Tesla Master Plan, Part Trois — 3
Welcome back. The first installment of the Tesla Master Plan, Part Trois covered Tesla’s measured expansion into autopilot. The second article outlined an immediate and sustainable model to urban planning. A Tesla-powered eBRT system can work in a majority of cities throughout the world.
City planning and urban design doesn’t matter without infrastructure.
Currently the United States requires an investment of $1 Trillion to fix existing problems. This doesn’t include those we’ll face from globalization and megacity migration. The American Society of Civil Engineers recently gave the US infrastructure system a D+ rating. Roads, bridges, sewer, and electricity are all aging. We need a New Deal.
A DC approach in an AC world
Once a month I speak with someone considering switching from a Mac/iOS environment to Android/PC. Every time they concede addiction to the Apple ecosystem. Amazing that we continue to “deal” with iTunes, Apple Photos, and non-expandable memory.
Side note: blurring these two worlds is easy. Highlight this if you’d like a future post on how to set this up.
We’re beginning to see the same type of addictive ecosystem with Tesla. Across North America and Europe is a vast and growing network of Tesla Superchargers. Owned and operated by Tesla they are free for life (this was a recent change, announced here).
Solar powered, sustained by Tesla Powerpacks, they operate as the “gas stations” of electric vehicles. Teslas pull up (soon, on their own), find a parking spot, and begin charging their vehicle. The pricepoint of Teslas creates a natural honeypot for upper middle-class customers. Real Estate firms develop the land surrounding superchargers into high-end lifestyle centers with shops a dining. A 30 minute charge can provide up to 170 miles of range (source).
High-end shops, no exhaust, and a parking lot full of Tesla’s? This sounds like a rest-stop on the road trip of the future. There isn’t a single country that couldn’t use this.
There are two exciting infrastructure ramifications here. First, these superchargers can operate without relying on existing infrastructure. Find land, pave the lot, set up solar panels, and you’re good. It’s the 21st Century axiom, “If you charge it they will come”.
Second, when there is infrastructure connected these stations generate more energy than they need to use and store. All that power is immediately dispersed onto the grid and Tesla receives a power generation subsidy.
This can adapt to a semi distribution network or eBRT bus port. Need more power? Add more panels and powerpacks. This provides politicians a vehicle to support growing economies, ailing infrastructure, and both ends of the economic spectrum. Exactly like the eBRT network. But this isn’t even the best Tesla export.
Gigafactories Galore
“The world’s first Gigafactory was built outside of Los Angeles and ushered in a 50-year expansion of battery technology. Here you see the last combustion engine on display in the Smithsonian.”
I have no doubt you will read this sentence in your grandchild’s history book one day. Many of you know that economies of scale and vertical control is a central theme of success for both Tesla and SpaceX. At both factories, rolls of steel and aluminum comes in and cars and rockets come out. The Gigafactory is a way to bring that level of precision and vertical control to battery manufacturing.
Gigafactory 1 is a massive 5.5 million square feet. It’s big. It’s really, really big.
It reduces the manufacturing cost of Tesla’s batteries by 30%. It churns out an annual production capacity of 35 gigawatt-hours. For reference, One GWh is like generating (or consuming) one billion watts for one hour — one million times that of one kWh. Its foundation cost an estimated $16 million. It has 4 separate earthquake-proof foundations. And by 2020 it will produce more batteries than every other battery manufacturer so far. Combined.
There are many raw inputs needed for a Tesla Gigafactory. For one, the total cost for Gigafactory 1 came to $5 billion. You also need a significant amount of space (they’re large plants). It needs to be in a region not susceptible to natural disasters. It must be as close to iron, lithium, nickel, copper, and zinc deposits as possible. It’s preferred in a very sunny area with minimal hail for solar power generation. If this happens you don’t need to worry as much about an existing utility network on which to build your plant. It can exist off grid. You do need to have fire safety standing by. Gigafactory 1 has an onsite fire-retardant flooding system. They also donated an engine to the local fire department, in case of emergencies. But take a step back and look at the big picture. You now have a factory capable of producing energy technology while not leaching from the current energy ecosystem.
You’ve built a sun powered box that makes millions of tiny sun-storing boxes.
Why Giga is Grrrrreat
Cool story, bro. Why do I care?
It’s not 10. It’s not 1,000. About 100.
