Tonight on State of the Bay, we’ll explore Sonoma County’s Measure J with Phil Barber, staff writer with The Press Democrat. Measure J aims to prohibit concentrated animal feeding operations, or large animal farms in Sonoma County. This contentious initiative could reshape the county’s environmental and economic future. What do farmers and residents stand to gain or lose?
We’ll also hear from Stanford climate scientist Rob Jackson about his new book, Into the Clear Blue Sky: The Path to Restoring Our Atmosphere, and the reasons he remains hopeful despite the climate crisis.
Later, we’ll talk with New York Times reporters Kate Conger and Ryan Mac, co-authors of Character Limit: How Elon Musk Destroyed Twitter. What has Musk’s takeover meant for free speech and the future of social media?
Tune in at 91.7 FM in the San Francisco Bay Area or stream live tonight at 6pm PT. What comments or questions do you have for our guests? Call 866-798-TALK to join the conversation!
Now that Elon Musk has purchased Twitter with plans to take the company private, what are the potential consequences for the fight against climate change, the crucial issue of our time? Like him or not, the Tesla CEO has arguably been the most impactful private industry actor revolutionizing clean technology. Will the purchase affect his work on clean technology?
It would be hard to overstate Musk’s value to the global decarbonization effort. His company Tesla Motors, guided by his relentless and innovative vision, has helped revolutionize the automobile industry, completely transforming it in the face of legacy automakers who made only a token effort on electric vehicles at best for decades. Now they face extinction from their inability to embrace change. Given the transportation’s sector outsized role in contributing to climate change, Musk’s role in reshaping this industry has helped give the world a fighting to chance to avoid the worst of climate impacts.
As if that’s not enough, Tesla’s work on electric vehicles has also vastly accelerated energy storage deployment of lithium ion batteries, which are central to decarbonizing the electric grid along with intermittent renewables. What’s more, Tesla now has the promise to dramatically scale up heat pumps, an important all-electric means of heating and cooling spaces. The company has improved upon them for use in vehicles, with enormous upside for expansion to buildings.
And not to mention Tesla also has a solar division. Though it has admittedly languished since Musk purchased Solar City from his cousin a few years ago, in the long run solar panels pair perfectly with home battery storage and electric vehicles for consumers.
But all of that progress could be undermined going forward by Musk’s purchase of Twitter. The specific risk for the climate change fight is that Musk might become “distracted” running Twitter (i.e. absent at critical times, with his mental energy no longer devoted to providing critical vision and direction for the company, especially since he already runs a space rocket and tunneling company). If that happens, could Tesla lose its competitive edge?
Perhaps worse, Musk’s deal to take Twitter private is heavily leveraged, and his Tesla stock provides much of the collateral. If Twitter starts to sputter (the company lost $493 million last year, and Musk himself has acknowledged that this purchase is not about making money) and Musk defaults or has to sell, will that devalue Tesla stock, depriving that company of capital for its much-needed global expansion?
On the upside, given his track record, we could assume that Musk has the potential to work some magic for a social media site plagued by controversies over free speech and how it handles misinformation. If Musk can instill more confidence among social media users across the political spectrum in Twitter, while improving debates that counter climate misinformation, perhaps Twitter can be a force for positive climate education. But given the partisan entrenchment of views on both climate policy and science, this seems unlikely to occur.
If by some miracle Musk can turn Twitter into a cash cow, then another upside is that his additional resulting wealth could help bolster not only his proven companies like Tesla but potentially provide him extra funds to invest in new clean tech start-ups that could help reduce emissions in other industries. You never know.
On balance, a better Twitter could be a positive force for society. But given Musk’s key role in the climate fight, it’s hard to see the upside for the critical clean technology we need to reduce emissions and stave off the worst of climate change.
Of course, Musk is free to do what he wants with his billions. And he’s already arguably contributed more to the climate fight than any other company leader. But in the long run, a fight over social media won’t matter much if the world doesn’t get a handle on reducing greenhouse gas emissions.
