Driving the Grid
The Tesla road to sustainability
There is a certain weight to the decision when it comes time to purchase a car. The American culture has long treated our wheels as a kind of identity statement. Who are you? What do you stand for? What are your values? What is your favorite color? Having recently found my 16 year old Honda three times in the shop within the space of a month, it became apparent that this was my own predicament. I could have clung to the rusty remnants of a cherished friend (her name was Rhonda), or bit the bullet and jumped into the driver’s seat.
This year has not exactly been an ideal time to consider an automobile purchase. There are supply chain gaps (like semiconductors) that are driving up the cost of new and used cars across the board, not to mention waiting lists and availability constraints. There are some recent jumps in gas prices (doubling!) that could extend for who knows how long. And against that backdrop, there is an emerging near industry-wide initiative to round out product lines with electric alternatives, which in most cases will realistically take a few years to reach fruition saving for a small number of startup pioneers, the primary example being the one and only Tesla Motors.
An informed vehicle buying decision would need to involve quite a bit of forecasting. Ideally you only buy a vehicle when you have some certainty that it will retain value and relative performance verses what will be on the market in five years, otherwise you are probably better off leasing, like now when the industry is going through rapid shifts in each of drivetrain, digital interface, automation, and fuel. There is just not very much certainty about how internal combustion vehicles would retain relative performance and value to consider anything other than a Tesla as a current viable purchase option instead of lease. It was the only car I considered likely to be competitive in five years, not to mention how competitive it is now.
Consider an obvious selling point of lifetime fuel savings. Let’s estimate with the following assumptions:
- Car usage at 12,000 miles per year over 10 years (a typical commuting vehicle)
- Gas prices in range of $3-$6/gallon
- Fuel economy of 32 miles per gallon (just to pick a number)
- Battery usage and charging economy at $0.04/mile
(12,000 miles) * [($3/gallon / 32mpg) - ($0.04/mile)] * (10 years)
= $6,450 savings @ $3/gallon, or $17,700 savings at $6/gallonI use a range of fuel prices and a constant electricity price primarily because historically oil has been a more volatile commodity price than electricity, likely due to electricity generation having multiple competing fuels serving as basis. Further, the driving trend for electricity prices of emerging distributed generation resources (home solar) means there will be downward pressure in coming years, while oil prices are exposed to shocks from regional stability issues, durability of shale drilling techniques, aging oil fields, expanding driver populations in the third world, and who knows if or when the long expected peak oil might become a reality.
Thus even though forecasting ten years into the future will generally be a fool’s errand, we can at least expect that electricity prices will retain some competitiveness with oil for transportation, although a counter argument is that if battery penetration really takes off at scale there could be some reversion to the mean between the two. One effect that could damper such reversion is that as usage falls, gas stations may begin to close doors, and with less local competition we could expect some amount of convenience markups from retailers. Home charging of electric vehicles will always be paid at market rates without markup.
Of course there are other considerations than just fuel prices. The convenience aspects of a national penetration of independently owned gas stations means there are always options for refueling even on long car trips exceeding the rated battery mileage. One way to think about this is that if you are stopping at one gas station a week and then two gas stations on a long road trip for 3 minutes each (we’ll say you’re adventurous and take four such road trips a year), in the battery scenario you could skip all of those midweek fill-ups by charging overnight and only have to stop at charging centers on the long road trips, which for super charging centers might take on order of 15 minutes per recharge (during which time you could enjoy a tasty sandwich). I calculate batteries would save you an entire hour of refueling time per year in this scenario. The only tradeoff is that charging options are a little more spread out for now, so road trips could require planning to select between interstate options (which even today there are plenty).
- 52 weekly fill-ups
- 4 road trips, each with 2 fill-ups, per year
- 3 minutes to refuel car at a gas station
- 15 minutes to recharge battery at super charger while eating a sandwich
- weekly fill-ups not required for electric charged overnight at home
(52 weekly + 4*2 on road trips) * (3 minutes to gas up) - (4*2 on road trips) * (15 minutes to recharge)
= 1 hour of refueling time saved with batteries per yearRoad trips are one thing, how about real outlier scenarios where you might need a vehicle in a pinch. Hurricanes. Wildfires. That kind of thing. Consider that without electricity, you’re not going to be pumping gas anyway. And let’s say there is some advance warning, say a hurricane on the radar. While all of your neighbors are waiting in line at the local 7–11, you can simply plug in your car to the outlet and let the juice do its magic. I expect eventually we may even see this in reverse direction, with car batteries as a backup resource for home electricity use, or perhaps even a macro grid resource to help balance intermittent renewable generation resources like wind or solar allowing for increased penetration and reduced carbon emission verses the offset gas or even better offset coal usage. There is very little difference between grid scale lithium ion batteries used for load balancing and what is installed in a car, it is just a matter of connecting and controlling them.
