Tesla talks Climate change
Speaking of sustainable development and climate change, who does not immediately think of Tesla? [1]
Today, everybody knows this brand and yet it’s only a dozen years old. Its business idea relied on the superiority of electric motor over gasoline engine. Electric engines have a significantly higher energy efficiency and work on lithium batteries used in smartphones. Everything Tesla has been doing from the very start is all about either fighting or adapting to a changing climate. [2]
Ten years ago, climate issue was not a global priority, although the level of carbon emissions already reached an alarming level. The world came to realize at the energy summit in 2002 in Johannesburg South-Africa that human race had a major influence on the rise in temperature on Earth: global temperature has increased 0.85 degree since the Industrial Revolution. [3] The Paris Agreement last December has set a target of keeping a maximum 2 degree increase in global temperature by the end of the century for the sustainable survival of human species. This requires a drastic reduction of CO2. The entire transport sector accounts for a quarter of emissions of greenhouse gases worldwide, thus this is a major area to work on.
An electric vehicle could use 6,100 fewer gallons of gasoline over its life time compared to today’s compact gasoline car. A recent report proved that on average electric cars produce half if not even less the emissions of a comparable gasoline car. [4]
Tesla launched a sports car model called Tesla Roadster in 2008. In June 2009 Tesla received $465 million in loans at low interest rates from the US Department of Energy as an incentive to support companies working on sustainable businesses. In 2010, its IPO allowed it to invest in a production facility in Fremont and then launch a family model that achieved a great success. As of October 2016, its luxury Model S is the world’s second-best-selling plug-in overall. However, that’s not enough. Electric vehicles are expensive. Only when the new technology becomes affordable to people with thin pockets will the automotive industry make a sound contribution to reduce global warming. The company’s strategy is thus to develop luxury product lines that bring out high profit to afford the development and production of mass market electric vehicles that can really replace most of the gasoline alternative in the market. With the success and reputation earned with latest models, Tesla has announced a plan to launch an “affordable” Model 3 line at $35,000 market price. This vehicle has already been preordered up to 350,000 units. To reach this goal, Tesla partnered with Panasonic to build in Nevada the largest factory of the world lithium battery with the objective to cut cost by half and double its capacity. It is a 5 billion dollars bet, the plant is still not yet fully operational, and Tesla is already planning the construction of other “giga factory” on other continents.
Tesla also has a high level of vertical integration as noted by Goldman Sachs, since it controls its whole production line like no other automaker. Discussing the very much sought after acquisition of Solar city, the company leader claim that the company will be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers. “This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered. With your Model S, Model X, or Model 3, your solar panel system, and your Powerwall all in place, you would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimizing your dependence on fossil fuels and the grid.”[5]
Tesla clearly wants to be seen as an energy company from now on, a company capable of offering full one-stop solutions addressing carbon footprint issue. Elon Musk also made a bold decision to offer patents for free to other car companies for the advancement of sustainable transport industry. [6]
In order to make a big leap in oil and gasoline consumption, a slow shift towards electric vehicles will not be sufficient. Tesla will not only need to bring the cost even further down quickly but also build many more giga factories to keep up with the huge demand. The company also is working on other innovations to utilize more and more of solar, wind, and nuclear power to make a bigger impact.
What lies ahead of such a brave pioneer company are countless of challenges and uncertainties. However, hope is high for Tesla because governments around the world are loading more and more rules to suppress gasoline and diesel cars while at the same time incentivizing Tesla-alike businesses.
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Endnotes:
[1] “Tesla”, https://www.tesla.com/energy, accessed November 2016.
[2] Eric Mack “How Tesla And Elon Musk’s ‘Giga factories’ Could Save The World”. Forbes.com, October 30, 2016, http://www.forbes.com/sites/ericmack/2016/10/30/how-tesla-and-elon-musk-could-save-the-world-with-gigafactories/#3590a2537273, accessed November 2016.
