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Saturday, March 31, 2018

Moats: Why Tesla Can Do What Other Car Companies Only Dream About

A moat surrounds a medieval castle to protect it from attackers
Castel of Brede, photo by Lionel Lourdel 
In modern business parlance, a moat is something that protects a business from competition or gives it an advantage. A moat could be a trade secret, patented product or process, or an asset that represents a significant capital investment. A moat could be a partnership, an exclusive license, a government granted limited-monopoly, or any barrier to a resource or market. The term was popularized by Warren Buffett. He covers moats in his book Buffett Beyond Value and says that he doesn't invest in businesses unless they have one or more moats; otherwise, it's a quick race to the bottom.

"In business, I look for economic castles protected by unbreachable moats." ~Warren Buffett

This story is about Tesla's moats, but I don't mean to imply that Buffett would invest in Tesla. Tesla is far from the value investments of the Berkshire Hathaway portfolio. Rather, Buffett's comments are to demonstrate the importance of moats. Morningstar even has a guide called Why Moats Matter. Understanding the moats a business employs is clearly important to understanding the business and its future. 

In no particular order, here's a list of Tesla's moats: mall stores, direct sales, Supercharger network, brand loyalty, EV mindshare, mission-driven, Tesla Energy, Panasonic partnership, rockstar status CEO, electric motor technology & manufacturing, battery technology & manufacturing, software development, connected cars, AI, talent magnet, fleet learning, SpaceX, vertical integration, over-the-air updates, mobile ranger service, Gigafactory, investor expectations, first mover advantage.

These moats enable Tesla to do things that other automakers cannot even consider. Some of these moats are wider than others. Let's group them and look at them in more detail. If you know of any Tesla moats missing from the list, let me know below.

Stores & Direct Sales

When you buy a Tesla product, you buy it from, well, Tesla. This might seem like a silly statement, but that is not how most car companies operate. Traditional automakers have dealerships. Dealerships are not owned by the manufacturer, they're locally owned businesses. In most states, the automakers are legally forbidden from owning a dealership. Dealerships are middlemen. This means that when you pay for a car, you must pay a price that allows both the manufacturer and the dealership to make a profit on the sale.

Tesla has stores in shopping malls. This allows you see their cars in a familiar and comfortable place. The Tesla employees in the store are not commissioned salespeople. They are there to answer questions, not to "get you into a deal today". There is no haggling; the cars have a Hobson's Choice price: Take it, or leave it. You pay the same price as Elon Musk's mom would pay, the same price as any Tesla board member would pay. This matches well with the online shopping model of Gen Y and younger.

Additionally, Tesla can sell their cars, solar, and energy storage products all under one roof. There's likely to be significant overlap in customers for these products.

* Moats: Mall Stores, Direct Sales, Product Cross-pollination

Connected Cars & Over-the-Air Updates

All of Tesla's cars have wireless service. The original cars had 3G, today they have 4G LTE, and when 5G is the standard they'll come equipped with that (or maybe something better). This connectivity allows the navigation system to have up-to-date maps and real-time traffic. Every smartphone has had this feature for over a decade, but in cars, this is still a rarity. In other cars, maps could be years out of date and/or cost hundreds of dollars to update.

The maps and traffic data are nice, but the real advantage of a connected car is software updates. Tesla is constantly improving their software (more on software later) and when a new version is released, after a couple taps on the screen, your car is updated to the latest and greatest. This keeps the ownership experience exciting. You can recapture a bit of the "new car smell" when a new feature or easter egg is added.

* Moats: Connected Cars, OTA Updates, Refreshed SW keeps cars relevant

No Dealerships

A dealership's agenda might not be the same as the manufacturer's and it is not likely the same as yours.