100 gigafactories satiates our world’s energy needs and gives your granddaughter the most hopeful History textbook of all time.
Now Tesla has a history of opening up their patents to the competition because, as Elon has stated in many interviews,
“If we’re all in a boat that is sinking and I have a really good design for a bucket, why wouldn’t I share that?”
With batteries, it’s self-evident what the long-term gain is from giving people your play book. You give competitors the tools, watch some of them fail, sell to the efficient ones left standing, and establish market dominance. This is the same Gold Standard in autopilot from our first entry in this series.
While this works, there’s a much more strategic play for Tesla. At the close of the TED interview discussing gigafactories (28:30) Elon announces the construction of between 2 and 4 more gigafactories by the year’s end.
“We need to address a global market.”
Gigafactories as Foreign Aid
There are a few ways to address a global market. Here’s one idea.
Dear [Iceland/Uruguay/Nigeria/India/Mexico/China] President,
We will be building Tesla Gigafactory 8 within the next 18–20 months to address your region of the world’s energy needs. We are currently operating 7 gigafactories throughout the world. The plants produce batteries at a rate of [X] per hour. On average, they have created $500 million per year in economic wealth for the countries we operate in. Long term predicted contributions are $2 billion per plant per year for the first ten years. Industry positioning, export taxes, and FDI ensure our factory countries lead the world for generations.
The cost of the plant is $5 billion. We are currently fielding offers from your neighboring countries to foot the bill. In exchange, all economic benefits, a Supercharger network over the next 20 years (to support their soon to be electric car market), and free Telsa eBRT for a capital city will be provided. Not counting these, or the network effects of having the first Gigafactory in the region, Gigafactory 8 is an investment that becomes ROI positive by year 10.
You have made significant investments in STEM education in your country and could provide a more knowledgeable workforce. We look forward to hearing your proposal.
Prospectuses are attached.
Memorably,
Elon Musk
Tesla owns the plant. They own the technology. The local government foots the bill (can be a loan) and becomes a global leader in manufacturing. They then field offers from Boeing, BMW, Skoda, GE, and Edison who want to poach the coming talent pool for their own local plant. And finally, to sweeten the deal, Tesla throws in some ecosystem-establishing carrots. Tesla’s reach grows. The floor of the local economy rises. And the world only has 92 more to go.
Building a Clean Energy World with BRICS
Let’s play out this strategy with three examples. For the sake of argument Russia and Brazil won’t be included. Russia won’t because the business environment isn’t as open or predictable as other countries. It also doesn’t have the nexus effect other BRICS provide with neighboring countries and domestic demand. Brazil is recovering from the Olympics and World Cup, political scandal, national unrest, and, like Russia, is highly leveraged in the Oil and Gas business. This could make them desperate at the deal table but a poor long-term partner.
India and China — The $10 Trillion Dollar Prize
First, if you haven’t read that book, do so. BCG distills cultural norms to strategic trends for the next 20–30 years. Or, as an alumni, I could point you towards a recent PwC study.
A democratic powerhouse, India, with a total current population of 1.31 billion, is set to pass China by 2022. While there are 1,652 unique languages spoken in India, most people speak English and/or one of the 22 common languages. Slums pop up anywhere infrastructure fails, often on the edges of cities where gentrification deposits the poor. Meanwhile cities are growing at an alarming rate with 3 of the world’s 10 largest cities by 2050 residing in India (Kolkata, Delhi, and Mumbai). The country is in desperate need of power, sanitation, transportation, and efficient models of expansion. All the better if such costs aren’t shouldered by the poor.
China is a similar story. There are over 200 distinct dialects of Mandarin with Han Chinese unifying communication across the country as much as it’s namesake’s empire. A small to medium sized city in China is 10 million people. This includes both local “huko” residents of ancestral residency as well as migrant worker populations. During holidays the country’s transportation infrastructure gridlocks in one direction; out of the city. Every economic center copies the disastrous Garden City movement popularized by Brazil. Extreme bias towards STEM fields, and mandatory English education from age 6, results in a global workforce. The political environment, while not democratic, is predictable.
India and China will have the 1st and 2nd largest economies by [year]. They both are well positioned for trade in Asia. They both are pumping prehistoric levels of CO2 into the atmosphere. They both use trains and planes to hop from city to city. Forgotten “in-between” economies in the rural expanse between cities litter both countries. And both need significant FDI to maintain their desired levels of growth.