[3] John Sutter, “Climate: 7 questions on 2 degrees”, cnn.com, April 24, 2015, http://www.cnn.com/2015/04/24/opinions/sutter-questions-two-degrees-climate/, accessed November 2016.
[4] Jerry Hirsch, “Electric vehicles beat gasoline cars in cradle-to-grave emissions study”, Los Angeles Times, November 12, 2015, http://www.latimes.com/business/autos/la-fi-hy-ucs-electric-vehicles-emissions-study-20151110-story.html, accessed November 2016.
[5] James Dodenhoff , “Tesla/SolarCity: Vertical Integration Value Hard To Find”, seekingalpha.com, June 11, 2016, http://seekingalpha.com/article/3987574-tesla-solarcity-vertical-integration-value-hard-find, accessed November 2016.
[6] Elon Musk, “All Our Patent Are Belong To You”, Tesla, June 12, 2014, https://www.tesla.com/blog/all-our-patent-are-belong-you, accessed November 2016.
I’m a huge fan of what Tesla has done for electric cars – without the introduction of these aspirational vehicles, I think we would still be stuck in a place where electric cars are viewed as a niche product for “tree huggers”. I’m excited to see what impact the introduction of the Model 3 will have on supporting infrastructure – electric charging points are certainly becoming more commonplace, but are still relatively sparse which is an inconvenience, especially when compared to the omnipresence of traditional gas stations. Several hundred thousand new electric cars taking to the roads over the next few years should change that.
I’m also intrigued to see how Tesla fares in its efforts beyond cars; the introduction of the Model 3 means Tesla will have passenger vehicles covering most of the retail/consumer segment, but the company is also working on the development of heavy-duty trucks which could revolutionize the freight transport industry, as well as a concept for high-passenger density urban transport concept. I think if Tesla can have similar success in these segments, then we will see observe a paradigm shift where electric transport becomes the norm for all forms of (land) transport, rather than a relatively niche product for tecchies/environmentalists. You can read more about the aforementioned initiatives and their expected benefits in the Tesla Master Plan (part deux) https://www.tesla.com/blog/master-plan-part-deux
I am significantly less optimistic about Tesla and I think Tesla’s actual contribution to combating climate change is questionable. When we consider the net carbon cycle required to power a Tesla vehicle, it is true that the car itself has very low emissions due to the battery, but the battery still needs to be charged off of the electric grid, which is quite heavily polluting. It is exceedingly difficult to pin down exactly how much CO2 is emitted per mile of car movement due to all the steps involved [1] (do you count initial mining of the coal that goes into a power plant to power the grid that charges a Tesla battery? The carbon expended in the manufacture of gasoline? The carbon used to manufacture the car?). But depending on exactly how you do this accounting, the fact that Tesla cars ultimately run off the grid can lead to the conclusion that there is at best a minimal net saving of CO2 emissions vs. a regular car [2] (Tesla, of course, disputes this). The production of the Tesla batteries and of the SolarCity panels are also extremely CO2-intensive processes [2].
Furthermore, I would dispute the notion that the merger with SolarCity is to promote vertical integration. The idea that every house will have a SolarCity solar panel powering a Tesla car is a compelling story, but the actual, real-life linkage of producing solar panels at a mass scale, somehow ensuring that all Tesla cars on the grid are being powered only by solar energy from these same panels, and how that in itself lowers the cost of producing cars and makes Tesla more cost efficient in production sounds more aspirational than practical to me. Investors have had the same reaction, with major criticism of the deal as both Tesla’s and SolarCity’s stock prices have dropped significantly since the deal announcement and observers have derided the deal as a way to try to save the badly floundering SolarCity by shifting cash from Tesla’s shareholders to SolarCity. [3]
While Tesla cars are definitely cleaner than their gas-burning cousins and promote admirable ideas, we should carefully examine their claims and the full life cycle of the cars and now solar panels involved in the business before becoming overly optimistic about their contributions to fighting climate change.