As I began researching the history of the Los Angeles Metro Rail system for my 2014 book Railtown, one particular aspect of the rail transit story shocked me. No, it wasn’t the petty political squabbles, short-sighted civic leadership, or selfish parochialism that slowed, weakened and sometimes stymied the development of a functional rail system in Los Angeles. It was the shocking price tag of building rail transit — particularly tunneling under busy city streets — and the absurd amount of time (decades in some cases) to dig tunnels that more than a century ago were done in a fraction of the time it takes today.
Like the rest of the United States, Los Angeles suffers from exorbitant costs and delays with tunneling. The 1.9 mile Regional Connector light rail tunnel under downtown, for example, will cost almost $1.7 billion and take at least 8 years to complete. Nationwide, as transit expert Alon Levy has documented, tunneling costs are out of whack even compared to other developed nations, with New York City’s $2.6 billion-per-mile Second Avenue subway as a particularly gruesome transit horror story.
So I was intrigued this past December when I learned that Elon Musk’s Boring Company was unveiling a demonstration tunnel in Hawthorne, California, that could be built quickly and at a fraction of the cost. How cheap? 1.14-mile for just $10 million, with potential long-term improvements in speed of up to 15 times over the current rate.
Many urbanists sneered, deriding the tunnel as nothing more than a sewer pipe and mocking the idea of a “tunnel for Teslas” as simply recreating the failed surface roadway patterns of the present — or worse, catering to the wealthy by allowing them to avoid the congestion caused by the plebeians above.
Many of these same urbanists already resented Musk for his work with Tesla, a company which promotes a vehicle technology that they rightly identify as destroying our urban fabric, while he also (ironically) works to remove one of the arguments against cars by eliminating their tailpipe pollution.
But what if Musk and his rocket scientists from SpaceX really could bring down the cost and time of tunneling? Imagine the transit projects that could ensue. I’ll offer four, just here in California alone:
- A subway under Wilshire Boulevard in Los Angeles, the densest corridor west of the Mississippi, while Metro, the public agency currently trying to build one, is mired in a decade-long, multi-billion dollar slog.
- A subway connecting West L.A. with Sherman Oaks and the San Fernando Valley underneath the dreaded Sepulveda Pass and the freeway parking lot known as “The 405.”
- A second Bay crossing connecting Oakland and San Francisco to address congestion on BART and possibly allow one-seat train service from San Francisco to Sacramento.
- A tunnel connecting San Francisco to Los Angeles and San Diego, completing the dream of the flailing high speed rail project.
Those four projects alone would make any California urbanist happy. Yet how seriously can we take the Boring Company’s claims regarding decreased tunneling costs and time?
I took a tour of the test tunnel in Hawthorne last month to try to gain more clarity on how the company is reducing tunnel costs. Three things stood out:
- The Dirt. Believe it or not, what to do with the dirt that comes out of tunnels is a big limiting factor. I heard this first-hand from the tunneling experts working on the Regional Connector project under downtown Los Angeles. Yet the Boring Company may have found something simple and innovative to do with that dirt: turn them into functional bricks. To prove their point, they built a Monty Python-style tower out of the bricks on site. If the bricks can be given away for free, it will greatly reduce costs. If they can sell the bricks for use in things like sound walls, they say they could actually make money on the tunnel (see the picture above and video below of the dirt brick-making process).
- Private funding incentives. The Boring Company is envisioning a privately funded network of tunnels throughout California and beyond. They are not necessarily contemplating bidding on large public sector contracts. As a result, the company appears to have incentives to cut costs in ways that some of the few big tunneling companies competing for select large public contracts may not. As an example, the company can save costs simply in terms of where they manufacture the tunnel’s concrete segments relative to the tunnel, a cost-saving step that they say the big tunneling contractors aren’t financially motivated to take.
- Lots of little things. There appears to be no one single leap forward with the Boring Company machine. But instead, the company’s leaders say they’ve managed a series of smaller innovations that combined together could help reduce the costs dramatically. Perhaps most significantly, the tunnel bore has a smaller diameter than many rail tunnels because they don’t need the wiring and infrastructure that a train needs, but it’s still large enough to fit a vehicle with the carrying capacity of a subway train. Their vision is to run battery-powered, autonomous vehicle platforms in the tunnels, rather than hard wire expensive rail cars. It’s a vision of where technology is heading that could eventually lead to existing rail transit being converted to autonomous, battery-powered, platooning shuttles, which could carry the same passengers as rail but for a fraction of the capital and operating costs.