We just discussed over-the-air updates. These are an example where a dealership might have a different interest than you or the manufacturer. Over-the-air updates are convenient for owners; you just wake up to a vehicle with updated software. Well, dealerships in many states could prevent a manufacturer from implementing this feature in their cars. Why? Because that is considered "servicing the vehicle" and the dealership agreement guarantees that all manufacturer service is contracted to the dealership. The dealerships want you to bring your car in often so they have a chance to upsell you on service or to a newer car. If a manufacturer pushes updates over-the-air, they might find themselves in a lawsuit or two with the dealership associations as Tesla has been, albeit for different reasons.

Dealerships make most of their money from service. Anything that prevents a car from coming into the shop is a missed opportunity for them to profit from the customer. Electric vehicles already require far less maintenance than gas cars, if wireless software updates were allowed too then there would be even fewer reasons for the car to visit the dealership on a regular basis.

With Tesla owning their own stores and service centers, Tesla is able to set their own direction without a complex web of multi-state dealership agreements. This gives them flexibility and allows them to define the ownership experience for their vehicles.

* Moat: Ownership of customer experience, No margin sharing

Panasonic Partnership

Tesla and Panasonic are partners in battery and solar technology and manufacturing.

Panasonic announced it would invest more than  $1.6B into the Tesla Gigafactory 1 battery plant. Gigafactory 1 supplies the battery cells for Tesla Model 3, Powerwall, and Powerpack products. Panasonic directly manufactures the 18650 cells that are used in the Model S and X.

Panasonic is also a partner in Gigafactory 2 for solar roof production.

Tesla currently has a hot brand and they are shipping a lot of Panasonic technologies. Panasonic certainly is looking at Tesla as a growth area for their products. Many other automakers are using LG Chem batteries. This means that Panasonic has a vested interest in seeing Tesla survive and grow. This could mean that Panasonic would be willing to invest more into Tesla if cash infusions are needed as Tesla hits bumps in the road getting to mass-market production.

* Moats: Strong technology and financial partnership with a behemoth

EV Mindshare

It seems like nearly all headlines about electric cars (any electric car) mentions Tesla. The car being reviewed is either a "Tesla Killer" or "How Does Car X Compare To The Tesla ..."  This was true for the new Leaf, the Jaguar iPace, the Porsche Mission E, and nearly any other new EV coming to market.

This is no different than hybrids and the Toyota Prius. Any new hybrid that comes out is compared to the Prius, because Prius is the benchmark for hybrids. Similarly, Tesla is the benchmark for electric cars. Over the next decade, many automakers will make EVs and they will all be compared to Tesla (range, price, styling, performance...).

As more automakers bring EVs to market, they will be playing the game on Tesla's court.

* Moats: First Mover Advantage, home-field advantage, de facto standard

Mission-Driven, Brand, & Rabid Fans

Tesla has a fanbase that other car companies dream about. They have Apple-like devotion with people lining up to buy Tesla's first affordable mass production vehicle. Why does Tesla have such devoted fans? There are as many reasons as there are fans. However, I'll suggest one important reason: Tesla is mission-driven. They are an uncompromised pure-play.

Tesla is not reluctantly making EVs just to meet a state mandate. They didn't recall and crush EVs from the late 90s. They don't have a 100-year history of making gas-burning cars that have put billions of metric tons of CO2 into our atmosphere. They haven't participated in a conspiracy to shut down public transportation. They were not caught cheating on emissions tests.

Tesla makes exciting cars that are fun to drive!

They also make solar panels that can charge the car with energy from the giant fusion reactor in the sky known as the Sun. They make storage batteries so the stored solar energy can power your house after the sun goes down.

People are inspired by Tesla. Their many many fans give them free advertising. Fans make ad videos, write blogs, record Tesla podcasts and YouTube channels. Tesla held a competition for the best fan ad and there were hundreds of submissions. One couple loves Tesla so much, they had a Tesla-themed wedding. Few brands have such devotion.

* Moats: Devoted fan base, dedicated brand, free from historic stains, free fan-based marketing


SpaceX is not part of Tesla, but Elon Musk is at the helm of both companies and they have more cross-over than is initially apparent. Their cross-overs include aluminum fabrication and AutoPilot as well as less direct connections too.

