Tesla races towards a sustainable ecosystem
Tesla goes all in on a few big bets on their Grand Master Plan to create a sustainable ecosystem.
Tesla goes all in on a few big bets on their Grand Master Plan, which is essentially a sustainable ecosystem for the mass consumer market. I believe they will be able to achieve it through their proven electric vehicle strategy, integrating SolarCity, ride-sharing community, and Gigafactory.
Electric Vehicle Strategy
Tesla has developed products in a very deliberate sequence that has enabled them to enter the market by capturing the early adopters, then focused on the mass market. And finally, to truly impact the world at scale in a more immediate manner, it intends to make it so affordable that everyone can own one. Essentially, they “build sports car; Use that money to build an affordable car; Use that money to build an even more affordable car; While doing above, also provide zero-emission electric-power-generation options.” All this points to their overarching mission to “create a sustainable world.” [1,2]
In the past two years, they have made meaningful impact as the market votes with their purchases. In 2015, Tesla sold 25,245 vehicles, while just in the first half of 2016, it has already sold 13,540, which points to the momentum Tesla has been able to achieve. And most recently, Tesla has rolled out the Model 3 represents the everyman’s electric car that will not only be practical and sustainable, but will embody a design consumers are readily willing to adopt. [3]
Integrating SolarCity into ecosystem
Tesla motors becomes Tesla. Elon Musk’s idea of sustainability is that it doesn’t just come from reducing emissions from vehicles, but it’s the whole ecosystem that should be disrupted. As a result, Tesla acquired Solar City to broaden its scope and create synergies across the consumers’ complete lifestyle ecosystem. [4]
Not only will consumers be able to take advantage of solar roofs on homes, but it will be able to seamlessly integrate to their battery storage and expand into other large passenger and heavy-duty vehicles. As a result, sustainability will not be broken down by different categories, but will actually be perceived as one utility. [5]
Ride-sharing community
As Uber and Lyft are competing in the ride-sharing race, Tesla has plans to enter this market, and do so in a way that’s not only fully integrated and seamless but also more lucrative for the vehicle owner. Essentially, consumers will be able to turn their Tesla into a taxi. And in the future, perhaps they can “rent” it out when it’s underutilized, a similar model to GetAround startup. So when consumers are on vacation for the weekend or just want to make a buck in the evening, they can monetize their electric vehicle in a safe and sustainable way. [6]
Building Gigafactory
In order to sustainably power Tesla, Musk is building the Gigafactory, a factory for creating batteries that are critical to the solar energy future. Since the “sun doesn’t shine all the time,” they need to invest creating batteries that are able to retain the energy to be used in their vehicles. The goal is to reduce the costs of lithium ion battery packs. The gigafactory will be built in Nevada to facilitate the production of a mass-market affordable vehicle, Model 3. By 2018, the gigafactory will produce more lithium ion cells than all of the world’s combined output in 2013, an unprecedented scale. Additionally, the gigafactory will produce battery packs intended for use in stationary storage, helping to improve robustness of the electrical grid, reduce energy costs for businesses and residences, and provide a backup supply of power, all of which will be the foundation to the engine of a sustainable ecosystem. [7]
The key point is that Tesla’s Gigafactory in Nevada will be powered entirely by renewable energy sources once it is completed. Tesla aims for its factory to produce 50GWh of batteries by 2020, enough for 500,000 cars while achieving net zero energy for the factory. The current drone graphics and concepts of the factories design show a massive plant covered in solar panels and surrounded by wind farms, as it becomes a reality. [8]
Conclusion and Next Steps
There is no organization more fitting to pursue this mission for the world than Tesla not because they have the most sound strategy, but because they have the most bold strategy for a challenge that is so fundamentally outdated, fragmented, and critical. The combination of proven success, talented team, and a general bullish sentiment will fuel Elon Musk and his team to transform and a make an impact in our environmental footprint.
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- https://www.tesla.com/about
- http://wardsauto.com/alternative-evs-hevs-fcvs/sustainability-innovation-driving-tesla-ceo-musk
- http://www.triplepundit.com/2016/04/tesla-model-3-sustainability/
- http://www.slate.com/blogs/bad_astronomy/2016/04/02/elon_musk_reveals_new_electric_car_calling_climate_change_his_motivation.html
- http://www.cnbc.com/2016/07/20/tesla-motors-ceo-releases-new-master-plan.html
- http://arstechnica.com/cars/2016/07/musk-tesla-to-become-a-sustainable-energy-company/
- http://www.edie.net/library/5-ways-Tesla-is-leading-the-sustainability-charge/6603
- https://www.inverse.com/article/22984-elon-musk-tesla-gigafactory-carbon-tax
As Tesla accelerates towards autonomous vehicles there will be interesting questions about the sustainability of low-cost vehicles roaming the streets. Robin Chase has written about this (see: Will a World of Driverless Cars Be Heaven or Hell http://www.citylab.com/commute/2014/04/will-world-driverless-cars-be-heaven-or-hell/8784/) by noting that our streets will become congested if we send out our vehicles all the time to run errands on our behalf. Even if these cars are electric vehicles, the demands on the power grid could be significant. How should we assess sustainability as autonomy begins to enter our city streets?
I am a huge Elon Musk believer, and I will be fascinated to see how this plays out. His Master Plan (Part Two) is inspiring reading, and his past delivery on promises makes me optimistic for the future. I wonder how realistic the volume projections can be, however – ambitious is understating it. To make a true, widespread impact, Musk and Tesla will not only need to hit those numbers by 2018/2020 but continue to grow rapidly far beyond that volume in the years following. The potential impact here is far greater than just transportation, and the execution will depend not only on Tesla/SolarCity’s ability to perform, but also on the market’s willingness to adopt these technologies and incorporate them into their lives.
I love the idea of driving an electric car, but we might be cautious of where the electricity comes from. If we use hundreds of smokestacks at power plants that supply electricity to charge electric cars, then many of these smokestacks are the single-largest source of greenhouse gas pollution in the U.S. The source would grow as electric cars demand more and more electricity generated by coal power plants. Therefore, Tesla has the responsibility to align sustainability goals with its downstream suppliers. Alternatively, Tesla could use clean energy to charge cars and generate electricity.