In any event, we’ll soon see if these company claims are accurate, as the Boring Company appears ready to work on a tunnel under the Las Vegas convention center soon.
And while urbanists fret about the potential for expanded subterranean capacity for solo drivers, there’s no reason that the technology would only be employed for that use and couldn’t scale to the level of current public rail transit. The company sees Model X battery-powered platforms seating between 16 and 32 passengers traveling up to 165 miles per hour through LED-lit tunnels. And with five boring machines in action, they think they could reach San Francisco in just a year. That vision — though of private and not public transit — would only bolster urbanist goals of car-free living in more dense, transit-oriented communities.
A big limiting factor though, beyond the technology, may be permitting. Environmental review under the California Environmental Quality Act (CEQA) may slow this deployment. Under the law, permitting agencies will have to study and mitigate environmental impacts ranging from paleontology to induced land use changes and traffic at the surface entry points to the tunnel. We’ll see how that process plays out, if the Boring Company starts moving forward on a project in California.
But if Musk and his crew have actually solved the technology and cost problem of tunneling, they will have given transit backers throughout the United States and beyond a big reason to celebrate. Because a revolution in tunneling is a pipe dream worth pursuing in our increasingly urban world.
Short answer: no. At least not the way they’re currently presented, as a single-track option for private vehicles with solo drivers. It’s the equivalent of building new roads on the surface: once you build them, traffic quickly increases to fill them.
However, if the tunnels improve their efficiency by squeezing more people into the vehicles, such as through shared rides or right-sized “pods” for individuals, then Musk’s tunnels could provide a significant benefit. But of course at that point they start to look exactly like a subway car, only with the cars replaced by Teslas.
Perhaps for this reason, many transit advocates are heaping scorn on Musk’s plan. They were also predisposed to resent Musk personally because he has criticized public transit in the past and has revolutionized passenger vehicles through battery electric technology, which some transit advocates mistakenly view as a threat to political support for expanding transit.
For my part, I don’t think it matters if Musk’s plan fails, since it’s a completely private venture. And if it succeeds, the public will benefit in multiple ways: from improved tunneling technology to new capacity to move people (albeit only those who can afford it) faster across town.
But I do have some “red lines” for my overall indifference to the venture:
- No public dollars should be spent on the project, unless there are commensurate public benefits. Essentially, the tunnels would have to be affordable to all and accessible to those who can’t afford a vehicle (i.e. function like traditional public transit).
- No public giveaways in terms of subsurface land rights. The tunnels should have to compete on a level playing field with public transit tunnels, in terms of these types of land costs. I’m otherwise okay with waiving some environmental review (i.e. transportation, aesthetic, and parking impacts, among others), as I would be with any other public transit tunnel.
- The tunnels should not interfere with public transit tunnels. That means the tunneling shouldn’t prevent future subway tunnel extensions, and the ingress and egress for the tunnels shouldn’t impede bus lanes and pedestrian access to transit, as well as critical transit-oriented development.
As long as the venture doesn’t cross those lines, I wish The Boring Company and Musk success and will hope for positive spillover for the general public. And I also wish that they fulfill the original vision of right-sized, shared vehicles in the tunnel that increase efficient use of space and decrease incentives for solo driving.
Given Musk’s commitment to averting climate change, that’s a vision I think he’d support.
The Boring Company Loop system pic.twitter.com/xVpDHzZKXB
— The Boring Company (@boringcompany) December 19, 2018
Elon Musk may have just disrupted another industry. In this case, it’s transportation tunneling. His Boring Company last night unveiled a 1.14-mile “proof-of-concept tunnel” in Hawthorne at a cost of $10 million (see Twitter video above).
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As Alissa Walker described in Curbed LA after attending the launch, the tunnel features a track for a Tesla to drive underground, as a sort of subway transit for private vehicles. While the tunnel is getting a lot of press, transit advocates have concerns about how effective this type of private transport might be.