When the engineers at Tesla run into a tough problem, they can literally call rocket scientists. “That’s cross-fertilization of knowledge from the rocket and space industry to auto, back and forth; as I think it’s really been quite valuable,” Musk said on a Tesla earnings call.

Aluminum Fabrication: When you are making rockets, you want them light and strong. Seams are generally weak points. SpaceX uses a specific friction stir welding process that fuses metal parts together without melting them. The end result is stronger and lighter than a traditional aluminum weld, with just 10% waste metal.

AutoPilot: SpaceX's rockets have to operate autonomously for much of their flights, including landing on drone ships at sea. This is very different than navigating city streets, but both of them need to interpret the data from the sensors. Raw data from radar and sonar are very noisy and false positives are common. Decoding these signals is tricky and vitally important. Sharing hard-learned lessons here improves both systems.

Marketing: SpaceX launched a Tesla Roadster into space. This was a huge marketing success. Most aerospace companies would have just used a dummy-load for this type of test launch. So for just the small cost of a used Roadster and a mannequin, Tesla and SpaceX had the most talked-about launch in the last decade. According to Reuters, Apple's and Google's corporate brands dropped in an annual survey while... Tesla's rocketed higher after sending a red Roadster into space.

Starlink: Starlink is a satellite broadband communication project by SpaceX. It is to provide low-cost, high-performance satellite-based internet connectivity. SpaceX has just launched the first of the low-earth orbit satellites and plans to put nearly 12,000 of them into orbit by the mid-2020s. The first obvious customer for this service is Tesla. Today, Tesla has to pay for the LTE connection in each of their vehicles. After Starlink is up and running, Tesla can use this network for all of their connected car activities. The service wouldn't be free to Tesla, but it would be one of Musk's companies paying another one of Musk's companies.

Mapping is an important part of autonomous car tech. There are no publicly announced plans, but it's possible that SpaceX satellites could help provide some of this information to Tesla.

* Moats: Access to SpaceX's advanced materials scientists. Access to cross-promotions. Possible highly affordable connected car internet service.

Recruiting Talent

If you were fresh out of school and wanted a job at a car company, would you rather work at one of the legacy car companies or at Tesla? Tesla is an innovative Silicon Valley company that makes sexy fast cars. If you want to work in battery tech, AI, automation, or many other fields, Tesla is the place that is treading new ground.

In March of 2018, Tesla was on LinkedIn’s list of top companies that American professionals want to work for, placing 5th and outranking Apple and Disney. Tesla is listed along with tech companies, not automakers. They are (and they are perceived as) a tech company that makes cars, rather than just a car company.

Over 500,000 people applied for jobs at Tesla in 2017. With this many candidates, Tesla is able to hire the cream of the crop. To do things that have never been done before, you have to hire highly skilled people.

* Moat: Desirable employer

Vertical Integration

Most car companies today are predominantly assembly and branding companies. Other than the internal combustion engine, they do very little of the engineering. Instead, they rely on their suppliers. In many cases, even the car designs are outsourced. This means legacy automakers are buying parts and buying others' innovations. Cars generally have 15% or less margin at wholesale, whereas the component suppliers may have 50% margins.

Tesla certainly has suppliers too, but they manufacture far more of their car's components than other automakers. Tesla designs and manufactures their own electric motors and they have vastly improved upon the AC Propulsion motor they started with a decade ago. By controlling the manufacturing of their parts -- especially batteries -- from start to finish, Tesla could create a significant cost advantage.

* Moats: Vehicle design, vehicle engineering, product margin


Tesla's cars are often described as "computers on wheels". They are software controlled. This allows new features to be added, upgrades, improved user interfaces, voice control, and more. The big screen is central to the car and not a de minimis afterthought. Tesla has a large in-house software team to deliver these features that are vital to the driving and ownership experience of Tesla.

Other automakers contract their software to outside firms for various tasks. This means that the navigation “look and feel” may be different from the entertainment system’s.

