy batteries that may limit cargo capacity.

The Semis will transport Frito-Lay food products for approximately 425 miles (684 km), but for heavier loads of soda, the trucks will initially make shorter trips of approximately 100 miles (160 km), according to O’Connell. PepsiCo will then use the Semis to transport beverages in the “400 to 500 mile range,” according to O’Connell.

“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.

Some of the trucks planned for the Sacramento location have been designated for deliveries to Walmart and grocers such as Kroger Co and Albertsons Cos Inc. Trucks from the Frito-Lay plant in Modesto have just arrived at PepsiCo distribution centers, according to O’Connell.

All of the Semis going to PepsiCo will have a range of 500 miles (805 kilometers). O’Connell also stated that he does not know when Tesla will begin deploying 300-mile (480-km) trucks. When Tesla begins production, PepsiCo will “rotate those up” into its fleet, he said.

PepsiCo declined to provide pricing information for the trucks, which Tesla has kept private. According to Mark Barrott of consulting firm Plante Moran, comparable vehicles sell for $230,000 to $240,000.

He added that the Tesla Semi’s 500-mile range could be more expensive because its 1,000-kilowatt-hour (kWh) battery pack is roughly twice the size of many of its competitors.

“We keep the trucks for a million miles, seven years,” O’Connell said. “The operating costs over time will pay back.”

The Gatorade company declined to share specifics on the weight of the trucks, which is another closely guarded Tesla secret.

He stated that Tesla did not contribute to the cost of the trucks’ megachargers, but rather provided design and engineering services for the facilities, which include solar and battery storage systems.

According to O’Connell, a 425-mile (684-km) trip carrying Frito-Lay products depletes the Semi’s battery by about 20%, and recharging it takes 35 to 45 minutes.

(Adapted from LiveMint.com)

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