EVs Enter The Sweet Spot

An idea whose time has come is unstoppable. 

For a product to go viral, it has to work reliably, be affordable, and bring you joy.  

EVs are entering this sweet spot. They have all three of the major requirements. Battery technology has advanced to allow for long-range driving. The cost for EVs continues to decline even as new features, more range, and performance are added. And EVs are fun! The "EV grin" is a common response to pressing on that accelerator for the first time (or the 1000th time).

In the 2020s, EV will cross the chasm to the mainstream. 

This is the decade of the EV! 

Se7en Ways Legacy Automakers Need To Be Like Tesla To Survive in the 21st Century

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Let's say you are the CEO of a car company (big or small). How can you lead your company to play a pivotal role in the next evolution of personal transportation? How can you take advantage of your existing strengths while developing the prowess and skills that you need in this new age? How do you augment the acumen and managerial skills you already have to become a market leader? How can you help not just your company, but the broader society meet the challenges posed by this massive transition? How do you address issues related to climate, privacy, employment, income equality, and general well-being, among others — while still ensuring success for your enterprise? We'll explore this and more in our list of seven things leaders should think about. 

1. Become accustomed to disruption - The auto industry has always been competitive, but disruption means that plans that have been years in the work may become irrelevant. Automakers are going to have to become agile. Don't fall into the sunk cost fallacy (I'm looking at you hydrogen). 
   
   
2. Software is eating the world - Automobiles are/will be software-driven, whether it's the anti-lock brakes, motors controllers, battery management system, entertainment, or the user interface, it's software-controlled. And you need a full-time dedicated software development team to add more features, fix bugs, and improve things. Today, software is almost an afterthought for most auto OEMs. It is sadly apparent that the software in most cars is piecemeal and outsourced. This needs to be completely flipped on its head. The components of the car need to exist to serve the software and the user experience. Use software-first design! 
   
   
3. Raise your technological acumen - Software is just one of the technologies that legacy automakers are sorely missing. It's time to grow a battery chemistry team, a battery management team, an energy efficiency HVAC team... Just depending on suppliers for these advancements means you'll have no competitive advantage. P.S. If you haven't partnered with an autonomous drive company already (or started your own), you're behind. 
   
   
4. Innovate rapidly and openly - Traditionally automakers build behind closed doors until the big reveal day. This limits the ability to receive feedback. It leads to years of secretive work on a product that no one is interested in unless you spend millions on marketing to create demand. Instead, see which ideas capture customer/public interest and drive their own buzz. These are the products that will have word-of-mouth marketing. Your budget is better spent on engineering (items 2 and 3) than marketing yesterday's products!
   
   
5. Collect data and learn from it - Your products need to become connected and you need to collect the wealth of data that they generate. How are your products being used, how are they failing, how can they be improved... everything from the most commonly used features and how many user actions (clicks, words, gestures...) are needed to (en/de) activate them. It's time to open an Amazon AWS account. Tap into the telemetry stream!
   
   
6. Adopt innovative capital models - Get creative. Maybe, rather than just starting an internal EV line, spin out an EV start-up. Maintain a controlling interest and supplier sharing contracts, but give them the freedom to operate outside of your overbearing corporate governance. Something like Saturn (but with a better ending). An IPO could help kick start or accelerate the EV effort. You might even end up owning a cool new brand. 
   
   
7. Focus on purpose and people, not product - A mission-driven company is something that people can fall in love with. Don't talk about what you will do, instead talk about what you have done and how this lays the foundation for better days ahead for all. This gets you fans, not just customers. The clean slate that #6 provides might be required to wash off that oily past. Sure you must drive to be a profitable company, but profits should be the secondary effect to fulling the bigger purpose, not the first-order goal.  

The world is not the slow-moving place that it once was. It's adapt or die time. We still take photos, just not with a Kodak camera. We still watch movies, just not from Blockbuster. During this transportation transition, which brands or companies that we know today, that seem indelible, will fall to Death's scythe and fade into the annals of history?

Major transitions are not easy:
How many typewriter companies are now making laptops? 

How many flip phone companies are now making smartphones? 

How many movie rental stores launched successful streaming services?

How many legacy automakers will master EVs, software, connected cars, and AI?