* Moats: Talented in-house software engineering (see recruiting talent above)

Fleet Learning & AI 

All of Tesla's cars have their full AutoPilot sensor suite of cameras, radar, and sonar. As we discussed above, Tesla's vehicles are connected cars. This means they can receive new software over-the-air. This allows Tesla to test their AutoPilot updates in shadow mode on hundreds of thousands of cars driving millions of miles before rolling them out to customers. Even cars that don't have enhanced AutoPilot or self-driving features enabled are helping to contribute to Tesla's validation efforts. Tesla has more than 300,000 cars on the road around the world gathering valuable feedback for their AI.

Compare this to the autonomous drive efforts of any other company. Other companies have a couple dozen cars on the road with engineers or safety drivers behind the wheel. It takes a long time to get a million+ miles of validation under those conditions. Then the software gets an update and the validation effort has to start all over.

* Moats: Massive fleet of fully instrumented cars

Supercharger Network

One of the drawbacks to EV driving is the difficulty of locating charging facilities while on road trips. Tesla has solved this problem. In most regions where they sell cars, there is a vast Supercharger network. You simply type the address in for your destination and the car will plot a route for you, showing you each stop that you'll need to make along the way. You can drive from Seattle to Miami or LA to Portland, Maine using Tesla Superchargers all along the route to recharge your car.

Today, there is no other plug-in car that can make such a claim. CHAdeMO and CCS charging stations are clumped in urban areas on the coasts with a large charging wasteland betwixt and between.

Additionally, Tesla's Supercharger network is reliable and easy to use. With other networks, you have to join and carry a card, fob, or app that you have to tap, scan, or activate. With Tesla's network, you just plug in. The protocol for determining who you are and what, if any, fees apply happens automatically when the car is connected.

Reliability and availability are vital to a charging network. If you show up at a location near empty, expecting to charge, only to find the charging station broken down or occupied, this can ruin your trip. Tesla Supercharger stations generally have 6 or more charging stalls. Most have 10+ and a few have as many as 50 charging stalls. So if a stall or two are down for repair, there are still plenty of spots where you can charge. If you're curious about a Tesla Supercharger location along your route, you can tap on it in the car and it will show you how many stalls are there, how many are operational, and how many are occupied. Other networks generally only have 1 charging stall per location. If it is not working or blocked, you're out of luck.

Other automakers are generally not investing in charging networks. They see themselves as automakers, not fuel suppliers. Since their business is not dependent on selling EVs, they are content to let this remain as someone else's problem.

Tesla, on the other hand, is growing a vast network of Superchargers around the globe where they will be able to sell energy above the local residential rate (while still cheaper than gasoline). Tesla has said that charging will not be a profit center for the company, but the revenue will certainly help to pay for expansions of the Supercharger network. Tesla has more than 1200 locations where you can fast charge, with more locations coming online every week.

* Moats: Building thousands of Supercharging locations is both time and capital intensive. Network ease of use & reliability. Revenue stream from 'fueling' vehicles.

Workplace & Destination Charging

While we're on the topic of charging, it is important to mention destination charging. There are hotels, bed & breakfasts, wineries, restaurants, ski lodges, malls, and other places that have Level 2 charging for Tesla vehicles. These are often a free amenity at these locations for patrons. These locations want well-heeled Tesla drivers to visit their establishment.

Tesla recently expanded this program and is now offering Level 2 chargers free to employers too.

Other car companies are far behind in providing charging support at this level.

* Moats: Vast network of workplace and destination charging stations


Tesla has a giant battery factory in Nevada. By footprint, it is one of the largest buildings in the world. When it is in full operation, this one factory will make more batteries annually than all of the world's combined factories made in 2013. Tesla has plans for similar factories in Asia and Europe as well.

These factories require a massive outlay of capital. They require a commitment to battery-powered cars as the next generation of personal transportation. Other automakers are only tepidly dabbling in EVs. They are making low-volume "compliance" cars and some are still working on fuel-cells or hail-mary internal combustion solutions.

