Tesla’s Master Plans for the future – Part I and II
Tesla’s product development serves as a primary example of the company’s creative capacity and initiative. In his Master Plan delineated on the Company’s website, Elon Musk outlines the Tesla’s main objectives from 2006 – 2026. [1]
Master Plan Part 1
To address the over-reliance on fossil fuels and global warming, Tesla Inc., seeks “to accelerate the world’s transition to sustainable energy.”[2] 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.”[3] 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.
[1] https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me
[2] https://www.tesla.com/about
[3] https://www.wired.com/2016/07/tesla-gigafactory-elon-musk/
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.[4]
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.[5] 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.”[6] Furthermore, the Gigafactory will be powered by renewable energy sources to ensure the achievement of net zero emissions.
Master Plan “Part Deux”
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.[7] 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”[8]. 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.
[4]https://www.tesla.com/presskit/teslaenergy
[5] https://www.tesla.com/gigafactory?redirect=no
[6] Ibid
[7] ttp://www.marketwatch.com/story/teslas-new-product-self-driving-hardware-that-wont-work-2016-10-19
[8] https://www.tesla.com/blog/master-plan-part-deux
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10 comments on “Tesla’s Master Plans for the future – Part I and II”
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Based on Elon Musk’s original “Master Plan”, it seems like he initially wanted the brand the company as an environmentally-friendly, vertically integrated firm that would meet all of your automotive transportation and energy storage needs. However, I think it’s worth noting that there are some caveats to Tesla’s claim of being “environmentally friendly” and “zero emissions”. While I acknowledge the fact that Tesla’s vehicles do not produce emissions while being operated, they do not take into the account the greenhouse gas byproducts produced by the manufacturing process. In Lizzy Wade’s “Tesla’s Electric Cars Aren’t as Green as You Might Think” WIRED Magazine article published on March 31st, 2016, she discusses the process for mining the rare earth metals required for the battery components in Tesla’s vehicles. She writes that, “…Rare metals only exist in tiny quantities and inconvenient places—so you have to move a lot of earth to get just a little bit. In the Jiangxi rare earth mine in China, Abraham writes, workers dig eight-foot holes and pour ammonium sulfate into them to dissolve the sandy clay. Then they haul out bags of muck and pass it through several acid baths; what’s left is baked in a kiln, leaving behind the rare earths required by everything from our phones to our Teslas.” If Elon Musk wants to market Tesla as the future of driverless car technology, that’s one thing. But he’s bamboozling us by claiming that Tesla’s products are an “environmentally-friendly” alternative to what’s currently available in the market.
Hi Andrea, thanks for sharing 🙂
To be honest I was really amazed by Tesla’s vision of the sustainable home solution. Its recent product Powerpack has several attractive value propositions towards energy consumers, such as peak shaving, load shifting, emergency backup, and demand response. However, besides that, there’s also another key value proposition here that I can think of according to my recent research on the supply chain of electric energy.
The reason for the existence of a peak price is mainly caused by unbalanced demand – there is a huge demand for electricity at peak hours and low demand at some other times such as nights, and this leads to an unbalanced demand of electricity throughout different times every day. However, one property about electric energy is that it is consumed almost instantly as it is generated (without the existence of a battery storage). Therefore, due to high demand at peak hours, there has to be enough amount of electric power plants to generate enough energy in order to satisfy the need of electric consumers; but at non-peak hours, there is always a surplus of electricity that is wasted.
There are several solutions currently regarding the wasted energy. One is to turn off several power plant machines at night so less energy is generated to meet less demand. However, due to the complexity of the machines, once they are running, it will cost huge energy to turn them off that even exceeds the amount of wasted energy. Another solution is called the “hydropower pumps”, which uses the excess electric energy at night to pull water to high lands, and regenerate energy to consumers during peak hours using the gravitational potential energy of water to regenerate electric energy. But again building those hydropower pumps requires a fair amount of cost as well.
Therefore, what I saw in Tesla’s vision of Powerpack is actually that, if the product reaches majority and is widely adopted, it can actually charge itself during nonpeak hours that pushes up the demand at night, while charging other household appliances can pull down the demand of energy during the days. This way, the energy-waste problem caused by an energy surplus will be eliminated, and it actually will become the best solution we have now when comparing to the others.
Hi Andrea,
Elon musk is a visionary. He is foreseeing the future like no other innovator in recent times. Creating a vertically aligned company powered by renewable energy is a great and daring step. To run a whole business where everything is powered by solar energy is commendable. The solar roof is a great product and definitely one of the things to look out for from Tesla apart from the cars. Also, the use of solar energy has allowed Tesla to reduce it’s operating costs and make a cheaper car, Model 3. The new Gigafactory 2 in New York is a testament to the level of commitment by the company to solar energy. Tesla has the ability to surprise us and I look forward to their technological advances in the future.
Great blog post Andrea!