How many legacy automakers will exist in 2040? 

Ω

15 Years Electric

We started our journey to move to a renewably-powered life 15 years ago. We've made great strides and still have more to go. Here's our journey so far.

Part I: The Wake Up Call - You Will Be Held To Account

2007 was my "wake up" year. This was the year that our then-toddler started talking. It dawned on me that one day I'd be asked what I did to prevent the climate calamity that would likely be the harsh reality of their young adult life. Sadly, with the heat waves and wildfires of 2021, which have become an annual event, this prediction has apparently come to be, but let's get back to 2007.

Considering the political leaders that we had in the White House in 2007, it was clear that no political solution was forthcoming. I had to do something. So, what did that leave me with? I would have to do what I could within my own nexus of control*. 

Part II: Tailpipe-Ectomy 

The first step was to get an EV. I was lucky and found an electric truck (yes, there were electric trucks before Rivian R1T and the Tesla Cybertruck). 

This was not a conversion. It was a factory-made EV from General Motors; a rare find at that time. This truck was one of just 492 built in 1997 and 1998. Like its cousin, the GM EV1 from the same era, most of these trucks were taken from their owners (lessees) and crushed. Luckily a few of the trucks (about 60) were saved from the crusher because some fleet managers insisted on buying the vehicle instead of leasing them. Mine was one of these lucky few survivors.

This little electric truck only had about 40 miles of range at this stage of its life with 18-year-old batteries, but this was perfect for commuting and errands. I was amazed how much of my driving fit within this limited range. And we still had our Prius for longer drives.

Plugging in to "fuel up," caused me to start looking upstream.

Part III: Driving on Sunshine 

Now that my daily commute was fueled electrically, I suddenly became much more concerned with how that energy was generated. Perhaps I should have been concerned before this point since we use electricity for so much in our daily life, but, for me, when the energy use was directly attached to how heavy my right foot was feeling that day, this peaked my awareness. So it was time to get renewable electricity.

My local utility has a "green source" option where you pay a little more and you get electricity from the wind farm. If you use this, you are helping the utility fund future green projects, but it was not direct enough for me. Programs like this don't change the grid mix that comes to your house. Apparently, that mattered to me; so we started shopping for solar.

In 2007, solar was significantly more expensive than it is today, and the few incentives that were available back then were capped at a low level. So solar was expensive but worth it.

Solar Panel Installation

We found a local company called Mr. Sun Solar and discussed options. At that time most solar panels were in the 165 to 185 Watt range. There was a new 200 Watt panel but it was back-ordered. We wanted a 4kW system, so twenty of these new panels meant that we'd use less roof space, leaving more room for future expansion, so we waited. Eventually, the panels arrived and before 2007 ended, we were generating enough solar energy to drive our little EV about 16,000 miles per year (we drive far less than that (then and now)). The solar panels were ensuring that our driving and even part of our home energy use was now powered by the sun. 

Part IV: A New LEAF 

In 2011, something exciting happened, an affordable family car electric vehicle came to market. This was the Nissan Leaf! 

Proud owner of a new Nissan Leaf

The Leaf was undoubtedly a breakthrough product at this time. It had twice the range of my EV truck. This was great. I pre-ordered it and received one of the first 2000 delivered to the US. It was a lot of fun the first few years, but ultimately, IMHO it turned out to have an inadequate battery thermal management system that resulted in battery degradation.

Part V: SolarCity 

In 2015 we added more solar onto our rooftop. We added 8kW; this tripled the size of our system. The cost difference for solar from 2007 to 2015 was astounding. Our new system was under a power purchase agreement. This meant that we paid zero out-of-pocket for the system, rather we'd buy the electricity that it generates for about 10% less than we were paying our local utility (and this price was guaranteed not to increase). In addition to zero out-of-pocket, we also qualified for the $6,000 state solar incentive. This means that we were getting paid to buy renewable electricity at a cheaper price! How could we say 'no'?

Part VI: Tesla Time

In 2016 our Prius was totaled. Our first choice to replace it was the Mitsubishi Outlander Plug-in Hybrid. Unfortunately, (or fortunately, as it turned out) this vehicle was not available in the US at that time. The Leaf experience made it clear that a pure electric vehicle was a viable option. However, we needed longer range and a better charging network. Tesla offered both of these.