But perhaps more important is Musk’s potentially significant advancement in tunneling technology, which could offer major benefits for subway tunneling everywhere (and maybe even please those same pro-transit critics).
Bloomberg summarized the engineering progress:
Musk said that the advances his team has made in tunneling technology would increase the speed of boring underground by up to 15 times. The company will do that largely through tripling the power of the drill itself, he said, and through logistical interventions such as building segmented reinforcements in the tunnel walls while continuing to drill.
Given the numbers that Musk reported last night, he may have netted significant results, with a relatively minuscule price of $10 million for 1.14 miles.
By comparison, recent per mile tunneling costs around the country have been staggeringly high, as Alon Levy noted in CityLab. For example, New York City’s recent Second Avenue Subway clocked in at an astounding $2.6 billion per mile. San Francisco’s central subway and Los Angeles’s regional connector subways are not much better, at $920 million per mile, while the L.A. Purple Line subway may cost $800 million per mile. That means these major transit system tunnels are costing as much as 100 times more than Musk’s prototype tunnel.
But are we comparing apples to apples? Not really. The costs described above include much larger diameter tunnels, as well as station “boxes,” utility relocation, ventilation, and safety features, among others. As Alon Levy calculated back in 2017, even in a best-case scenario with cheaper “cut and cover” station boxes, U.S. subway tunneling would likely still cost $500-600 million per km ($800-$960 per mile). Musk’s tunnel by contrast is quite bare bones, with no station boxes or complex systems and space for only one vehicle.
For a better comparison, we can look to Laura Nelson’s reported numbers for the Purple Line heavy rail extension in the Los Angeles Times. She described back in June the tunneling contract for the 2.59-mile extension from Century City to West Los Angeles, which is projected to cost $3.59 billion total. But the actual tunneling contract is smaller: $410-million for a four-year design and construction contract to Tutor Perini. So the costs just for tunneling (assuming these numbers will be accurate, which is doubtful based on past experience) will be $158 million per mile, not including land acquisition and moving utility lines.
But that $158 million per mile is still 15 times the cost of Musk’s Boring Company tunnel.
Ultimately, more analysis and investigation will be needed to understand how the costs for Musk’s single-track tunnel might compare to a large-scale, twin-bore subway tunnel with all the safety, lighting, and ventilation features that we see in big urban transit projects.
But the early numbers indicate that Musk may have just achieved a significant breakthrough in reduced tunneling costs, with major benefits for transit everywhere.
Transit advocates never really liked Elon Musk anyway. The billionaire entrepreneur behind Tesla has almost single-handedly made electric vehicles cool and desirable. But as I’ve blogged before, the cleaner cars become, the more that progress undermines one of the crucial arguments in favor of transit: that it can reduce air pollution as an alternative to dirty cars. On top of that, many transit advocates simply hate cars. So the idea that cars can now be an environmental “good” (or at least dramatically less bad for air pollution) is hard to stomach (of course, electric vehicles also include buses).
The resentment has popped up numerous times on social media and pro-transit articles, particularly around Musk’s plan for tunneling underneath Los Angeles. The plan seems to mimic existing publicly funded rail transit lines, as Curbed LA described. But instead of transit, the tunnels would feature private vehicles and larger shuttles with “between 8 and 16 passengers” that would ferry through the tunnels on sled-like “electric skates” up to 150 miles per hour.
Transit advocates largely found the vehicle-focused proposal threatening and referred to it as a waste of money that will not solve congestion and likely only induce more of it. They also noted it conveniently serves Musk’s house and office, insinuating that he’s building it to enrich himself.
The tension then boiled over when Musk recently went on a rant against transit:
“There is this premise that good things must be somehow painful. I think public transport is painful. It sucks. Why do you want to get on something with a lot of other people, that doesn’t leave where you want it to leave, doesn’t start where you want it to start, doesn’t end where you want it to end? And it doesn’t go all the time. It’s a pain in the ass. That’s why everyone doesn’t like it. And there’s like a bunch of random strangers, one of who might be a serial killer, OK, great. And so that’s why people like individualized transport, that goes where you want, when you want.”
