Tesla: More Than Just a Car Company
Tesla’s goal of bringing sustainable energy to the masses is supported by synergies with SolarCity.
Elon Musk said in his first Tesla blog post in back in 2006 that his goal with Tesla was to transition the world from a “mine-and-burn hydrocarbon economy towards a solar electric economy.” With the transportation sector responsible for 14% of global greenhouse gas emissions, this is an extremely important area to target as well as one of the sectors that is most likely to impact the everyday lives of people. Bringing the issue of electric vehicles into the minds of citizens helps bring up the conversation of climate change in a way that hits closer to home for many people more than the impact of giant factories or corporations operating far away.
Around the same time Musk also helped start a solar panel company called SolarCity, which was another step toward his sustainability goals. From the beginning of both of these projects in 2006, Musk planned on having them work together. He envisioned people becoming “energy positive” using SolarCity panels on the roof of their garage and using a Tesla vehicle to commute. As he put it, “this is a step beyond conserving or even nullifying your use of energy for transport – you will actually be putting more energy back into the system than you consume in transportation!”
Musk’s business plan for Tesla was to first build an extremely high performing sports car with a high pricetag to match, and then use the profits from it to build a cheaper car to target a larger market, eventually creating high quality electric vehicles for the masses. In this way, Tesla built quality into its products from the beginning, proving that an electric car could be better than gasoline cars in every way.
Tesla is currently attempting to buy SolarCity for around $2.3 billion, which seems to have caught the industry by surprise despite Musk’s clear intent from the beginning for these companies to work as one. As the Institutional Shareholder Services (ISS) advisory board said this week, “The transaction is a necessary step toward [Tesla]’s goal of being an integrated sustainable energy company.”
This acquisition shows that Tesla is more than just a car company. They intend to disrupt the energy sector in general by bringing sustainable clean energy to the masses. They started with a very niche market, high performance sports cars, and are now rapidly expanding so that someday soon they will hopefully touch all of our lives.
I believe that Tesla and SolarCity have done an amazing job addressing the issue of climate change in the last decade. As Musk has said, the first part of his master plan for Tesla is pretty much complete. However, this is far from the end of the story. Going forward, I am excited for the possibilities that I believe Tesla will bring us. They are actively working to create pickup trucks and SUVs to address the rest of the car market, but then they plan to expand into industrial trucks and buses as well. Additionally, with the SolarCity synergies, they plan to create solar panels that are cheap and high quality enough (as well as attractive) for use on anyone’s roof. These goals are extremely important for Tesla and mark a turning point for the company. Tesla will not be a car company for much longer. They will be a clean energy company, working to change the infrastructure that the world economy is built upon.
Tesla’s goals seemed almost unreachable when the company was first created. However, they have proven themselves in the last decade, doing better than almost anyone expected. It is very good news for our world that companies like Tesla and SolarCity exist to help shepherd us through this challenging time for our planet. Hopefully in the near future it will become normal for all buildings to have solar panels on them and all cars to be run on clean electricity.
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 Climate Change in 2016: Implications for Business, pg. 14
Student comments on Tesla: More Than Just a Car Company
I agree that Tesla’s plan all along has been to revolutionize clean energy and force a completely new paradigm for evaluating what makes a company “clean” or not in the future. One thing I am curious about is what else could Tesla be doing to push both itself and SolarCity (assuming that goes through) into being a fully green supply chain as well. The gigawatt factory in Nevada is a great step towards that, but where else should Tesla be pushing? What happens to the movement when the current round of tax credits expire? What about their effect on the rest of the car industry – can Tesla really accomplish this revolution alone? Probably not, so how can they push the pace of other major car companies to do more than just have a hybrid on the market? Obviously some of this has already started, but that’s the area where I am really excited about Tesla’s potential impact… how can its model and beliefs ripple out to the entire automotive industry?
Hey Lane – Solar City has always been really interesting to me because of its consumer application. When we are taught in school about solar panels, we are shown images of huge open spaces or industrial buildings roofs glimmering with the reflection of the sun. The thought of being to able to own my own (partially) solar-powered home is really inspiring. One issue that I have always had is SCTY is their lack of reach to the typical American consumer. Although the price tag of Teslas are out of reach for most people (although this is soon to be changed by the Model III), Elon Musk has done an incredible job of diffusing the brand into our culture – through showrooms, free PR, social media, and flashy product reveals. My biggest hope is that Tesla will bring this ingenious marketing strategy to SCTY. The company did $400M in 2015, which is a minuscule piece of America’s annual spend on residential construction & home improvement (http://www.marketwatch.com/investing/stock/scty/financials). The vision of solar panels on homes needs to pervade our culture before people will buy – it’s time to get the word out, Elon Musk!
Great post, Lane. I’m also a huge fan of Elon Musk’s work with Tesla and Solar City. I wonder how Tesla will adapt in a future world where ride sharing in autonomous cars could be the prevalent form of transportation, rather than individual car ownership. Should Tesla be prepared to become an Uber competitor? I feel that minimizing the excess capacity and therefore the number of vehicles on the road should be a key consideration for Tesla if it truly wants to reduce our reliance on fossil fuels. I hope to see Musk’s technology continue gaining traction with the mass consumer and challenging the way we think about energy.
Great analysis of how Test and Solar City are dealing with affects of climate change. Elon Musk is truly an iconic leader and a visionary who is setting the bar high for multiple industries. You are doing a nice job highlighting his unique ability to be working towards mitigating affects of climate change from multiple fronts. I also agree with you that he made his intention to acquire Solar City clear a long time ago. What makes your post even more appealing is that solar power is powerful climate solution because there is virtually unlimited source of supply (Sun) and unlimited opportunities of adoption.
Lane – Thank you sharing this post.
As Caroline mentioned, it is astonishing how we have to within a span of only a few years of imagining solar panels as a technology that can be used only in large open fields to having solar panels on homes.
Going forward, however, one of the challenges we will have to face is regulation and especially weening off the economy and especially its indicators off non-renewable energy. One such very public battle between Elon Musk’s push towards solar in Nevada and Warren Buffet’s push to advance his utility company is an interesting read – http://www.bloomberg.com/features/2016-solar-power-buffett-vs-musk/
I believe in the future we are going to see a lot more of these challenges.
I also was quite surprised when I heard of Solar City being acquired by Tesla. However, then it made sense not only as a marketing move to send the signal that Tesla is not just in the automobile company but is fully committed to the energy crisis but also possibly to move towards powering its own supply chain and factories with renewable energy. I think a huge factor in making Teslas more accessible has been the increased availability of charging stations https://www.tesla.com/models-charging#/onthego (which previously were free to use but now would include a charge). I’d be curious to see if Tesla could use renewable energy (particularly solar!) to power these charging stations.