We traded in our final gasoline-powered vehicle, a Honda Passport, and purchased a Tesla Model X. The X was a blast. It had all the fun of electric plus with the long-range and fast charging network, we could take it on road trips. 

Our Leaf's range continued to degrade. By this time, its usable range was nearly the same as the old Chevy S10 EV when we sold it. It had to be charged multiple times during the day to fulfill our needs. This meant if we had a mid-day emergency, it might not be up to the task. It was time to upgrade, so in 2018, we traded in the Leaf for a Tesla Model 3 long range. We were now a 100% Tesla household.

Proud Model 3 Owner

 

Part VII: Charged Up (Home Battery)

The next step in our journey happened on the last day of 2020. We had 3 Tesla Powerwalls installed. This allows us to better utilize our solar when it best helps the grid and reduces our electricity bill. Oh yeah, and it provides us with backup power.

Part IIX: Positive Feedback

One of the fun things that's happened is how well our various steps have all reinforced each other. The solar panels produce more than enough to power the cars. The EVs typically charge overnight, this is off-peak electricity rate time. The solar panels produce during peak rate time. This allowed us to shift to a Time-of-Use electricity rate schedule with our local utility. Instead of paying 10 cents per kWh any time during the day, we pay 4 cents at off-peak and 14 cents at peak. Since the EVs are a big part of our load, paying only 4 cents per kWh is a big saving. A kWh typically gets us about 4 miles of range, so we're paying about 1 cent per mile. You could pay ten times that much for fuel in a gas car. 

The only drawback is that part of the day we could be paying 14 cents per kWh. That's where the batteries kick in. During peak hours, we're not using the grid. Each morning from Sun up, the batteries charge from the solar. Then at 3 PM, when peak time starts, we drain the batteries. So we're not using the grid when it costs the most. Then when 8PM arrives, the prices drop and we go back to normal operation. Typically, the batteries still have a 40% charge after this, so we still have a reserve in case of a power outage. 

Part IX: The Numbers

Over these 15 years, we have gone from a hybrid and an ICE to two long-range EVs.  We've driven about 200,000 sun-powered electric miles. In the US, the typical vehicle is driven about 13,500 miles each year. The average fuel economy is 24.9 MPG. Putting these two together, the average household buys 480 gallons of gasoline each year (per vehicle). AAA says the current national gas price is $3.22. That means, on average, people are paying $1,500 per year (per vehicle) in fuel. 

Using the same 13,500 annual miles, in an EV charged off-peak (meaning 1 cent per mile) works out to just $135. Would you rather pay $1,500 per year or $135?

We have generated over 100,000 kWh of electricity from our roof. This is enough to drive a Model 3 around the planet 14 times. At 10 cents per kWh, that's $10,000 worth of electricity. 

The future will judge us; Mother Nature (and future generations) will hold us accountable. 

* Notes on personal responsibility 

There's an attempt to blame shift from the big polluters to individuals. Yes, we all have a role to play, but that does not mean they are off the hook for decades of polluting and deception.

Hoverboards Don't Hover, Sea Monkeys Aren't Monkeys, Tesla's Full Self-Driving Doesn't Fully Self Drive And It Doesn't Matter!

Disclosure: I'm long Tesla.

Let's talk about Beta software. This will be an important foundation for the rest of the discussion. Here are the basic stages of software development:

Pre-alpha - major sections of the software are incomplete and/or non-functional. Formal testing has not started.

Alpha - Most of the features have some level of functionality although they may have major known defects. Testing begins, but much of the test plan may be blocked (due to the known defects).

Beta - All of the features have some level of functionality. There are still known defects, but testing on all features can formally begin to uncover the unknown defects. There may be many beta releases, e.g., beta1, beta2...

Betas come in several flavors: 

Private beta - aka Closed beta. Software is kept internal to the development team and quality team. No one outside of this circle has access to the bits. 

Limited release beta - a select group of customers or development partners can run the software with the understanding that it still has known and unknown bugs. This software must not be used in a production environment without safeguards. The users must assume the software will do the worst possible thing, at the worst possible time (remember there are known and unknown defects). 