Transit consultant and persistent Musk critic Jarrett Walker attacked in kind:
In cities, @elonmusk‘s hatred of sharing space with strangers is a luxury (or pathology) that only the rich can afford. Letting him design cities is the essence of elite projection. https://t.co/gtSVgPkfPo https://t.co/CmCpoIJ5NE
— Jarrett Walker (@humantransit) December 14, 2017
Musk responded on Twitter by calling Walker a “sanctimonious idiot.” Transit advocates in turn had Walker’s back, questioning whether Musk is an “elitist jerk” and generally amping up criticism of his urban mobility vision.
For my part, I question why transit advocates feel so threatened by Musk’s tunneling plans. First and foremost, at this point it doesn’t involve any public dollars. If Musk wants to spend his own money on an ultimately doomed plan to reduce traffic, then what’s the harm to the public? And if he’s successful, why would it be any more of a threat to transit than the current regime of publicly funded roads and highways? And isn’t there the possibility that his work could lead to innovations in tunneling and transport that might actually benefit transit and related development?
I’d also note that it’s somewhat unclear what Musk truly intends with these tunnels. They might end up being more practical for Musk’s beloved “hyperloop” idea, which in turn might be better suited for goods movement rather than people movement, given the potential danger and risk of nausea in the tubes.
Finally, I think it’s worth acknowledging that while Musk’s comments about public transit are inaccurate (not ‘everyone’ hates riding transit), he speaks for a large percentage of people, like it or not. Check out Eric Jaffe’s article on the subject from a few years ago:
Every transit advocate knows this timeless Onion headline: “98 Percent Of U.S. Commuters Favor Public Transportation For Others.” But the underlying truth that makes this line so funny also makes it a little concerning: enthusiasm for public transportation far, far outweighs the actual use of it. Last week, for instance, the American Public Transportation Association reported that 74 percent of people support more mass transit spending. But only 5 percent of commuters travel by mass transit. This support, in other words, is largely for others.
Public transit, particularly buses, do not poll well or have a very positive image among vast segments of the public, as I’m guessing a transit consultant like Walker knows. The recent nationwide ridership dip proves the point to some extent, as former transit riders are now choosing more convenient options like Uber and Lyft (or purchasing a vehicle or driving one more frequently).
For multiple reasons, we should all want public transit to succeed: it can foster more sustainable, transit-oriented development, it can provide people of all incomes with car-free travel options and therefore reduce pollution and sprawl, and it can enhance quality of life by supporting dynamic, equitable, community-oriented neighborhoods.
But many people have a negative view of transit, and not without good reason. Musk not only speaks for them, he’s speaking to them. And as long as that public attitude and its underlying causes persist, attacking Musk is at best a waste of time and at worst a failure to address some core challenges facing transit.
Begun, the smear wars have
Anti-clean technology forces, emboldened by Trump’s electoral college win, are eager to kill federal support for electric vehicles and solar power. Critical to the effort is a smear campaign directed at Tesla CEO Elon Musk, especially now that the company has merged with SolarCity. As EcoWatch uncovered:
Elon Musk is being targeted by the conservative political action committee, Citizens for the Republic. The group’s so-called Sunlight Project is behind an incendiary lobbying campaign and website called, “Stop Elon Musk from Failing Again,” with a mission of divesting the Tesla/SpaceX/SolarCity boss from federal clean energy subsidies.
The group cites a misleading Los Angeles Times article stating that Tesla is set to receive $4.9 billion in government subsidies. As Musk described, the figure is derived from “adding up everything that’s ever happened and including things that will take the next 20 years” and doesn’t compare with subsidies for fossil fuels.
It’s not clear who’s funding the effort, but right-wing ideologues are definitely spearheading it:
The Drive‘s Liane Yvkoff also reported that Citizens for the Republic’s board members Craig Shirley and Diane Banister are partners of the right-wing public relations firm Shirley and Banister Public Affairs, that has represented the National Rifle Association, commentator Ann Coulter and the Tea Party Patriots. Posts on “Stop Elon Musk From Failing” are authored by someone called “stopelon,” the same user name on Alt Left Watch, which also happens to be managed by the PR company.