[1] Oremus, Will. “How Green is a Tesla, Really”? Slate. September 9, 2013. Retrieved 5 November 2016.
[2] Wade, Lizzie. “Tesla’s Electric Cars Aren’t As Green As You Might Think”. Wired. March 31, 2016. Retrieved 5 November 2016.
[3] Assis, Claudia. “Tesla-SolarCity Deal: ‘Thinly Veiled Bailout’ or ‘Necessary Step’?” MarketWatch. November 4, 2016. Retrieved November 5, 2016.
“It is impossible for Tesla to build electric cars fast enough to address the carbon crisis.” (1) that is what Elon Musk said when his company decided to go open source and share the patents of Tesla cars. This quote reinforces why I am a strong believer of Elon, and the reason i believe he is one of the biggest innovators of our time that is actually trying to build something sustainable for our planet. He has generated a movement in which not only his companies are addressing important issues but also its competitors. Through his approach, Elon has managed to bring the attention from big players across multiple industries (automotive, aerospace etc…). He has taken the competition of sustainable companies to another level. As a passionate follower of Elon and all of his companies, I believe his main challenges are two. First, to keep converting “non-believers”. Elon is trying to disrupt two of the biggest industries in the planet and in order to do that he has taken several risks. We all have seen how his rockets have exploded or his cars crashed, and those failures just help strengthen the arguments of the critics. I have a really hard time thinking how he can change the mindset of people who are currently against him after all of this companies have already demonstrated the enormous value that they bring to society. Secondly, electric cars are a first great step to alleviate the footprint the transportation industry has on our environment but it will be extremely naive for us to think that all cars will be electric in the years to come. In order to solve the root cause of the problem, Tesla and all of us should be thinking how to replace what is currently filling the tanks of the cars, trucks, planes and boats that are currently running. One approach that seems achievable in the short term is converting solar energy into liquid form (2). Just a couple of thoughts that I wanted to add to your post!
Thank you for sharing and I hope more people could appreciate what Elon has achieved so far!
(1) http://www.forbes.com/sites/briansolomon/2014/06/12/tesla-goes-open-source-elon-musk-releases-patents-to-good-faith-use/#139d7a6b18e4
(2) http://www.cnbc.com/2016/06/29/beyond-tesla-solar-city-heres-what-needs-to-happen-next-to-solve-climate-change-commentary.html
I am in complete agreement that the transportation sector represents a huge opportunity for climate change related improvement, and Tesla has taken the industry lead for a transition to electric vehicles. However, one may wonder how Tesla can disrupt the $4 trillion global automotive industry, and Tony Seba provided nine great reasons in his book “Clean Disruption”:[1]
• The electric motor is five times more energy efficient than gasoline-powered motors
• The electric vehicle is ten times cheaper to charge than to fill up an equivalent gasoline powered vehicle
• The electric vehicle is ten times cheaper to maintain
• The electric vehicle will disrupt the gasoline car aftermarket
• The ability to charge wirelessly
• Modular design architecture
• Big data and fast product development
• Solar and electric vehicles are four-hundred times more land efficient
• Electric vehicles can contribute to grid storage and other services
Furthermore, the cost of the electric vehicle is quickly dropping (due in large part to rapidly improving lithium batteries) and the range is quickly rising. I can easily envision a future where Tesla produces a solar-powered, electric, and autonomous vehicle that redefines our image of transportation. I can also imagine the development of Tesla into an energy juggernaut that drives innovation in distributed energy generation, the smart grid, and even precious mineral mining in space (Space-X anyone?).[2] While we face an uncertain and dangerous future (assuming no action), I fully believe the innovation driven by companies such as Tesla will help uncover the opportunity for improved climatic conditions and a better quality of life for people worldwide.
[1] Tony Seba, “Clean Disruption” (Silicon Valley, California: Clean Planet Ventures, 2014), p. 102-113.