* Moats: Biggest battery factory in the world, with more coming. Significant capital expenditure.

Investor Expectations 

Why is it that Tesla can spend billions of dollars on battery factories and global Supercharger networks? Whereas, if other automaker CEOs hemorrhaged cash at this rate, they'd be fired faster than a Tesla in Ludicrous mode. The simple answer is the expectation of the board of directors and the shareholders. People who invested in legacy automakers bought into a stable business that pays regular dividends.

Tesla investors, on the other hand, bought into a growth company. They are not looking for Tesla to be profitable today, or anytime soon. Tesla's investors are looking for top-line growth rather than bottom-line profits. Today, Tesla has about 20% of the luxury car market. If they can expand into affordable cars, semis, small crossovers, performance cars, pickup trucks, and who know what else with a similar market share, Tesla could be one of the most valuable companies in the world. And as we discussed above, owing to direct sales and vertical integration, Tesla has the ability to sell cars with better profit margin than any other automaker. Or so goes the hope of people (like me) who are invested in Tesla.

Amazon is a good comparison. For years Amazon sank their revenue back into their growth rather than paying out dividends to investors. In May 1997, Amazon went public at $18 per share. As I write this, the stock is nearly $1500 per share. And that's after 3 stock splits. Amazon investors were looking for growth, not profits and dividends. Today, Tesla investors have the same growth mentality. As market darlings, Tesla can raise capital by issuing shares, bonds, or taking loans. This allows them to pursue big efforts as long as they are delivering growth.

* Moats: Investor expectation of growth rather than quarterly profits

Rockstar CEO

Love him or hate him, Musk is by far the most widely known CEO of a car company since Henry Ford. This fame and fandom allow Musk to put out a message and have it echoed through his social media presence. When he tweets, it is news. The Boring Company, another of Musk’s ventures, has sold hats, flamethrowers, fire extinguishers, and now lifesize LEGO-like interlocking bricks made from tunneling rock. Fans have bought and will buy these because they are fans and want to signal their devotion to the Musk tribe.

This media attention can be a double-edged sword. When Tesla misses a deadline or a Tesla vehicle is in a crash, it gets as much media attention as Tesla's successes do. But for a company, the only thing worse than too much media attention... is *no* media attention.

Musk's past accomplishments, circle of friends, and current status allow him to raise money. This is important until Tesla's vehicle production is at a volume that would allow them to be consistently profitable (about 1 year from now by our estimation).

* Moats: Media attention, Ability to raise capital


In addition to trying to reinvent personal transportation, auto sales methods, and home energy, Tesla is trying to reinvent the way that cars are manufactured. This is "the machine that builds the machine".

In 2016, Tesla acquired German automation company, Grohmann Engineering. This was one step to reinvent the auto factory. Musk has said that their factory will look so radically different from traditional factories that it would seem like an alien dreadnaught. Staying true to Tesla's Silicon Valley root Musk said, "It might look like a giant chip pick-and-place machine...".

Musk has said that if you look at the rate that cars come off the end of the line in today's auto factories, it's slower than "grandma with a walker". Musk would like his factory to move at least at a jogging pace. He wants the robots to be moving so fast that air drag is a relevant factor.

Musk has even talked about Tesla selling their factory designs as a product.

Today, however, companies like GM, Ford, and Toyota are not impressed with the speed or quality of Tesla's manufacturing and have no intention of trading in their factories for a Tesla Dreadnaught.

The results of the current version 0.5 Dreadnaught are not Earth-shattering, but that does not mean that it won't eventually be revolutionary. For example, when Nicolaus Copernicus first introduced his heliocentric system, it was not well received. In fact, initially, it did a worse job at predicting the movements of the planets than the existing Earth-centric Ptolemaic system. That was because the Ptolemaic system had been refined for 1400 years and it had been finely tuned to account for all of the perturbations in the night sky.