Open beta - aka Public beta. This is just like a limited beta except now anyone (with the minimum hardware requirements) can install and use the software with the understanding that it has defects, testing is still ongoing, and it is not yet approved for production release, safeguards must be in place.

Release Candidate (RC) - The known bugs are minor and the product could be released with these known documented defects. Testing is still ongoing and new defects are likely to be found. There may be many RC releases as defects are resolved and testing restarts to ensure that a "fix" didn't break something else (aka cause a regression).

Production Release - All verification tests are passed. The known defects are documented. The software is stable. Unknown defects may (likely) still exist (this is nearly always true in software development). 

Field Hardened - Software that's been deployed for a significant time. It's had multiple bug fix releases and security patches. The defect report rate had declined to near zero. No new features (that may bring new bugs and vulnerabilities) have been added recently... 

What Is FSD? (software lifecycle)

In the software lifecycle, Tesla's Full Self Driving (FSD) Beta is a limited release beta. The driver must maintain vigilance and assume it will do the worst possible thing at the worst possible time. The licensed driver behind the wheel is the safeguard. As Tesla rolls the beta out to more people, based on their safety score, FSD is still a limited release beta (just a little less limited). FSD is still years away from being considered Field Hardened. This is the level that it would need to be before the steering wheel could be removed. 

Levels Of Autonomy

The Society of Automotive Engineers (SAE) International has defined 5 levels of driving autonomy (6 levels if you count level 0, no autonomy). But they've made a major error in this scale in that it includes both human-piloted levels with various levels of assistance and it includes levels of fully autonomous systems where humans have no responsibility for driving. 

I think this has contributed to some of the confusion about autonomous driving. 

In Levels 0 - 2, the human is responsible for everything. Levels 1 and 2 may include assistance systems such as ABS, cruise control, lane following, traffic-aware cruise control, blind-spot warning, lane change assist, traffic light indication, sign recognition, and more. However, even with all of these assists, the driver must maintain awareness of their surroundings and they are responsible for the vehicle's actions. 

Let's come back to level 3 in a moment. 

Level 4 - 5: in these levels, the vehicle does all of the driving. There may not even be a steering wheel. Level 4 would be geo-fenced (or otherwise limited), such as an airport shuttle to/from long-term parking. Whereas Level 5 would be able to drive to any location that a typical person could drive, think robo taxi.

Part of the problem is that these have radically different levels of human responsibility, yet they are on the same scale. 

Level 1-2 should be called Driver Assistance (DA) levels and it could be expanded far beyond 2 levels based on how many assistance features are offered. 

Level 4 and 5 should be called Autonomous Drive (AD) levels. 

Creating independent categories, based on who's responsible (human-piloted or machine-piloted) removes any confusion as to who is responsible for piloting the vehicle. You have either a driver assistance system or an autonomous system. The responsibility is clearly defined. 

Level 3 - I promised we'd come back this one. Level 3 is not really a separate level, it's a level that operates at Level 4 some of the time and Level 2 at other times. This level operates autonomously in some areas but requires a human driver when it leaves this well-defined geofenced zone. The human is given adequate warning before the vehicle leaves the geofenced zone and there's a clear hand-off protocol from machine-pilot to human-driver. An example could be a semi-truck that can drive on the freeways with no human supervision; however, once it leaves the freeway, it can no longer pilot itself, and a human pilot is required. When the human is driving, it may have driver assistance features. This is a DA-AD hybrid system. 

Geofencing is the simplest example, but other operational domain parameters (such as time-of-day or weather) may also require the human to take over.

What Is FSD? (Level of Autonomy)

In the levels of autonomy, Tesla's FSD Beta is a driver assistance (DA) feature. The aspirational plan is for this software to evolve into an autonomous drive (AD) system, but it is far from there now. Tesla has bright minds working on the problem and enthusiastic drivers providing them with the data they need to continuously improve the system, but right now, it is still a DA system and the person behind the wheel is fully responsible for the actions of the vehicle. 

Tesla has no announced plans for a Level 3 or Level 4* product. They plan to go from Level 2 (driver assist) to Level 5 (robotaxi).

* Level 4 would be perfect for The Boring Company tunnels. This controlled environment would be much easier for an AI pilot to master than the above-ground real world. This could likely be deployed years before a Level 5 system.