[2] Clive Cookson, “Asteroid Mining is Not Science Fiction,” Financial times, February 5, 2016, [https://www.ft.com/content/14b5efce-cb56-11e5-be0b-b7ece4e953a0], accessed November 6, 2016.
Great read! I think Tesla is an inspiring company with the big picture in mind when it comes to climate change. They are working to redefine what transportation in the future looks, but as you mention in your article, their in-progress acquisition of Solar City is what shows their true goal of vertical integration. With the SolarCity acquisition, Tesla is defining what the future of energy is in our world. The company is taking a leading stand in this conversation about climate change, and they are creating an opportunity for themselves to drive solar energy adoption. The combination of the two companies builds this dream of offering “end-to-end clean energy products”, where society can minimize our dependence on fossil fuels and the utility grid while also lowering costs [1]. Tesla is already clearly “catalyzing the transition to sustainable transportation”, but with SolarCity, they take their vision further by creating a comprehensive sustainable future in all aspects of our life where energy plays a role [2].
I would like to disagree with CaptainKoloth above comment though about whether Tesla’s contribution to climate change discussion is questionable. “Even when you factor in the carbon emissions and pollution from the power plants that produce the electricity to power the cars, and from manufacturing and disposal, electric cars produce about 40 percent less carbon dioxide and ozone than conventional cars,” and all of these benefits are provided without sacrificing the sleek style and luxury of a high end brand [2]. Tesla is clearly doing more than a minimal net savings of CO2 emissions, and by discounting the work that they have done and continue to do is the opposite attitude of what is needed to continue the conversation around Climate Change issue seriously.
[1] Tesla. Tesla Solar City Investor Presentation. N.p., Oct. 2016. Web. 3 Nov. 2016
https://www.scribd.com/document/328897063/Tesla-Solarcity-Presentation-Investor#fullscreen&from_embed
[2] Bullis, K. How Tesla is driving electric car innovation. MIT Technology Review. 7 August 2013
http://www.technologyreview.com/news/516961/how-tesla-is-driving-electric-car-innovation
Interesting article.
While true that an electric car will net reduce CO2 emissions, Tesla should also be mindful of the impact of mass lithium extraction from the earth. In fact, some car experts (Top Gear) have gone as far as to claim that it requires the same amount of energy to produce a Land Rover Discovery as a Toyota Prius. The claim was later disputed by Greenpeace but the point remains that the environmental impact of a vehicle goes far beyond the fuel consumption.
Great post!
I’m a huge fan of Elon Musk’s visionary mindset and aspirational willingness to change the world. I’m convinced that electrical car is the future of car, and that Tesla and Elon Musk have played a key role in boosting R&D and customers’ adoption in this field. And I agree with some posts above that electrical cars, despite the fact that they require the use of lithium batteries and still need to be charged via outside sources of energy, still have a reduced impact on environment compared to any other kind of cars. So if we really need to use cars, electrical cars are probably the most environment-friendly way to go.
However, a second step into reducing the impact of transportation on climate change is to question the very necessity of cars, at least as we use them today, that is in a model where everybody owns his or her own car, that he or she uses everyday for all types of trips. I’m convinced that there are other ways to think our relationship and need for cars.
Tesla has already provided an answer, by exploring the possibilities offered by self-driving cars, and using them to implement car-sharing solutions: when not using their car, Tesla’s owners could chose to add it to Tesla’s shared fleet, and make it available for use to other users, with the car autonomously finding its way towards other users. [1] Car-sharing would allow to reduce the total number of cars needed, and hence would reduce the impact on the environment linked to cars productions.
More generally speaking, alternatives to cars should become the norm, especially in densely populated cities, which should focus instead on public transportation to reduce the need for cars.
[1] https://www.bloomberg.com/news/articles/2016-10-27/elon-musk-says-tesla-car-share-network-is-the-people-vs-uber