Tesla Semi completes test drive: What does an electric truck mean for insurance?

Tesla unveiled its first all-electric semi in 2017, promising “the future of trucking.” Production was set to begin in 2019, but the program has suffered repeated delays, including supply chain issues due to the pandemic.

Details about the Semi are sparse on Tesla’s website. Apparently, this truck allows him to accelerate from 0-100km/h in 25 seconds, fully loaded, and maintain highway-level speeds even on steep grades. It can also run up to 800km on a single charge (which is allegedly proven by successful test runs) and consumes less than 1.25kWh per km.

The Tesla Team Completed A 500-Mile Drive In An £81,000 Tesla Semi!

— Elon Musk (@elonmusk) November 27, 2022

According to Tesla’s website, the semi truck is also equipped with “active safety features combined with advanced motor and brake control to provide traction and stability in all conditions.”

The future of trucking

All the fuss and speculation about the release of this Tesla product aside, we’re excited about the promise of the “future of trucking” being sold at the Semi. Because, as any commercial shipping insurer or broker knows, the industry desperately needs change.

The commercial transportation sector has long had a bumpy road. In the years leading up to the COVID-19 pandemic, the industry saw devastating damages caused by distracted driving, a general increase in auto insurance claims due to new technology, social inflation and nuclear jury verdicts. It was plagued by challenges with rising bills (especially in the US, but the trend is true for other major trucking economies as well).

Today, the industry can add some challenges to its list. For example, inflation, soaring petrol prices, an ever-growing shortage of drivers, and delays in his chain of supply. These put pressure on delivery schedules, increasing costs and time. Complete truck repairs.

In the face of these challenges, loss ratios for commercial transport insurance have deteriorated, with the result that most insurers are limiting capacity and applying stringent risk selection and underwriting standards while limiting primary coverage to We are raising the rates for both and excess/inclusive coverage… so we can add insurance to the issue at the top of the list above.

Could Tesla’s Semi be the answer to all of these industry problems? Maybe not, but electric trucking in general can alleviate some of the major challenges…but… Not without introducing some new exposures.

The advanced in-cabin safety technology that Tesla claims it has in the Semi could help reduce crashes, and in some cases, even those related to distracted driving and driver fatigue. , which (in theory) reduces the cost of auto insurance claims and ultimately premiums.

For years, transportation insurers have emphasized the importance of technology such as dashcams and telematics to promote safer driving, but it has been difficult to get truckers involved. With these tools already built into the track, there should be an automatic positive feedback loop.

The use of electric trucks with the ability to sustain highway-level speeds will reduce the frequency of collisions as trucks will be able to better share the road with other vehicles, even on steep grades. should help reduce the

But while it may be less frequent, it remains to be seen what the severity of the collisions will be, especially when these electric trucks are much more expensive to buy and repair.ENGS Commercial Finance Co. of all-electric semi trucks reported to cost 10% to 80% more to purchase than comparable diesel trucks. This can increase the severity of losses in the event of an accident.

energy challenges

Innovation always comes with challenges. Personally, I think electric cars and electric trucks are great. While too expensive (for now) for the average consumer, these are important steps in the global race towards net zero carbon emissions.

But nothing is 100% great. A Bloomberg article earlier this month, titled “Electric truck stops require as much power as a small town,” cites new research on highway charging requirements conducted by National Grid Plc. . Researchers have found that electrifying a typical highway gas station by 2030 will require as much electricity as a professional sports stadium. By 2035, the power required for a large truck stop is projected to match the power needs of a small town.

This is a very dramatic increase in power demand that utilities could struggle to keep up with. The success and efficiency of electric transport is highly dependent on the capacity of the energy infrastructure and distribution grid. Some regions, such as California, a state that is very pro-electric, are already struggling.

California officials have warned that extreme heat and other climate change impacts could threaten the reliability of the state’s electrical grid over the next five years, causing blackouts due to power shortages. increase. But what happens when electric trucks carrying essentials can’t reach their destinations because they can’t recharge?

In some countries such as the United States, Canada, and Australia, the distances traveled by truck drivers are enormous. We don’t yet have the infrastructure needed to sustain an electric fleet in an area of ​​such enormous size. It will also be some time before the necessary developments are made based on the deployment of electric vehicles for personal use.

I see the release of the Tesla Semi as an exciting development in the truck industry. While certainly positive for commercial transport insurers and brokers, like all innovations, the rise of electric trucks inevitably comes with new risks and insurance challenges.

Will electric trucks have a positive impact on the commercial transport insurance market? Share your thoughts in the comments below.