How will Tesla enable sustainable transportation?
disclaimer: written by a TSLA shareholder. Opinion. Not investment advice. Do your own research. All information here comes from publicly available sources or is speculation / guessing. Please fact check this blog post. (going overboard on the disclaimer after a particularly funny reddit comment).
Tesla has distinguished themselves as a company that builds both software as well as physical products and hardware.
One of the few companies whose mission appears to be sustainability over profit, they continue to innovate and create the best technology, forcing other players in the market to try to keep up.
Tesla’s Big Goals:
Tesla’s number one mission is to accelerate the transition to sustainable energy. Tesla is progressing in a few main areas to achieve this goal:
- produce more affordable electric vehicles
- build systems for energy storage
- be the best at manufacturing
The CEO of Tesla, Elon Musk, has stated how he believes “you have to have a goal”. Following his earlier statement, Elon kept his word – the company’s goals were concisely outlined during the Tesla battery day event this past September.
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Goal 1: Tesla building Affordable Electric Vehicles
Today, less than 1% of the cars on earth (the “global fleet”) are electric. To increase this, Tesla will build a car that anyone can afford. Tesla has announced plans to build a $25,000 electric car.
With what started as a luxury, high-end car, Tesla is working towards reaching economies of scale to move towards high volume production of a car for the mass market.
Once Tesla reaches full-scale manufacturing and production, Tesla wants to produce and sell 20 million cars per year, enough to replace 1% of the gasoline cars with electric vehicles.
To achieve these numbers, Tesla must increase production of their cars by 40X compared to their 2020 manufacturing numbers.
Elon has hypothesized that internal combustion engine industry WILL NOT EXIST in the future, aside from perhaps in museums and hobbyists.
Autonomy & self-driving cars:
Creating self-driving cars is not directly related to reducing carbon emissions, yet it does provide a few solutions that will make buying a Tesla an extremely attractive purchase:
- Safety. Autopilot, designed to avoid collisions, has the potential to save the lives of at least 40,000 people per year that die in automobile fatalities. With traditional automobiles, accident probability is 2.1 collisions per million miles. With Tesla autopilot, the probability is 0.3 collisions per million miles.
- Entertainment will be important in the car once human attention is no longer just being used to drive. This could include video games (the vehicles already have a number of games available), socialization, reading, working, etc.
It is hard to say just how valuable autonomy is to each customer, but the parameters are as follows: Since autonomy is valuable to cars at an individual level, the value of autonomy for Tesla = value of each car * value of autonomy per vehicle.
Full-self-driving technology BETA version feels like it is close to being released to the market after seeing a few of the CEO’s recent tweets on the subject.
If the FSV features help the company sell more cars, then the company is that much closer to achieving its mission of an automobile economy based on sustainable energy.
Goal 2: Energy Storage – Tesla Batteries, etc.
To be truly sustainable, energy must be accessible and affordable to everyone. Tesla plans to make vehicles and grid batteries that cost less. This includes reducing the cost of energy per kilowatt hour by one half.
At Tesla battery day, the heads of the company mentioned that reducing the cost per kilowatt hour of batteries is not happening fast enough. This was demonstrated by showing the curve of cost per kilowatt hour of batteries and the slow rate of improvement. Its flattening out, as shown in the photo above.
Tesla is al re-engineering the battery cell design, manufacturing, and production processes to create more affordable cells.
- Tesla batteries are cylindrical, and newer versions are larger (bigger cylinder cells cost less)
- Tab length in batteries: older batteries had tabs located at anode and cathode ends, which added to the distance an electron has to travel through a battery. Tesla got rid of tabs, so the electron only has to travel a shorter distance, making them more efficient.
- Battery filler is not only flame retardant, and it is a structural adhesive. Glues cells to the top and bottom of the sheet.
- Battery cells are load-bearing, made of steel, dual-purpose as the structure of the car itself. (see below)
- Anode: Tesla uses silicon instead of graphite (graphite is carbon based) for the anode. Silicon is the 2nd most abundant element on Earth, present in Earth’s crust as silicon dioxide, commonly known as sand). Stores 9x more lithium than graphite. Problem with silicon is that it expands in the cells. They use raw metallurgical silicon and design batteries to be able account for expansion.
- Cathode: the cathode holds the lithium and retains its structure. Nickel is the cheapest and has the highest energy density, but Nickel presents challenges with chemical stability. Cobalt is more expensive, yet more stable than Nickel. For the most energy intensive batteries (like the semi-truck or the cyber-truck) they will use full nickel. The goal is maximizing nickel and gradually removing cobalt from battery manufacturing. The company has added coatings and dopants to stabilize nickel in the batteries. Cathode materials are purchased and priced based on the London metal exchange (LME).
- Lithium: lithium is plentiful in the US, Tesla already has access to enough for every car (once they are building 20M+ per year). The company mines clay containing lithium in areas of the US where the ground has high concentrations. They extract the lithium via an environmentally friendly process involving table salt NaCl. After mixing it with salt and water, the lithium is extracted because lithium bonds extremely strongly to Cl-. The lithium effectively knocks off the sodium atoms, and we are left with LiCl salt, which the company can use for their battery manufacturing.
- The company will eventually recycle materials in the used batteries to make new batteries.
Goal 3: Manufacturing
In addition to the number one goal of accelerating the adoption of sustainable energy, Tesla wants to be the best at manufacturing. Elon stated Tesla needs to be “better than anyone at manufacturing”. The company has created a vertically-integrated car from the ground up. They build everything in house, outsourcing little of the process.
The remarkable thing being built by Tesla is actually not the car, but how. The way the company built the car, with heavily automated robotic factories is impressive.
Tesla is building 4 types of products for consumers:
- Energy generation (solar panels / solar roof)
- Energy storage (Tesla Powercell) – customers want the freedom to charge at home. The Tesla Powercell product allows people to do so.
- Electric vehicles (cars and trucks)
- Automated factories. The company has engineered machines to build the car, supporting the creation of each product. While these three products are very much in the foreground, the importance of the robotic factory in the background has given Tesla a wide competitive advantage that will be extremely difficult to copy.
- Sustainable factories include car factories built with solar.
- Factory close to consumers (on each continent) shortens the supply chain, quicker delivery to customers. Factory in Fremont California, Nevada, Austin TX, Berlin, Shanghai China.
- Tesla is the only American car company with manufacturing facilities in China.
- Largest casting machine ever to make the front and rear casting in one piece.
The ability to do more with less is an important strategy in engineering for elegance.
The company focuses more on metrics within the context of product improvements and manufacturing than purely financial areas. As of Battery day, the company reported:
- Reducing number of parts in the car: now 370 fewer parts.
- Reducing floorspace required in the factory by 35%.
- Ensuring each cubic meter of the factory floor does useful work.
- Stop using cobalt in batteries, mainly use nickel now.
- Materials engineering the frame of the car: Developed their own high-strength casting alloy of aluminum that does not require coating or heat treatment. (Heat treatment historically causes alloys to lose shape)
- Shortening the supply chain for resources: Reducing miles traveled by materials that end up in cathode by 80%.
- 10% mass reduction in the car.
- 14% range increase
- “Electric energy costs are half those of diesel. With fewer systems to maintain, the Tesla Semi provides $200,000+ in fuel savings and a two-year payback period.” – Tesla.com
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- Tesla Battery Day presentation Deck: https://tesla-share.thron.com/content/?id=96ea71cf-8fda-4648-a62c-753af436c3b6&pkey=S1dbei4
- Tesla website
- TSLA 10k / annual report