In both cases the same solutions can apply:
A nationwide system of Hyperloops.
A locale system of Boring tunnels for migrant worker transport.
City eBRT systems to decrease traffic and smog.
A rural network of superchargers to vitalize “in-between” economies.
Gigafactories creating batteries to supplement growing solar farms.
Solar power generation and storage could not only give 50 years more life to pristine areas like Yunan. It could shorten 100-year city growth plans in Mumbai and Guangzhou by a decade at least. For those who have been to Shanghai, Beijing, ChengDu, Mumbai, Delhi, or Kolkata — Can you imagine what these cities would look and feel like with this Tesla infrastructure?
You’re…you’re already buying real estate, aren’t you?
Africa
Africa is poised for too large of a leap to only talk about South Africa. And it’s due, in large part, to the French.
The United States continues to weather economic storms for two reasons. One, it holds the global reservee currency. Two, its citizens have massive economic independence. For example, if someone becomes unemployed in Portland they can find a job and move to Charlotte. Local laws might change but people will still speak English, work the same way, and go to the same sub-par pizza chain (New York ruined me). This type of lateral movement isn’t possible in Europe. While the EU is great, it’s often a new language, let alone a new country.
For the past 27 years France’s Agency for French Education Abroad (AEFE) has been spreading across the globe and into local communities. It provides French government education and spreads French cultural and linguistic influence throughout the 130 countries it operates in. Africa is home to 54 countries and an estimated 1,500–2,000 languages, dialects notwithstanding. And now, despite whatever political unrest we’ve seen, they’re beginning to talk to each other. In French.
By some accounts, French will be the most popular language spoken in 2050 — more than English. The last half of this century will be the Age of Africa and it is ripe for a Tesla harvest.
It is the most element rich continent, with more precious metal deposits than anywhere else on Earth. You could build two dozen gigafactories across Africa over 20–30 years at a much lower cost of operation than elsewhere in the world. Solar power and battery storage become a native and ubiquitous solution. Rural African villages don’t have phone lines because everyone has cell phones. Urban and suburban environments will grow in the same way, with no need for powerplant infrastructure.
Lagos and Johannesburg get eBRTs and Boring transports, raising the economic floor. Nigeria and South Africa then build gigafactories, jumpstarting local manufacturing with FDI. Neighboring countries push for more frequent cross-border trade. Existing rail lines, now aging, cost a fortune to fix so local governments invest in highway networks. Highways bring trade to former rural areas. Tesla Semis deliver goods between countries through autopilot. Supercharger stations blanket the route, providing waypoints for a continent-wide powergrid.
This process is repeated from current economic hubs in Africa to the surrounding countries. Decade after decade. First gigafactories. Then highways for trade. Then Superchargers and autonomous Tesla semis. In 50 years’ time the country is blanketed with highways. Autonomous supply chain delivers predictable economic success and political stability. Any “African aid” project that’s still needed is more successful because resources actually get to the people. And Africans travel more, and for less, across the entire continent. And everywhere they can speak and work, in French. Cities evolve with a flexible utility infrastructure, sustainable for hundreds of years.
China, India, and all of Africa using Tesla transport, relying on the Tesla supply chain, earning income on the TAC network, generating solar power on Tesla hardware, and conversing with their neighbors in the same tongue. That’s 3.9 billion people affected. That’s a world changed.
Liberté, égalité, fraternité.
The Foundation
Let’s recap Tesla’s market position 50 years from now. Tesla owns, manufactures, and sells the hardware for global power generation. Tesla owns the beginning to end commute for the majority of the urbanized world. Tesla’s infrastructure evolves with a city. Thus, Tesla shapes the creation of cities and owns the best seat at the planning table. Tesla owns logistics infrastructure of the majority of all commerce (licensed or outright). Tesla owns the digital platform for most upper middle class’ second income stream.
Gigafactory. Semis. eBRT. Boring. Solar Roof. Powerwall. Powerpack. Supercharger.
Manufacturing. Shipping. Transportation. Energy. Real Estate. And a global tech platform. 6 industries where Tesla can position itself to be the dominant player. This is the world Tesla could make. That we could make.
“I’m not trying to be anybody’s savior. I’m just trying to think about the future and not be sad.” — Elon Musk
Me too, Elon. Me too.
