NEW YORK, April 19 (Reuters) - Key Tesla

customer PepsiCo ( PEP ) made initial payments for 100 Tesla

Semis in 2017, intending to use the electric-truck fleet to haul

its Cheetos, Lays potato chips and Pepsi soda pop to retailers.

But according to the food-and-drinks maker and one of its

executives with knowledge of the deal, PepsiCo ( PEP ) was using only 36

of Teslas promised 100 electric trucks as of this month.

The shortfall, which hasn't been previously disclosed, lays

bare the challenges for Tesla as it seeks to become a

high-volume player in the truck-manufacturing business. Other

would-be Tesla customers including food distributor Sysco ( SYY )

, UPS and Walmart Canada continue to wait

for Tesla Semi trucks and are turning to rival electric-truck

makers.

The struggles of shipping enough Semis come at a bad

time for Tesla, which has seen growth for its consumer electric

vehicles slow, forcing it to cut prices and hurt margins. In

addition, Reuters reported this month that Tesla had decided to

cancel its long-promised inexpensive car that investors had

hoped would drive further growth.

Diesel-powered 18-wheelers are a major source of pollution.

As companies pledge to slash their greenhouse gas emissions, the

proposition for Tesla is clear.

"People might wonder why build a semi truck?" Musk said at

the carmaker's gigafactory in Sparks, Nevada, in late 2022, when

Tesla delivered the Semis to PepsiCo ( PEP ). "It's 20% of U.S. vehicle

emissions."

Under the Biden administration, companies using electric

trucks qualify for large subsidies to offset their purchases.

PepsiCo ( PEP ) secured over $20 million in government grants to cover

the cost of 32 of the Semis, plus federal subsidies of $40,000

per vehicle.

Tesla, which will report quarterly results on Tuesday, did

not return a request for comment.

A PepsiCo ( PEP ) spokesperson said in a statement that the

company's plans for the Semis can shift when technology and the

need to establish infrastructure is involved.

The soda and snack producer was the first of Corporate

America to take delivery of any of Tesla's highly-anticipated

Semi trucks. "The 100 (Tesla Semis) we have a deposit on, we'll

get those out in '23 for sure," Mike O'Connell, PepsiCo's ( PEP ) vice

president of supply chain, told Reuters at the time.

But, as of this month, PepsiCo ( PEP ) was "focused on best

leveraging the 36 (Tesla Semi) vehicles that are currently in

our fleet," a spokesperson told Reuters in early April. That's

the same number PepsiCo ( PEP ) first started with when it began using

the trucks to transport goods from its Modesto food

manufacturing plant and Sacramento bottling site, PepsiCo ( PEP )

executives said.

Tesla has been looking to build a truck-making business for

years.

Tesla had said it would have the Semi in production by 2019.

In October 2022, Musk told investors that his goal was to make

50,000 Semis in 2024. Tesla finally unveiled the Tesla Semi

truck in late 2022.

But in June 2023, Musk said at an energy conference that

"there just weren't enough batteries" for Tesla to reach "volume

production" of the truck, without quantifying how many Semis

that would be. He said Tesla would reach volume production in

2024 "as the battery problem gets solved."

Svein Sollie, the transportation director at ASKO Norway,

the logistical arm of Norway's largest food retailer

NorgesGruppen, used his personal credit card to put down an

initial deposit on 10 of the Tesla Semis in 2017 but has not

received any.

"We are not happy with the situation at Tesla," Sollie said.

"(It's) almost seven years now, it's a long time to wait."

UPS reserved 125 Tesla Semi tucks in 2017, one of Tesla's

biggest orders at the time. A spokesperson for the package

delivery company told Reuters on April 16 that it is "working

closely with Tesla to determine a date for us to take delivery

of the trucks," but declined to provide additional details.

Meanwhile, UPS, Walmart Canada, Sysco ( SYY ) and Schneider National ( SNDR )

, a transportation company that works for PepsiCo's ( PEP )

Frito-Lay, said they are turning to Daimler Truck, maker of the

Freightliner eCascadia. All four companies said they had begun

to put dozens of eCascadia electric big rigs on the road.

The eCascadia's range is around 230 miles, while the Tesla

Semi can go about 500 miles. Schneider said it uses nearly 100

eCascadia trucks to haul goods including PepsiCo's ( PEP ) Frito-Lay

products.

Daimler Truck North America said the eCascadia is used in

more than 55 separate companies' fleets.

To be sure, Tesla has its own fleet of close to 100 Semi

trucks that are traveling between its factories in Fremont,

California and Sparks, Tesla executive Lars Moravy said on

reality show Jay Leno's Garage in December.

In addition, logistics provider Martin Brower has said on

its website that it used two Tesla Semis to make deliveries to

its restaurant customers earlier this year, as part of a pilot.

It did not respond to additional requests for comment.

In Tesla's quarterly earnings call on Jan. 24 Andrew

Baglino, an executive who has since left the company, said Tesla

recently began expanding its plant in Nevada to manufacture the

Semi. Musk said in March that it would "make sense to also build

the Semi in Europe" at the company's factory outside of Berlin,

according to local news reports.

Pepsi Chief Sustainability Officer Jim Andrew said in a

recent interview with Reuters that PepsiCo ( PEP ) was working on

building out the infrastructure to support an electric fleet,

including employees who can service the vehicles and power grids

strong enough to charge them.

"You're talking about a system," Andrew said. "All of those

things have to happen before we can electrify the fleet."

A PepsiCo ( PEP ) spokesperson said the company would be deploying

more electric vehicles from a range of manufactures as they are

available.

PepsiCo ( PEP ) investor Green Century Capital Management has

reservations about the company's time table for rolling out the

Semis.

"The fact they're running behind schedule is concerning,"

said Andrea Ranger, a shareholder advocate at Green Century. The

investment firm has followed PepsiCo's ( PEP ) use of electric vehicles

and is pushing the company to consider its impacts on

biodiversity at its annual meeting in May.

In Europe, ASKO Norway is using electric semis from Scania

and Volvo while it waits for Tesla, according to Sollie. He said

Tesla told him that Tesla is prioritizing Semi deliveries to

Pepsi and other U.S. customers.