Elon Musk just put the rail industry on notice

Reuters/Mike Blake

Elon Musk at SpaceX Hyperloop Pod II competition in Hawthorne, California

• In autonomous convoys, moving freight using Tesla Semis would cost less than using railroads.
• Convoys would consist of a lead Semi with several others following autonomously.
• "This beats rail," Musk said.

HAWTHORNE, California - On Thursday, Tesla CEO Elon Musk didn't just announce his plans to remake the trucking industry. He also served notice to rail carriers.

Unveiling Tesla's new Semi Truck, Musk crunched the numbers for the agog crowd: a traditional diesel truck can be operated for $1.51 per mile; the Tesla Semi beats that with $1.26.

But it gets better. Using convoys - Tesla Semis yoked together with connected Autopilot technology, operating like roadgoing trains, with one semi as the leader - Tesla's cost drops to $0.85 per mile.

"This beats rail," Musk said.

He said that Tesla can execute on convoying technology now, so it's really just a matter of a customer buying enough Semis to create the train.

Obviously, rail still has some advantages, such as being able to operate at relatively high continuous speed without stopping over great distances, without the need to refuel. Rail also saves wear and tear on the nation's roads.

But Tesla's freight economics are starting to look quite impressive.

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