Exclusive: PepsiCo to launch 100 Tesla Semis in 2023, says Exec

NEW YORK/SAN FRANCISCO, Dec 16 (Reuters) – PepsiCo plans to introduce 100 heavy-duty Tesla Semis in 2023, when it will begin using the electric trucks for deliveries to customers including Walmart and Kroger, the top fleet officials in the soda manufacturer, Reuters said on Friday.

PepsiCo Inc (PEP.O), which ordered the big trucks in 2017, is buying them “direct” and also upgrading its facilities, including installing four Tesla Inc (TSLA.O) 750-kilowatt charging stations in both Modesto and in Sacramento locations in California, PepsiCo Vice President Mike O’Connell said in an interview. A $15.4 million state grant and a $40,000 federal grant per vehicle help offset some of the costs.

“It’s a great starting point for electrification,” said O’Connell, who oversees the company’s vehicle fleet.

“As with any early technology, the incentives help us grow the program,” he said, adding that there were “a lot” of development and infrastructure costs.

PepsiCo is the first company to experiment with the battery-powered Tesla Semis to reduce its environmental impact. Continue reading

United Parcel Service Inc (UPS.N) and grocery 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 uses them and its timeline for deployment. Tesla CEO Elon Musk initially said the trucks would be in production by 2019, but this was delayed due to battery limitations.

PepsiCo said it plans to use 15 trucks from Modesto and 21 from Sacramento. It’s unclear where the others will be based, but O’Connell said the company aims to launch the Semis next in the central United States and then on the East Coast.

The company’s Frito-Lay division sells light-weight grocery products, making it a good candidate for electric trucks that have heavy batteries that could limit charging capacity.

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

“Towing around a trailer full of chips isn’t the most intense and difficult task,” said Oliver Dixon, senior analyst at consulting firm Guidehouse.

“I still believe Tesla has a lot to prove to the broader commercial vehicle market,” Dixon said, citing Tesla’s unwillingness to offer payload and pricing information.

PepsiCo has earmarked some of the trucks planned for the Sacramento location for deliveries to Walmart and grocers such as Kroger Co (KR.N) and Albertsons Cos Inc (ACI.N). The Modesto Frito-Lay plant’s trucks just drove to PepsiCo distribution centers, O’Connell said.

All Semis going to PepsiCo will have a range of 500 miles (805 km). O’Connell added that he doesn’t know when Tesla will begin deploying 300-mile (480 km) trucks. When Tesla starts building, PepsiCo will “rotate” them into its fleet, he said.

PepsiCo declined to share details about the price of the trucks, a figure Tesla has kept secret. Competing vehicles sell for $230,000 to $240,000, said Mark Barrott of consultancy Plante Moran. He added that the price of the 500-mile range Tesla Semi could be higher since its 1,000-kilowatt-hour (kWh) battery pack is about twice the size of many of its competitors.

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

The Gatorade maker declined to share details of the trucks’ weight, another of Tesla’s closely guarded secrets.

He said Tesla didn’t help pay for the trucks’ megachargers, but provided design and engineering services for the facilities, which are equipped with solar and battery storage systems.

O’Connell said that driving 425 miles (684 km) with Frito-Lay products reduces the Semi’s battery to about 20% and takes about 35 to 45 minutes to charge.

Reporting by Jessica DiNapoli in New York and Hyun Joo Jin in San Francisco; additional reporting from Joe White and Siddharth Cavale; Edited by Jonathan Oatis and Rosalba O’Brien

Our standards: The Thomson Reuters Trust Principles.

Jessica Dinapoli

Thomson Reuters

A New York-based reporter covering US consumer products ranging from paper towels to packaged foods, the companies that make them and how they are responding to the economy. Previously, he reported on corporate boards and distressed companies.

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