PepsiCo to roll out 100 Tesla Semis in 2023, exec says

REUTERS/Alexandria Sage/File Photo
Tesla’s new electric semi truck is unveiled during a presentation in Hawthorne, California, U.S., November 16, 2017.

NEW YORK/SAN FRANCISCO (Reuters) – PepsiCo PEP.O plans to roll out 100 of the heavy-duty Tesla TSLA.O Semis it reserved in 2023, when it will start making deliveries to customers like Walmart WMT.N and Kroger KR.N, the soda maker’s top supply chain official told Reuters on Friday.

PepsiCo Inc is purchasing the big trucks “outright” and is upgrading its plants, including installing four 750-kilowatt Tesla Inc charging stalls at both its Modesto and Sacramento locations, PepsiCo Vice President Mike O’Connell said in an interview. A $15.4 million California state grant and $40,000 federal subsidy per vehicle helps offset part of the costs.

“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 adding, saying “there’s lots of development” and infrastructure costs.

PepsiCo, which ordered the Semis in 2017, is the first company to experiment with them as a way of cutting its environmental impact.

United Parcel Service Inc UPS.N and food delivery company Sysco Corp SYY.N have also reserved the trucks, while retailer Walmart Inc WMT.N is testing alternatives.

PepsiCo’s plans to use the Semis have been reported, but O’Connell provided new details on how the company is using them and its timeline for deploying them.

The company’s Frito-Lay division sells lightweight food products, making it a good candidate for electric trucks whose heavy batteries could limit cargo capacity. PepsiCo is deploying 36 electric trucks from Tesla, with 15 in Modesto and 21 in Sacramento, so far.

PepsiCo’s new 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.

The company has earmarked some of the trucks to make deliveries to Walmart and grocers such as Kroger Co and Albertsons Cos Inc ACI.N.

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.

The company is targeting rolling out the Semis in the central U.S. next, then the East Coast, O’Connell said.

He said Tesla did not help pay for the trucks’ megachargers 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.