But is it too late to stop the momentum for clean technologies like EVs? As the Detroit Free Press reports, EV sales in places like California have been accelerating due to state policies, while global investment in EVs continues:
These are global companies, and China and Europe are moving forward with their incentives for non-gas-burning vehicles. Whatever the Trump administration does, the rest of the world won’t abandon the Paris Agreement to reduce the global growth of carbon emissions.
“The industry has made a massive investment in electric vehicles,” [Dan Sperling, founding director of the University of California Davis Institute for Transportation Studies] said. “While some would prefer to slow it down, most companies are going to continue along that path.”
And Bloomberg as well notes the global investment in alternatives to gas-powered vehicles:
Gasoline has been the world’s choice to power automobiles. From the 1950s onward, when Henry Ford’s dream that every middle-class American could own a car became reality, gas stations sprung up next to drive-through restaurants and strip malls and transformed the landscape of America and economies across the globe.
Now, however, car companies — most obviously Tesla, but also incumbents such as General Motors Co., BMW AG and Nissan Motor Co. — are putting their money, and reputations, behind electric vehicles. With technology improving — especially for batteries — prices are falling. Tax breaks, particularly in China, are helping sales.
Meanwhile, as Salon writes, other automakers are following Tesla’s playbook of investing in batteries as building energy storage and not just vehicle transport.
So it may be too late to stop the momentum behind battery price declines and improved options for EVs. But this smear campaign is an attempt to turn Musk into the bogeyman of clean tech and rally the right to ditch the federal tax credits. Advocates should counter by debunking the claims and trumpeting the domestic economic and job benefits of these technologies.
In Fortune, former Tesla VP Cristiano Carlutti dishes on the company and the upcoming Model 3 (Tesla’s first mass-market EV, due in 2017):
As far as the downsides of the Tesla Model 3, let’s try to look at things from a different perspective: the biggest downside of Model 3 in my opinion is that it doesn’t exist yet. Lots of things can change until the launch date and I would assume that, when it was presented earlier this year, Model 3 was probably nowhere near a decent stage of development.
In order to understand this perspective, you have to take a different look at the way the company operates: in my opinion, it’s fundamentally a very focused marketing machine that until now has been focused on selling shares, with car sales instrumental to that. Before some fans attack me because of this comment, let me tell you that… it was the right thing to do!
In other words, Elon perfectly knew since the beginning that he would need a massive amount of money to become a car OEM and that, in order to raise that money, he had to create and sustain excitement in investors even more than in clients. Another way to look at it is that at this prices, the purchase of Tesla stock is more irrational than the purchase of a Model S: the latter is a very good car, competitive in its market, while the stock is more of a bet (or a gamble) on future dividends that nobody knows if they will ever appear. Car sales and car fans are just instrumental to raise the money Tesla needs to reach the point where it will be self-sustainable: the gamble is that financial markets keep drinking the company’s kool-aid at least until the company becomes self-sustainable. If they stop drinking it too soon, it will be game over and an historical failure, if believers sustain the company long enough, it will be a masterpiece of entrepreneurship and a tremendous success.
A lot is at stake with the future of Tesla. The company is, in my view, the most important private sector clean technology purveyor out there. Elon Musk has almost single-handedly pushed EVs to the forefront of the public imagination, spurring other automakers to follow suit. He also is betting big on energy storage and its marriage with solar PV, which will be essential to decarbonizing the grid. Combined with electric transportation, Tesla’s technology deployment promises to help the world decarbonize at a much greater rate than we otherwise would.
I don’t want to overstate it, but Tesla is making a strong claim to being in position to quite literally save the world (at least from out-of-control climate change).
So we need the company to succeed and raise the capital it needs for the deployment it envisions. If Carlutti is to be believed, let’s hope Musk can keep stoking the imagination of investors — and more importantly, that he and his team can deliver on their big promise with the Model 3. They’ll need a car that meets expectations at the right price and delivery time, without some of the quality issues plaguing the Model S.
