Tesla
Faster than a Ferrari, powered by the sun
Tesla is the fastest, sexiest, most-hyped car of its generation. It can drive 1000 km on a solar powered battery, with zero carbon emissions, whilst also becoming the must-have luxury accessory in Hollywood.
“Don’t take from the earth, accept from the sun, untold memories for a gallon of light” goes the voice over as Tesla’s incredibly sexy Model S pulls up at a beautifully sun-setting Californian beach.
Tesla, named after the Serbian physicist who invented the AC induction motor, started as a Silicon Valley dream. To create the world’s leading electric car company, believing that, unlike the Toyota Prius, being good didn’t need to compromise great performance.
Tesla describes itself an electric vehicle and clean energy company with a mission statement “to accelerate the world’s transition to sustainable energy”.
It was founded by Elon Musk, Martin Eberhard, Marc Tarpenning, JB Straubel, and Ian Wright. Here’s a brief overview of the key founders and the development of Tesla.
Tesla Motors (as it was initially called) was founded in July 2003 by Martin Eberhard and Marc Tarpenning. Eberhard served as the CEO, and Tarpenning as the CFO initially.
Elon Musk became involved with Tesla when he led Tesla Motors’ initial round of investment funding in February 2004. He became the largest investor and assumed the role of chairman of the board. In 2008, amidst financial challenges, Musk took over as CEO of Tesla, and he has been the face of the company ever since.
Tesla’s first master plan was published in 2006 and called The Secret Tesla Motors Master Plan (Just Between You and Me). The title was tongue in cheek, but the message was clear. “Build sports car,” it explained. “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. Don’t tell anyone.”
To address the over-reliance on fossil fuels and global warming, Tesla Inc., seeks “to accelerate the world’s transition to sustainable energy.” Musk and his colleagues plan to create “a vertically integrated company that builds electric vehicles, batteries to store the power, and solar panels to generate the power.” According to the Master Plan, Tesla built the Tesla Roadster, a luxury sports car, in order to use the resulting cash profits to build the luxury vehicles, the Model S and Model X. Currently, Tesla plans to use that money to build a more affordable car, the Model 3, all while providing its customers with zero-emission electric power generation products.
As the final component to the Master Plan, Tesla seeks to integrate renewable energy generation and storage into residential buildings. The company’s acquisition of SolarCity will allow for the widespread distribution of its sustainable energy products, including its solar panels, Powerwall and Powerpack batteries. The batteries will enable homes, businesses and utilities “to store sustainable and renewable energy, to manage power demand, provide backup power and increase grid resilience,” empowering the individual as his or her own utility.
In a joint venture with Panasonic Corporation and other strategic partners, Tesla Inc. signed an agreement in 2014 that laid out their cooperation on the construction of a large-scale battery manufacturing plant, known as the Gigafactory. Located in Reno, Nevada, the Gigafactory not only manufactures the individual lithium-ion battery cells but also assembles the immense packs that power a Model S or store energy in a customer’s garage. Although still under construction, the Gigafactory has produced limited quantities of Powerwalls and Powerpacks and will begin mass production of the lithium-ion battery cells in late 2017. As a result of its ability to control all aspects of manufacturing, Tesla has a head start incorporating new battery chemistries and technologies into the manufacturing process relative to its competitors. This competitive advantage allows Tesla to circumvent waiting for suppliers to develop the cells. Inside the Gigafactory, robots carry out most of the manufacturing while the engineers supervise from desks not far from the production line. Although heavily automated, the Gigafactory will employ approximately 6,500 people when in full production.
The Gigafactory’s rapid completion is imperative as Tesla plans to begin building the Model 3 sedan and producing half a million vehicles annually, both in 2018. To achieve this goal, Tesla must dramatically increase battery production to decrease costs. In a recent interview, Musk claims that the Gigafactory will produce batteries for significantly less cost “using economies of scale, innovative manufacturing, reduction of waste, and the simple optimization of locating most manufacturing process under one roof.” Furthermore, the Gigafactory will be powered by renewable energy sources to ensure the achievement of net zero emissions.
In 2016, Musk released the second part to his Master Plan, which acknowledges the progress Tesla has made with a renewed focus on new product development. Most importantly, Musk intends to create self-driving cars that are ten times safer than conventional cars. In his Master Plan, he anticipates the needs of the customer long before R&D can deliver a finished product. This motivates Tesla engineers to develop the necessary software as quickly as possible. Although the technology software is not yet complete, Tesla has already begun installing the hardware in its vehicles. While this decision could jeopardize the company’s strong financial standing, as the software may never be developed, it is indicative of the ingenuity and risk-seeking nature that characterizes Tesla’s innovative process.
In addition to self-driving capabilities, Tesla seeks to transform car-ownership. If Tesla is successful in realizing the fully autonomous vehicle, an individual could contract out his or her car to “make money for you when [he or she isn’t] using it”. The car would act as a taxi when not in use by its owner, and in effect, offset the overall cost of the vehicle without sacrificing quality. These societal mentality shifts — on how we use and think about public and private transportation– are some of the most innovative aspects about Tesla’s product development. They understand the needs of the customer today but also anticipate the willingness in younger generations to share modes of transport.
Overall, many products Tesla hopes to make in the coming years demonstrate the company’s creativity. The Master Plan itself relays a creative vision while demanding implementation within certain constraints. There are clear, achievable goals for very challenging tasks, that give Tesla the necessary framework to design and manufacture breakout products in sustainable energy.
When the MP3 was published on the Tesla website in early April, an initial skim read suggested a well-thought plan that covered all the bases. But when I examined it in more detail on holiday, I was extremely impressed. Using data from the International Energy Agency, the plan reminds us that the world currently uses about 165 petawatt-hours of energy per year (PWh/yr), of which 80% is from fossil fuels. Losses and inefficiencies, however, mean that barely 36% of the total energy is actually used for the purpose intended (59 PWh/yr).
But because electrically-driven power sources are far more efficient than combustion engines, the “electric economy” only needs 82 PWh/yr to do the same work. A Tesla Model 3, for example, is 3.9 times more energy efficient than a petrol-powered Toyota Corolla, while a heat pump is 3–4 times better than a gas boiler. Of course, a truly electric economy will need vast amounts of materials to build solar panels, wind turbines, batteries and so on.
What’s more, as the MP3 report estimates, we’d need 240 TWh/yr of battery storage to manage the 30 TW power generated from solar, wind and other renewable-energy sources. That in turn would require us to spend up to $10 trillion mining, refining and manufacturing everything from concrete, glass and steel to all sorts of rare-earth elements needed in batteries.
It is an eye-watering figure but, according to the MP3 analysis, it’s actually less than the $14 trillion the world is projected to spend over the next two decades on fossil fuels. What’s more if the $10 trillion were spread out over 10 years, it would be only 1% of the world’s total GDP (currently $100 trillion) and only 0.5% if spread out over 20 years. It doesn’t sound implausible if we put our minds to it, especially when you realize that fossil-fuel firms made a total of $4 trillion in profits last year.
MP3 outlines five steps we need to take to reach an all-electrical economy. First, we need to switch to renewable power, which would cut our use of fossil fuels by 35%. Second, move to electrically-powered vehicles (a 21% reduction). Third, install heat pumps (a 22% saving). Fourth, get industry to switch to “green” hydrogen for processing metals and other high-temperature operations (a 17% cut). Finally, sustainably fuel planes and boats (a 5% saving).