Elon is putting all his effort in changing the world as we know it today, regarding EV, power and Space travel. He is picking up Jobs legacy and taking it to a whole different level. However, from an outside perspective it might seems what he is doing is easy, after all his accomplishments and success in the tech world. I have the pleasure to know some people that have been working very close with him on SpaceX since the beginning. One big key players such as Boeing intentionally worked against him from the start, commanded all its suppliers to not supply anything to SpaceX. This is where Elon tok it to the next level and decided to take full control of the entire value chain. I think we will see great things for years to come from Elon´s endless list of success. EV is come to stay, Solar power is evolving and space travel is open for business
Insightful post! I think one point that is very critical for Tesla’s mission to democratize EVs through Model 3 is the production capacities that the Gigafactory will eventually provide. Already in production, this insane factory project is still far from being fully operational. It’s interesting to see that Tesla is expanding its production capacities worldwide, planning to build “probably 4 gigafactories” (https://electrek.co/2017/05/01/tesla-gigafactories-4-more-year/): in Europe, China, and probably another one in the U.S.
Great post!
Tesla has a great future vision. We can never compare Tesla with any car makers such as BMW, Benz. Because Tesla has great difference between them. Tesla’s plan is to revolutionise the traditional car industry and create total different innovative lifestyle.
For Tesla’s plan on model 3. I do think model 3 will be very successful, as it’s a more affordable car. As more people buy electric cars, the trend of popularising electric cars will accelerate even faster.
Insightful post Andrea. Our dependence on fossil fuels is extremely high and the way forward is through decreasing the dependence on fossil fuel (A non-renewable resource) and increasing our dependence on solar, wind & electricity (Renewable resource).
Tesla is on the right path and this innovation of pure-breed electric cars has also provoked other car manufacturers to adopt this.
For example – BMW – i3 & i8.
I feel, we can look forward to a revolution in the coming future.
Pratik Jain
238A
@ Andrea Wang
I agree and thank you for your good structured comment. Tesla’s Master Plan sounds great. Of course their visionary strategy can be understood to solve problems like of fossil fuels or global warming. So Tesla seeks to accelerate the world’s transition to sustainable energy. In face of their market position Tesla could be categorized as a „rule-maker“ company based on their innovative Master Plan for the future.
Our guest speaker Co-Founder of Tesla JB Straubel presented also how he revolutionizes the traditional car industry and how he creates a total different innovative lifestyle. Also his vision of the sustainable home solution was awesome. But I have one critical approach regarding to JB Straubels presented vision.
Why does a Silicon Valley company like Tesla tries to solve problems in Afrika? Of course it is a noble thought but aren’t there other possibilities to work with these problems? Wouldn’t it be more efficient to support or fund companies based in Africa with all the local knowledge in the future? The question focus on the aspects of sustainability.
I was literally carried away as I watched Elon Musk unveil the Master plan 2. Tesla has been built with foundations of repetitive failure and resilience. However, they survived because they never set their eyes away from the goal ‘to accelerate the advent of sustainable energy’. It almost feels as if Elon Musk is living a playback of a video he created before. Tesla has disrupted so many industries at once. The car manufacture industry has been disrupted in 2 ways; going electric and autonomous. The energy industry has been disrupted by the commercialization of solar energy through solar panels, solar roofs, power packs and power walls. The battery manufacture industry also got a big slap on the face with the Gigafactory; which will produce more energy than what the whole world produces in all lithium-ion battery cells. In his other venture, SpaceX, the aerospace industry has also been disrupted. So what do you think Elon Musk’s next venture will be? I think he will be the next Geo-engineer that would take responsibility in cleaning the environment of greenhouse gasses.
Thank you very much for the article Andrea.
I like the enthusiasm around Tesla and (even as a German) truly believe in Teslas visions and certainly that it has already had some positive impact on the industry as a whole.
However, I am quite sceptic about certain points.
First of all, in regards to Jegas comment (first comment), I would like to add that the assumption of “driving at zero emissions” is very superficial also because the electric energy the car is consuming originates from emission generating power sources. If a Tesla is charged sourcing a regular US power grid, nearly 2/3 of that energy is still produced through Natural Gas (33.8%) and Coal (30.4%), which are both and especially the latter, generating CO2. In other words, as long as the stake of renewable energy in the overall electricity production is still small, all a Tesla is doing is shifting the emissions from an exhaust to a chimney. (https://www.eia.gov/tools/faqs/faq.php?id=427&t=3 ) Driving a Tesla is thus not emission free yet, but the Masterplan 1 is certainly a good step towards it. In addition, I would like to just briefly mention the waste created by discarded, old batteries.
Regarding the Masterplan “Part Deux”, I found Teslas strong focus on the software from its very beginning particularly interesting. The majority of car manufacturers have underestimated that for a while and in my eyes it is a good example of the emerging dominance of software over hardware in a competitive market, even in a naturally hardware based industry.
Moritz Steinbrecher (238A)