Environmental Implications and Policy Challenges for Bringing Long-Haul Electric Trucks into China: The Case of the Tesla Semi

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Executive Summary

The Tesla Semi is a battery powered electric long haul truck currently in the prototype phase. Since cost and technological barriers have prevented electric vehicles from making significant inroads into the market for long haul trucks, the announcement of the Tesla Semi marks one of the first major attempts to bring electrification to on-road long haul freight transport. China, as the world’s largest carbon emitter, is an important market for truck electrification. China has a bourgeoning passenger electric vehicle market but, like the rest of the world, is reliant on heavily polluting diesel trucks for on-road freight transport. 

This paper addresses two main questions:

1. What are the potential impacts on carbon emissions of electric long haul trucks in China? 
2. What are the barriers to the adoption of electric long haul trucks in China? 

Can the Tesla Semi cut costs and CO₂ in China?

For each standard diesel truck replaced, the Tesla Semi, as announced, would be able to reduce direct CO₂ emissions by up to a third over a 10 year period compared to what would have otherwise been emitted, despite a large percentage of coal in China’s electricity generation mix. However, costs reductions depend on multiple factors including (1) diesel fuel costs, (2) the costs and utilization rates of the required charging infrastructure, and (3) whether or not the Tesla Semi is subject to a Chinese tariff on imported vehicles. 

The charging infrastructure necessary to support long haul electric trucks is a major challenge to vehicle adoption, as it is with passenger electric vehicles. With only a few electric trucks on the road, the utilization rate of the charging infrastructure would be quite low and require high prices for the installers of the infrastructure to break even. But in order to reduce electricity prices and make electric trucks more economical, a high charger utilization rate is needed, implying large number of electric trucks already on the road. Therefore government subsidies or direct involvement in construction of charging infrastructure can provide an important boost to speed the adoption of electric long haul trucks by reducing costs for initial users.

If the electric truck charging infrastructure can achieve a utilization rate of 25% or greater, this paper estimates that the Tesla Semi can decrease costs to users given rising diesel prices in China between now and 2030, with increased savings possible if the charging infrastructure costs are kept low either by subsidies or by high utilization rates. If diesel prices in China fall from $4 per gallon in 2020 to $3 per gallon in 2030, the Tesla Semi would most likely increase user costs compared to a standard diesel truck. In all cases, if China’s import tariff is waived, the Tesla Semi is much more likely to save Chinese users money over the truck’s lifetime.