Henry Ford had the right idea to build a car that could meet the needs of as many people as possible when he sought to transform an industry from custom assembled to mass produced assembly line Model T — the proverbial “You can have any color you want as long as it is black”. Along the way he brought the price of automobiles down to a level that could even be afforded by the mechanics that serviced them, and is rightfully remembered as a national hero. Eventually General Motors was able to disrupt that model by segmenting their product lines to meet the diverse needs of different demographic profiles, a trend that has continued in competing ever smaller fragmentations to this day, each one a compromise between horsepower/torque/fuel economy/comfort/utility/cost/weight pushing against the thermodynamic boundaries of the Otto cycle in different directions.
Consider the cellular phone market, which not too long ago had a similar amount of diversity between vendors. Steve Jobs came along and offered one model that could do everything for almost everyone — phone calls, web browsing, music — with demographic segmentation only following later by the introduction of an app store for user centered software solutions. It remains to be seen if a Tesla app store may become sufficient for demographic segmentation or if other variations in product line will be needed. Perhaps the Model 3 on its own may be sufficient to stand the test of time, as stationary in design as the Google search box over the last 25 years, with perhaps a few small tweaks around the edges to mix things up a bit and all of the innovation taking place under the hood.
The old Honda isn’t my only vehicle that has remained stationary as of late. I also have a bare bones exercise bike I use to Pelaton in front of the television. It literally has two moving parts: a pedal / flywheel assembly and a valve to adjust a magnetic resistance lever. It will never break. I wouldn’t even know how to do so if I wanted to. I imagine it is the same feeling to owning a Tesla. So many fewer parts than a gas guzzler. You have a battery, a motor, a braking system, a cooling system, a computer, and not much else. The law of numbers says that maintenance can only be a breeze. They don’t even have an annual service, you simply change fluids and filters when a need eventually arises.
When you design a product from the ground up instead of just sourcing everything from vendor catalogues, you gain the ability to create unique customer experiences. Custom AI chips. Immersive sound systems. Every handle and knob a digital-first rethinking and refinement from long established practice. A computer interface developed by designers at the top of their craft and software engineers instead of bureaucrats. The whole experience cohesive. At times even gamified. Every commute its own Disney ride.
When you design your sales channel from the ground up it becomes possible to realize similar benefits. Every interface and interaction streamlined to remove road blocks and simplify decisions. No need to distract customers with trivial options of low significance. (You won’t let me buy a car until I settle on the floor mat design? Seriously?) When there is a national price, there is no need to negotiate, and hence no need for sales channel inconsistencies. Every customer has the same experience give or take.
Tesla gets a lot of attention for their CEO, for better or worse, but what they have accomplished so far is so much bigger than any one celebrity. They have upended nearly every industry they have touched. Automobiles. Fossil fuel demand. Battery durability and efficiency. Renewable energy. Domestic automated manufacturing. Vehicle sales. Artificial intelligence.
The AI team probably doesn’t get as much visibility since they do not publish as much research as others in the industry, likely owing to competitive nature of the application. Their segmentations of the video interpretation problem have some unique approaches in both architecture and continuous training refinement, and building a camera first sensor interface will set them apart for a long time. Level 5 autonomy is a holy grail that will never have a distinct barrier where we can know “ok level 5 is finally here,” the only realistic validation may be safety records of staged rollouts through tiers of internal and then user testing. Done properly every flaw will help improve the system, it will become a virtuous cycle. In the mean time the intermediate layers of autonomy for assisted driving are kind of cool.
Oh yeah, and there is also the torque. Don’t forget about the torque.
Movies that were referenced here or otherwise inspired this post:
Back to the Future
Link is for movie stream rental
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