Can The Purchase Of Tesla’s Semi Truck Benefit Anheuser-Busch?

Earlier this month, Anheuser-Busch InBev (NYSE:BUD) reported that it has placed an order for 40 Tesla semi-trucks citing its commitment to reducing its environmental impact, as well as increasing the efficiency of its operations. These trucks, the delivery of which won’t begin before 2019, are fully electric-powered and equipped with autonomous driving capabilities, a fact which would result in reduced fuel and insurance costs. Currently, the company spends an approximate $120 million on fuel costs for moving its beer between breweries and wholesalers. The integration of Semis into the beer giant’s distribution network would go some way in achieving its target of cutting its operational carbon footprint by 30% by 2025. The company has also invested in vehicles running on alternative fuels, such as compressed natural gas, and is stated to be working with Nikola for the use of its hydrogen-powered trucks. Anheuser-Busch isn’t the only taker for Tesla’s Semi; other giants such as Wal-Mart, DHL, and PepsiCo have also placed orders, pushing the total to almost 200 orders within two weeks of its unveiling.

We have a $131 price estimate for Anheuser-Busch InBev, which is higher than the current market price.

Considerable Cost Savings

The operating costs associated with owning a truck include insurance, finance, fuel, and maintenance costs. Given the number of safety features in a Semi, such as enhanced autopilot and automatic emergency braking, the insurance costs should be significantly lower compared to a diesel truck. Moreover, maintenance costs, which typically make up 10% of the operating cost for a truck, is another area where savings can be generated by using a Semi, as electric vehicles typically have a reduced need for maintenance. Furthermore, Tesla has also provided a one million mile warranty. Tesla has priced the truck at $150,000 to $200,000, while a new, heavy-duty diesel truck would cost between $120,000 and $150,000. Hence, the finance costs would be marginally higher.

Tesla announced that the total cost of ownership for a diesel truck is $1.51 per mile, while that of its Semi would turn out to be $1.26 per mile, which amounts to a 16.6% savings. The majority of this is expected to come from fuel cost savings, which the company has stated would be $200,000 over the lifetime of the truck. This factor alone ensures the recovery of the cost of the truck. Assuming the diesel price at $2.50 per gallon, and a fuel economy of 6 miles per gallon, we can calculate the cost per mile of a diesel truck as:

Cost Per Mile of a Diesel Truck = 2.50/6 = $0.42

Now, assuming electricity costs of $0.12 per kilowatt hour, and Semi’s energy consumption of 2 kilowatt-hours per mile, the cost per mile would work out to be:

Cost Per Mile of a Semi Truck = 0.12*2 = $0.24

Hence, the costs clearly beat that of a diesel truck. If we consider the total distance traveled per truck in a year to be 100,000, then the savings in a year with a Semi would amount to $18,000. Moreover, in his Semi unveiling presentation, Elon Musk had stated electricity costs to be 7 cents per kilowatt-hour. This would take the cost per mile further down to $0.14, and consequently, the yearly savings to $28,000, which would already make up for the difference in the initial price of the truck, when compared to that of the diesel truck. Hence, for companies, such as Anheuser, that are looking to trim their transportation costs, the purchase of Tesla Semis makes a lot of sense.

See Our Complete Analysis For Anheuser-Busch InBev

Have more questions on Anheuser-Busch InBev? See the links below.

• What’s The Main Job Anheuser-Busch’s New North America CEO Has Been Tasked With?
• SABMiller Synergies Help Anheuser-Busch Deliver A Beat On Earnings
• Does A New Survey Spell Good News For Anheuser-Busch?
• Lure Of The Non-Alcoholic Beverage Market For Liquor Companies

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