Today Toyota's Kaizen method is vastly superior to Tesla's Dreadnaught. The modern car manufacturing process is a big improvement over the assembly line that Ford used, but it is an evolution of that same 100-year-old method. The question is, once refined, will Dreadnaught be the system that replaces it?

The modern assembly line was designed around people operating it. Robots have replaced many of the people on the line, but the robots are retrofitted into a system made for people. Dreadnaught, on the other hand, is a system that is designed around robots. This is not all that different from the clean slate design of Tesla's cars. They are not gas cars retrofitted with batteries and motors. They were designed from the beginning to be electric.

Dreadnaught could be the system that allows manufacturing to make a leap forward, or it could be an expensive failed experiment. Time will tell.

* Moats: None yet, but maybe Dreadnaught 3.0 will make the manufacturing world take notice.


Tesla has looked at all the objections that someone may have to buying an electric car and they have done their best to resolve them. They have made EVs that are cool, fast, and fun. They have made road trips possible. They have made home and destination charging convenient. They are working on battery and vehicle manufacturing to increase the volume and bring down the cost. They have allowed you to "drive on sunshine". Tesla has created a compelling narrative that is far beyond just the vehicles they sell.

In the process of resolving the objections to electric vehicles, Tesla has created a long list of moats. Tesla's moats are not unbreachable, but some of them are far outside the culture of the traditional automakers or beyond the template that the investors impose upon them. Even the automakers that are making EVs are trying to compete with the car's features or price. They don't even know how to compete with the Tesla narrative. It seems Tesla will stand apart from the crowd for many years, even after the legacy automakers become fully committed to electric cars.

Disclosure: I'm long Tesla

Saturday, March 17, 2018

Internal Combustion Engine Jumps The Shark

The Preußen, a German steel-hulled five-masted ship-rigged windjammer built in 1902

The internal combustion engine is jumping the shark, or to put it into terms from another transportation field, it has entered the "More Sails" phase.

Electric vehicles are disrupting the status quo of transportation. We've seen this before. To understand what might happen in the near future, we'll look back at another transition.

The first successful steam-powered vessels were built for use on canals and rivers in the early 1800s. 

Not long after, there were ocean-going hybrid ships with sails and steam. The steam engine didn't have to wait for the wind, they could sail in any weather, and didn't have to jibe and tack. With these ships, new trans-Atlantic crossing record times were being set and more ships began incorporating steam engines.

Not all ship makers embraced the new technology (sounds familiar). Some responded to the threat by doubling down on the legacy that they knew and loved. In an effort to compete with the record-setting times, rather than adding a steam engine, they added more sails. The effort prolonged the demise, but did not prevent it. This is when sails jumped the shark. During the late 1800s, large sailing ships almost completely disappeared as steam power took over. The bulk of the transition occurred during just one century.

Internal combustion engines (ICE)

Much like the ships that added more sails, there are automakers today turning the ICE engineering to 'eleven' in an attempt to prolong its life. In late 2017 Mazda announced a 'Holy Grail' breakthrough in engine tech with their Skyactiv-G high-compression gasoline engine. Similarly, Toyota made claims in February of this year that they had created the world's most thermally efficient 2.0-liter gas engine. They are not the only ones, despite dieselgate (more on that below), just weeks ago, Volkswagen's leader announced a "Diesel Renaissance" is on the horizon and Nissan has been talking about HCCI as the next great thing in engines since 2013. Occasionally, you'll see a story about rotary engines posed to take over... These are all signs of "more sails".

Engines are a mature technology. It's highly unlikely that there will be a breakthrough that greatly changes their fuel economy. Internal combustion engine tech is over 100 years old and it has had a lot of R&D sunk into it. There are fundamental limitations to combustion.