 

If It's Doesn't Drive Itself, Why Is It Called FSD? 

If you really still need this question answered, you must have skipped ahead; the answer is there above, but that's okay; I'll summarize it here. Tesla has a goal of making a robotaxi. This is an early version of that software, it does not fully work yet. This early version works some of the time, under some circumstances. This is a beta version of the software. 

What About the Sea Monkeys?! (I only came here to talk about them)

I hear you saying, "Sure, hoverboards don't hover and sea monkeys are not monkeys, but I don't put my life in their hands! I don't let them drive on city streets where pedestrians are crossing the streets. Other drivers have not opted-in to allow Tesla test beta software on them." That's true, but you didn't opt-in for the distracted driver, the drunk driver, the person with broken taillights. So rather than fear-mongering, let's look at the data. Tesla's are the safest vehicles on the road; they have fewer crashes per million miles than the average vehicle and their statistics in Autopilot mode is even better than when they are human-driven. They are not accident-free, but if that's the standard, there wouldn't be any cars on the road.  

end-of-line

5 Years Of Tesla Ownership

I bought my first Tesla, a Model X, in 2016; it was one of the first 20 thousand Model Xes off the line. We were not as early to Tesla as the original Roadster buyers but ahead of the swarm of Model 3 buyers.

Five years in and I still love to drive it. Each year that I've owned it, I've written an annual report of the adventures we've had and our ownership experience. You can see years 1 through 4 here: 1, 2, 3, 4. 

At the end of year 5, we have just under 43 thousand miles on the vehicle. 

Battery Degradation

Normally, I start these reports by talking about our various road trips for the past year and that fun we've had getting there in our Tesla, but I don't want to bury the lead for this year. The big breakthrough in year 5 is that the battery degradation has leveled off. This is great news! As you can see in the graph below, there was notable degradation in years 1 through 4.  

When new, our 90D had an EPA-rated range of 257 miles. In the first year, it was down to 250 miles. The end of year 2 saw 246 miles. The range was 240 miles at the end of year 3. Year 4 knocked another seven miles off, bringing the range to 233 miles. I was starting to get worried. The range seemed to be dropping 4 to 7 miles each year with no sign of slowing. I knew that battery range degradation is to be expected in the first few years, but the degradation rate should slow after that and I was seeing no signs of slowing since year 4 lost as much range as year 1 (seven miles).  

Year 5, is when we finally had the leveling off that I've been waiting for. As we exit year 5, I'm happy to say the reported range is now 237 miles (up a bit from the end of year 4).  

I'm not sure why more range is now being reported. We have had several over-the-air software upgrades. It's possible that one of them has changed the way the battery is managed or this data is reported. There's also "noise" in the readings from various things like battery-balancing, temperature... 

Another possibility is that with the pandemic, we've cut most of our road trips and I've been working from home for the last ~19 months, so the vehicle is not driven as much as years 1-4. This year+ of light use may have contributed to the reduced degradation too. Whatever the cause, I'm happy to see this leveling at 8% degradation. 

If you're EV shopping, and you plan to keep the EV for 5 plus years, make sure you account for this and buy at least 10% more range than you need to allow for some level of degradation and a worry-free drive.

To the Dunes

Quad on the dunes (via jmaboy)

Now on to the fun stuff. The one notable road trip we did take this year was to the Oregon dunes. Our timing was perfect as a heatwave hit the Portland area, we headed to the coast where it was much cooler. 

The drive was easy, we drove from Portland to Florence, Oregon on a single charge. The Florence hotel we stayed in had a Tesla destination charger. This allowed us to charge up as we strolled on the beach and ate dinner, giving us plenty of charge for our fun the next day. 

The dunes were fun; I can't wait till we can rent a Cyberquad or the like and tool-around on electrically powered sand riders.

On To Another Year

I plan on keeping this Model X until 2025. However, my 2016 vehicle is an Autopilot 1 vehicle and all the Full Self Driving Beta hype is getting my attention and giving me a case of fomo. The refreshed Model Xs have recently been spotted, I might have to go and test drive one soon. 