It’s possible to do, but not certain. Reason for us all to be nervously optimistic.
The company is moving way beyond this kind of product.
I’m back from vacation, and while a lot has happened since I was away, the big story seems to be the unveiling of Tesla’s 2.0 master plan — at least on the environment and energy front. The key stand-outs for me are:
- The diversity of transportation modes that Tesla wants to electrify: It’s not just about passenger vehicles anymore, as Tesla wants to build buses and cargo trucks, too. And of course, the expansion into pickup trucks and compact SUVs are noteworthy.
- Autonomous driving will take a while: Musk writes that while the technology is being tested, regulatory policies are still way behind, especially taking into account all the jurisdictions around the globe. He anticipates another 5 years or so before fully autonomous vehicles are allowed everywhere.
- The big play on residential and commercial batteries for solar: the new acquisition of SolarCity has solidified this approach, but the master plan is clearly betting on solar incentives changing across the country. Right now it’s a pretty good deal to get rooftop solar in most places, but there are no incentives to capture surplus solar in a battery as long as customers are getting full retail credit from their utility for it. Musk seems to betting that retrenching these incentives, as Nevada and Hawaii have done, will become the norm and will therefor provide an opportunity for batteries. It could also set up Tesla as a bit of an opposition force to traditional solar installers in these state battles, as those companies generally don’t want solar incentives shifted to batteries.
I’ll have more thoughts soon in particular on the Tesla play for buses and transit. But in the meantime, Musk has given the public a lot to chew on.
Let’s play monopoly
As has been widely reported, Tesla is making moves to buy solar installer SolarCity. The two companies have family relations, with Elon Musk’s cousins running SolarCity and with Musk serving as chairman of the board, in addition to his role running Tesla.
Does the deal make sense? At a basic level, yes (although doubts persist about the short-term economics). Tesla is already distributing its batteries through SolarCity, and many Tesla customers will be interested in solar, once their electricity bill goes up as they charge at home. So there are obvious synergies: — Tesla can advertise for SolarCity in their showrooms for example, and SolarCity can promote Tesla vehicles and batteries.
But in the long term, Musk is aiming for a monopoly on a magnitude we’ve rarely if ever seen before, outside of the old company town. Essentially, Tesla seeks to own your transportation and home energy, all in one corporate clean energy “ecosystem.” It will become your utility, car company, and gas station, all in one — only without the emissions of our current system.
Musk is a friend and former business partner of Peter Thiel, the famed PayPal investor who preaches the virtues of such monopolies. Thiel essentially argues that if you’re an entrepreneur starting a business that isn’t aimed at becoming a monopoly, you’re basically wasting your time. Think Google and Amazon.
It’s hard to argue with the pure business logic of that approach (leaving aside the traditional arguments against monopolies). And now Musk seems to be following through on that approach with this takeover effort — a monopoly pattern that already started with Tesla’s decision to own its own charging network, rather than let third party companies take over, and to bypass auto dealers in favor of direct sales. At least from an environmental perspective, it would certainly herald a big win.
But will it work? Not in the short term. SolarCity will not be replacing electric utilities anytime soon. And batteries plus solar will not allow most people to leave the grid entirely. You simply can’t generate enough power or store it to cover most people’s needs throughout the year. And many people don’t own their own homes or have their own rooftops to make this possible.
But two trends could change that dynamic. First, technologies can improve, leading to more powerful solar panels and cheaper, bigger batteries. New technologies, such as cheap fuel cells, could also provide the additional generation needed to fill the solar gaps during the nighttime and winter. These developments could allow Tesla/SolarCity to become the ultimate monopoly it dreams of, particularly if it can operate at a neighborhood scale for those without dedicated rooftops.
Second, Tesla/SolarCity could buy up other companies to fill the gaps, such as energy efficiency companies and different renewable generators, like urban wind turbine manufacturers.
All in all, it’s a big gamble but with a very logical long-term goal. In the short term, the co-marketing and co-distribution opportunities could cover the costs of the merger. And in the long term, it has the outside chance of turning this country into the United States of Tesla, whether we like it or not.
