Inside Elon Musk's newest plan to transform energy and transportation

Inside Elon Musk's newest plan to transform energy and transportation

A Tesla showroom in Washington, D.C.
ShutterstockPavel L Photo and Video
A Tesla showroom in Washington, D.C., in 2014.

Tesla Motors CEO Elon Musk has outlined his overarching vision for the electric car company, one which appears to cover the breadth of the sustainable energy chain — from generation and storage, to electrification of the entire vehicle fleet and the sharing economy.

In essence, the entrepreneur sees Tesla as consolidating all parts of that chain into a single company, and he wants that company to blaze the trail for a more sustainable future.

Musk's motivation, he said, is "accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good," adding that sustainability "matters for everyone."

The "Master Plan" was posted last week as a blog on the Tesla website after first being teased on Musk's Twitter page earlier this month. Dubbed "Master Plan, Part Deux," the strategy extends far beyond a corporate vision for Tesla, sketching out a plan to accelerate the delivery of a sustainable world.

"By definition, we must at some point achieve a sustainable energy economy or we will run out of fossil fuels to burn and civilization will collapse," Musk wrote. "Given that we must get off fossil fuels anyway and that virtually all scientists agree that dramatically increasing atmospheric and oceanic carbon levels is insane, the faster we achieve sustainability the better."

It sounds staggeringly ambitious, but in many ways, the plan is not so outlandish  it's a fairly straightforward, logical next step for an electric car company currently seeking to add a renewable energy firm to its ranks in the form of SolarCity, of which Musk is also the chairman.

Part one of Tesla's Master Plan, published 10 years ago, set out how the company first would produce high-end electric cars, then develop more affordable models — a plan Musk described as "now in the final stages of completion" following the unveiling of the Model 3 car earlier this year.

"Part Deux" builds on that starting point, envisaging how Musk expects Tesla and SolarCity to consolidate, diversify and grow in the rapidly changing energy and automotive markets.

Energy

The first step of the new plan is integrating energy generation and storage through Tesla's proposed $2.8 billion acquisition of SolarCity, a move Musk has previously described as a "no brainer." The planned deal has not been universally welcomed, with some analysts questioning whether an acquisition could distract Tesla from its demanding plans to scale up production capacity.

Nevertheless, SolarCity produces energy and Tesla makes powerful batteries to store that energy, and as such Musk wants to deliver solar roof panels which include batteries in order to "empower the individual as their own utility, and then scale that throughout the world — one ordering experience, one installation, one service contract, one phone app."

He suggested Tesla and SolarCity's current status as separate companies is largely an "accident of history" which has created barriers to achieving the necessary levels of integration between solar, energy storage and electric vehicle technologies.

"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," the plan stated.

Transportation

Secondly, Tesla plans to vastly expand its electric vehicle range beyond sports and passenger cars to also include pick-up trucks, heavy-duty trucks and even public transport, or "high passenger-density urban transport," as Musk put it.

Unsurprisingly, the plan says the key to expanding Tesla's product line will be scaling up the production volume in its factories as soon as possible. "That is why Tesla engineering has transitioned to focus heavily on designing the machine that makes the machine — turning the factory itself into a product," Musk explained.

But he also reveals electric heavy-duty trucks and public buses are in the early stages of development at Tesla and "should be ready for unveiling next year."

The Tesla Semi truck, Musk said, will deliver a "substantial reduction in the cost of cargo transport," which could revolutionize the freight industry. But arguably more interesting is Tesla's plan to move into public transport by developing what sounds like a driverless electric bus, with Musk envisaging bus drivers eventually becoming "fleet managers" as autonomy in transport becomes more common.

Autonomy would eliminate the need for a traditional bus driver and the proposed "bus" apparently would match its acceleration and braking to other vehicles on the road "thus avoiding the inertial impedance to smooth traffic flow of traditional heavy buses." Moreover, a future Tesla bus would take passengers all the way to their destination, Musk said, and could be summoned not just by phones but also at traditional bus stops.

Self-driving

Autonomy is at the heart of the second part of Tesla's Master Plan, and Musk said that all Tesla vehicles will have the hardware necessary to be fully self-driving "with fail-operational capability, meaning that any given system in your car could break and your car will still drive itself safely."

Much has been made about safety concerns regarding the beta autopilot technology in the Tesla Model S following the first reported death of a driver in autopilot mode recently. But Musk argued that autonomous driving is already much safer than a person driving themselves, so it would be "morally reprehensible" to delay further rollout of the software "simply for fear of bad press or some mercantile calculation of legal liability."

He believes that true self-driving will achieve worldwide regulatory approval once 6 billion miles have been driven via this method, with the current rate towards that figure at around 3 million each day.

Sharing economy

Once self-driving is approved by regulators, the plan is then for Tesla to move into the sharing economy.

Reliable autonomous driving would allow users to summon their Tesla vehicle to pick them up "from pretty much anywhere." Intriguingly, Musk sees this functionality leading to a scenario where Tesla owners can add their car to the "Tesla shared fleet list," effectively hiring out their cars for others to use.

By adding Tesla vehicles to the shared fleet, Musk said owners will be able to earn money from their car being used by those subscribed to the fleet service, "significantly offsetting and at times potentially exceeding the monthly loan or lease cost" in the process.

Essentially, you would own a self-driving car which you could then make available through a taxi app, which according to Musk "dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla vehicle." 

And if there are not enough Tesla owners in a city to make the taxi service work, the company will step in. "In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are," Musk wrote.

The second part of the Tesla Master Plan is, like the original Master Plan, actually quite simple: the creation of a single company which generates and stores affordable renewable energy that can be used by all kinds of electric road vehicles, which will drive autonomously and be shared between users.

It is a vision that promises to slash carbon emissions from the energy and transport sectors and bring an end to chronic air pollution in urban centres. 

It is also a vision which looks increasingly technically feasible. Despite the bold ambition and some of the grandstanding language in the plan, few ideas in it are on their own particularly novel and in many cases, numerous companies are working on similar technologies. What is unique about Tesla, though, is Musk's vision of a single conglomerate which brings all these ideas and services under one umbrella.

It will be fascinating to see if in another 10 years' time Tesla's Master Plan, Part Deux has been delivered as effectively as the company's first Master Plan.

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