The Next Industrial Revolution

It has taken an extra decade or three, but it looks like we're finally moving into the 21st century: COVID-19 vaccines were developed with messenger RNA rather than 1900s techniques, rockets are able to land rather than just splashdown into the ocean*, cars will soon drive themselves, renewable energy is dominating new deployments, energy storage is reaching industrial scale, AI can understand human speech, by 2030 the majority of new passenger vehicle sales will be electric...

Times they are a-changin'.

We recently looked at Moore's Law, Wright's Law, Swanson's Law, & Jevons Paradox. These are and will continue to accelerate the advancement of technology. This got me thinking, what will the next big revolution be? 

Here are several of the past revolutions: 

Historical Revolutions

Textile manufacturing 

Steam engine

Steele production

Automobiles

Electrification, electric lighting 

Telecommunications

Transatlantic communications

Home appliances

Computers 

Satellites 

The Internet / broadband 

Smartphones 

Datacenter / cloud

Rarely does a revolution come out of nowhere. Rather, the innovation exists, it is just constrained by something such as cost or producibility. So to see what's coming, let's look at the things that exist, but are somewhat nascent.

The Next Wave 

Using this lens, the things to watch include:

3D Printing

Energy Storage 

Renewable Energy 

"Affordable" Space Access

Artificial General Inteligence (AGI)

Autonomous Robots / Self Driving Cars 

Blockchain

Cryptocurrency / Fin-tech

Nanotech

Biotech / Genomics 

Human Brain Interfacing 

Certainly, all of the items on this Next Wave list are here to some extent today. The question is which one(s) will find the killer app? Which one (or more) will become ubiquitous? 

 

What do you think is missing from the list and which ones do you think will be the next big thing?

Tesla Will Make EVs In Texas but Can They Sell Them In Texas?

Tesla has announced that their next factory will be in Texas and construction is well underway. You can call it Giga Austin or Tera Texas, either way, this is great news. The Cybertruck and Semi are both expected to enter production from this site and it will mean jobs and revenue for the region. Tesla and the state of Texas seem to have a budding new friendship. Elon Musk has sold his California homes, moved to Boca Chica, Texas (or is that Starship, TX?) Speaking of Boca Chica, we can't forget about all the SpaceX activity in the state too. The Boring Company has even opened an office in the area. Musk is clearly all-in on Texas, but it is unclear if this will be a two-way relationship. 

The Lone Star State has named Giga Austin as The Manufacturing Project of the Year. And the state of Texas was given the 'Gold Shovel Award' by Area Development magazine for their business-friendly policies. 

Texas governor, Greg Abbott said, “The Lone Star State offers innovative businesses, the freedom to flourish with our pro-growth economic policies, a predictable regulatory environment, and our young, growing, and diverse workforce."

So with this mutual love-fest and pro-economics policies, certainly Texans will be able to buy the products that Tesla makes in the factories in Texas, right? Well, not directly. 

Currently, Texas state law does *not* allow Tesla to sell vehicles in the state. If you're a Texan and you want a Tesla, it has to be registered in another state and then transferred into Texas. When Giga Austin is online, it will be even more ridiculous. The vehicles will be legally required to be shipped out of the state before they can be delivered to someone that lives in Texas. You will not be able to go to the factory, take a tour, and drive home in your new just-off-the-line vehicle.

That's right, if you live in Texas, your vehicle will need to be loaded onto a truck and carried across the state line to New Mexico, Oklahoma, or Louisiana. Then the car carrier can turn around and take your vehicle to a Tesla service center where you can pick it up after you've paid for it online via a server that's outside the state. Note the loophole, this vehicle pick up is now not a "deliver", it's just an existing owner picking up their vehicle.

Why is this? As in many states, the auto dealership association has a significant amount of local political power. Tesla is not a member of their club. Tesla does not sell cars to dealerships, where dealerships add their mark-up, haggle on prices, sell you rust-proof undercoating, sell you service contracts, check with the backroom three times while you wait... Since they are not getting their cut, they want to do all they can to slow Tesla down in their region and they are using all of their political clout to do just that.

They say "everything is bigger in Texas," I guess that applies to cronyism and protectionism too. Maybe that saying doesn't apply to free markets and direct competition.

Oh, and if you thought, at least this means you won't have to pay Texas vehicle sales tax, I have bad news for you. Texas still requires their pound of flesh.