Why Tesla Wants To Become A Solar Company Now

Image Credit: Getty Images/Ethan Miller
Image Credit: Getty Images/Ethan Miller

The first and perhaps most salient point from Elon Musk’s “Master Plan, Part Deux” was to “create stunning solar roofs with seamlessly integrated battery storage.” While it was laid out as more or less as a bullet point, this is really the thesis that drives this whole Tesla-SolarCity-Powerwall love triangle.

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In “The Secret Tesla Motors Master Plan (just between you and me),” Musk’s post from 2006, he alluded to this goal of achieving solar sustainability, of making the car company eventually more than just a car company. He wrote:

. . . the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution.

Critical to making that happen is an electric car without compromises . . .

Tesla offers a home battery called the Powerwall that charges up using solar panels. Of course it’s very pretty: sleek and minimalistic, just like other Tesla products.

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Image Credit: Tesla
Image Credit: Tesla

The Powerwall is only one of the new developments since the 2006 post. A decade later, Musk’s goals remain the same and here’s how he plans to keep the ball rolling:

Create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility, and then scale that throughout the world. One ordering experience, one installation, one service contact, one phone app.

We can’t do this well if Tesla and SolarCity are different companies, which is why we need to combine and break down the barriers inherent to being separate companies. That they are separate at all, despite similar origins and pursuit of the same overarching goal of sustainable energy, is largely an accident of history. Now that Tesla is ready to scale Powerwall and SolarCity is ready to provide highly differentiated solar, the time has come to bring them together.

Just last month, Tesla announced that it was buying SolarCity, one of the largest solar energy companies in the country. At the time, this was a highly controversial move, because SolarCity’s chairman is... Elon Musk. And SolarCity was founded by... Elon Musk’s cousins. So, if this deal happens, Elon Musk could receive a fat personal payout from Tesla’s resources. It’s totally legal, but investors understandably balked at the idea.

It was also controversial because it seemed like there was a huge jump between installing solar panels and making electric cars that the investors just couldn’t see bridged. Tesla argued that Tesla drivers would make the natural progression from buying the cars to installing solar panels on their homes using SolarCity.

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It looks like Musk is moving forward with that gamble. He wants Tesla to offer even more extensive energy independence services so it can finally achieve world domination under the Tesla Lifestyle Umbrella.

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Just kidding. This diversification is something that a car company, or at least a company that started in cars, has never really done. There are a lot of things nobody knows right now. I don’t believe this is a short, five year plan—this is going to take a while. At least a couple of decades. Musk is laying the groundwork for what he hopes the company will become long-term.

On that note, I think this Musky holy trinity really has a shot at working. It starts with the money. Despite Tesla’s current unprofitability, sales of the upcoming and affordable Model 3 could give Tesla the cash it needs to really get things moving. But that means that it must build the Model 3 at the levels that it says it can: 500,000 cars a year, which is insane.

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At first, I was skeptical about how the Model S was positioned as a luxury item. I didn’t see how its lofty prices could possibly pull in aggressive sales. But holy hell did the thing catch on, and it’s now not only a practical people carrier, it’s also a status symbol. It’s the cool car. You can’t really put a price on that.

After that will come an affordable car from the same sleek and high-tech brand that says I’m trying to save the world and gives a dainty little sniff at the end of the sentence. Those things will sell like hotcakes.

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Also, Musk’s got the timing down. Back in 2006, sustainability just wasn’t as big as it is today. Now, Musk can ride on the fervor of this wave. He helped make sustainability desirable and fashionable. And we all know people respond well to both of those abstractions.

The usual arguments against solar panels are, of course, omnipresent through this whole thing. Arguments like, what about people who live in places where inclement weather is a factor? And people who live in the extreme northern and southern cities where sunlight isn’t prevalent in certain months? Would investing in a Powerwall be worth it then?

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These are questions that Musk will eventually have to tackle if he plans to shift the majority of the world to a solar electric economy. But he’s off to a good start.

Writer at Jalopnik and consumer of many noodles.

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DISCUSSION

Oh it’s more than just this. Tesla is looking to go beyond manufacturing of solar panels and diversify into become a power provider.

First off is the Switch lawsuit.

http://lasvegassun.com/news/2016/jul/…

Switch is suing because when they tried to enact a public measure to leave the grid to receive power from a new solar farm, the PUC sided with NV Energy. So the solar farm still was built, but NOW Switch has to pay a retail markup on kilowatt hours for the same electricity since NV Energy legally inserted themselves as a reseller in order to skim profits.

This also occurs as MGM, Wynn, and now Peppermill in Reno all are pushing to leave the grid and lawsuits are gearing up.

But the tide has turned. This November voters will have the option to enact Deregulation in Nevada, which will rewrite the state constitution and destroy the monopoly NV Energy has over the entire state.

https://ballotpedia.org/Nevada_Energy_…

So with deregulated electricity, the government pushing for green energy, who the hell is going to make all of these solar panels Nevada is going to use? Better yet, what if Solar City switches over from simple manufacturing to becoming their own Utility?

Tesla is going to generate electricity, sell it to people, and manufacture the PV Solar Panels, Power Wall Batteries, and Cars that are all involved in the generation & consumption of that electricity as well.

You watch, Tesla isn’t going to simply be a supplier; they’ll end up as their own Utility. And what a magnificent discount you’ll receive when you bundle all of their products together! How’s that for a diversified portfolio?