The headlines often say something like "New Engine 30% More Efficient" but this is very misleading. First, the results that you get in the ideal conditions of the lab are, just that, ideal (in a warmed up engine at optimal RPM...). In the real-world, this will be reduced, but for the sake of argument, let's assume they really have a 30% improvement. Gasoline engines are about 20% efficient. So a 30% improvement would mean 50% efficiency, right? Wrong. That headline means 30% better than 20%. This is what I call "marketing math". If you were at a restaurant and the bill was $20 and you left a generous 30% tip, that would be $6. Appling this to engines, you could call a 26% efficient engine 30% better than an engine that is 20% efficient. A headline that reads "6% improvement" does not get as many clicks as "30% improvement". If they are comparing the improvement to a lower efficiency starting point, marketing math can make the improvement percentage even higher.

Even in the unlikely event that an engine with a 50% thermal efficiency were to be created, it still would not compete with the 80 to 95% efficiency of its new rival, the electric motor. Even an efficient gasoline engine is still burning gasoline and emitting pollutants into the air where we live and breathe.

Model T vs Today

The original 1908 Ford Model T had a fuel efficiency of 21 MPG. Not including hybrids, the average fuel efficiency of the gasoline-powered cars on the road today is not much better than the original Model T. More than 100 years later there was no big breakthrough that allowed 200+ miles per gallon. 


Emissions cheating is yet another symptom of the engine apostles clinging to tightly to the old technology and pushing it beyond its capabilities. Either the emissions requirements could be met, or the performance requirements, but not both. So cheat. The majority of this press coverage focused on Diesel, but some gasoline engines were found to be using defeat devices as well.

As a society, we no longer want the devastating health impacts nor the environmental impacts that fossil fuel burning engines cause. Emission standards increased to reduce these impacts, but engine technology is just not capable of being something other than what it is, a combustion machine.

Hybrids Are Transitional

Just as the earliest Atlantic crossing ships to use steam engines were hybrids, some of the cars available today are a mix of traditional internal combustion and electric motors. The Toyota Prius was a landmark hybrid car. It nearly doubled the fuel economy of other cars at the time of its US introduction. Today, there are plug-in hybrids from many automakers. You can plug them into a standard outlet in your garage overnight and the next day the battery will be full. This allows you to drive some limited number of miles on electricity. Then when the battery is drained, it just uses gas from the tank and you never have to worry about mid-day charging.

Driving a plug-in hybrid allows you to enjoy many of the benefits of an all-electric vehicle without ever worrying about where to plug-in. If you are not already driving all-electric or not ready to jump in with both feet, I would recommend that you get at least a plug-in hybrid as your next vehicle. Depending on the electric range, you could cut your gasoline usage in half. You'd get to experience the smooth quiet acceleration of an electric motor and still have the safety net of using gasoline when you need it.

Sailing Into The Sunset

The introduction of the steam engine to ships has many parallels to the electric motor's entry into cars.

Just as the first steamships were used on canals and rivers, many of the early electric cars of this generation were urban runabout or commuter cars with less than 100 miles of range. This class of electric car filled these niches very well, but they were not a general purpose vehicle.

Just as the first steam engines to cross the Atlantic did so as part of a hybrid vehicle design, the first "transcontinental" vehicles to utilize electric motors were hybrid cars.

It took nearly 100 years for the engine to fully replace sails. However, just as everything else happens faster in our modern era, transitions are sped up too. Today the Chevy Bolt EV, the Tesla Model 3 and other EVs are for sale. These are just the first of many long-range affordable electric cars that will be coming to market. Over the next decade, things will change radically.

ICE has jumped the shark. It is not dead yet, but the writing is on the wall. Don't let it take you, your career, or your business down with it. I'm not sure if engines will be history by 2030, 2050, or 2070, but this is the century of their demise. It's time to consider electric cars rather than putting more sails on your internal combustion vehicle.


Saturday, March 10, 2018

Off-Grid or Grid-Tied: Which Is Greener?

If you have solar panels or you are considering them, congratulations you are helping make the world a cleaner place. After deciding to jump in, there are a few questions that you'll need to consider.

