In a recent presentation to the Tesla and SolarCity Proxy Advisory Firms, the presenters, including Elon Musk, discussed how today’s energy landscape shows record high carbon dioxide levels. Currently, 94% of CO2 emissions result from fossil fuel combustion, 82% of total energy utilized is produced from fossil fuels, and ⅔ of all fossil fuels consumed are used in transportation and electricity production . Driven by the mission to “accelerate the world’s transition to sustainable energy”, Tesla is fully aware of these threats and opportunities associated with climate change . As evidenced by the in-progress (awaiting shareholder approval) acquisition of SolarCity, Tesla is about more than just commercialization of electric vehicles. The company is thinking about long-term growth and their strategic direction.
Primarily, Tesla is known for its dream of creating a mass market electric vehicle. Tesla’s electric vehicles promise its customers a new world where there are no expensive gas station stops and no pollution emitted while driving.“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 . Clearly Tesla takes the environment and the sustainability of the earth seriously and is striving to make it an easy choice to pick a product that saves the world.
However, Tesla unfortunately has consistently been reporting losses, partially due to the huge costs it faces while upscaling production. To combat that and to address the effects of climate change’s physical manifestations and the related regulation, Tesla is pursuing a strategic combination of solar and storage. The two areas are highly complementary and provide substantial cost efficiencies and revenue synergies. The longer term hope is that these choices will drive improved cash flows.
Clearly, Elon Musk has a grand scheme where he aims for Tesla to become an “innovative vertical integration of energy generation, storage and consumption [that develops] sustainable energy products” . How? The company’s long-term purpose is to help “expedite the move from mine-and-burn hydrocarbon economy towards a solar electric economy” . Tesla is striving to become self-sufficient with the big picture in mind and the potential SolarCity acquisition aligns with those goals. Tesla hopes to control the entire energy sector under its brand: automobiles, batteries, and solar.
Yet, this is not enough. Tesla needs to continue to take additional steps to move its organization forward and keep its position on the cutting edge. There are some clear issues with the solar landscape: energy needs to be harnessed even when not in daylight hours. Additionally, unlike electric vehicles, solar panels are not considered sexy. There is room for improvement in both cost and aesthetics of Solar City’s products.
Robert Tenent, a senior scientist at the National Renewable Energy Laboratory, describes it best: “Ugly doesn’t sell in the building space. For solar technology to take off, it has to meet performance and durability standards, while also integrating with the electricity grid […] and you have to look cool while you do it to really get something adopted” . SolarCity is combatting this problem with new aesthetics in the solar roof space as seen in the picture here. The slate roofing tiles are glass tiles filled with solar cells. As seen in the Tuscan Home picture above, roofs can meet our traditional appearance standards while harnessing the sun’s power! With experimentation of these new aesthetics for solar roof panels, adoption rates should continue to rise.
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 . 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 .
- Tesla. Tesla Solar City Investor Presentation. N.p., Oct. 2016. Web. 3 Nov. 2016
- @teslamotors. “Tesla.” Tesla. N.p., n.d. Web. 04 Nov. 2016.
- Bullis, K. How Tesla is driving electric car innovation. MIT Technology Review. 7 August 2013
- “New Solar Roofs.” Popular Science. N.p., 2 Nov. 2016. Web. 4 Nov. 2016.