One of those questions is "Grid-tied or Off-grid?". In some cases, such as a cabin in the woods, connecting to the grid is not an option. Assuming that you're already on the grid, then you do have a choice whether or not you'll stay on-grid or go off-grid.

There are several factors that you should consider such as your energy needs, how often you have power blackouts, local laws, the energy storage costs...

A friend of mine has an off-grid system and he made the claim that it was "greener" than my on-grid system.

I wanted to examine this claim (heavily biased towards proving him wrong). The particulars of his system and mine are not that important; I'll try to focus on the bigger picture.

System Size and Backup Power

For a grid-tied system, you can install a PV system that accounts for only a portion of your energy needs. Any energy needs your home has when the sun is not shining will be provided by the grid. How green your local grid is, depends on where you live, but most of them are slowly improving. Many utilities have a green power option that supports their solar, wind, or geothermal projects.

For off-grid systems, the solar panels and batteries have to supply 100% of your energy needs unless you have a backup such as a generator. Backup generators are usually diesel or natural gas based. If these were being used, then an off-grid system would be less green than a grid-tied system.

To remove this drawback, let's assume that each of these systems are capable of powering your home 100%.

Which is greener? A minor advantage for grid-tied here since the backup could be cleaner.

Grid or Battery 

With a grid-tied system, during the day surplus energy is feed into the grid and runs your meter backward. This energy is then used by nearby demands (AKA, your neighbors). After the sun has set, a grid-tied system draws energy from the grid, unwinding some of the backspin from the meter.

With an off-grid system, when there is surplus generation, this is used to charge the batteries. The energy from the batteries is then used to power your home overnight. There is some minor loss of energy during the store and retrieve process.

Which is greener? A minor advantage for grid-tied here because it does not have the storage loss.

Seasonal Considerations

I live near the 47th parallel. We have a winter season here. We don't get a lot of snow, but there are many cloudy rainy days in the winter that don't generate much energy. On these days, even with a very large PV system, we would not be able to generate enough energy for our needs.

With an off-grid system, we'd be running generators on these days.

With a grid-tied system, we are able to use those summertime credits in the winter. Our state requires utilities to support annual net metering. This metering starts each year on April 1st. When the meter runs backward in the summer, you have all winter to use these stored kilowatt-hours. Additionally, there is less demand on the grid in the winter (air conditioners are not running) and the utility's wind turbines in the Columbia Gorge spin frantically during the winter months.

Which is greener? Again a minor advantage for grid-tied here.


An off-grid system requires batteries. These batteries have to be manufactured and transported. There are some environmental impacts for these activities. It is far less than connecting to a coal-plant, so it is worth it if you need them for a viable PV system.

If you don't need the batteries, because you are connected to the grid, you can avoid these (albeit minor) impacts and you can avoid the cost. You can used the saving to buy a larger PV system.

Which is greener? Again a minor advantage for grid-tied here.


Solar is great whether you are on-grid or off-grid, you are generating renewable energy from the sun.

There are reasons such as grid availability or reliability that you might consider including batteries in your PV system. However, if your reason to include batteries is that you think that makes it greener, then I disagree. You could even say that you want to have a Tesla Powerwall because you think they're cool, that's great. Feel free to get one (or two, or three). But don't claim that it somehow makes your PV system even greener.

As I said at the start, I might be biased since we don't have batteries in our system, but in every metric I've looked here, grid-tied systems have a slight advantage. The energy that they generate is always used immediately. The summer to winter delta is covered by net metering. And finally, on the cloudy days that don't supply enough solar energy, no generators need to be fired up.

While both systems are "green", grid-tied systems have a slightly darker tint of green.
(Take that Terry! 😄)

All that said, we might just add a Powerwall or two just for the fun tech of it. How cool would it be to have the only house on the block with power during the next winter storm.


Thursday, March 1, 2018

Preparing to Tow With A Tesla Model X

One of the reasons that we bought a Model X rather than a Model S was so that we could tow our camper. Spring is coming and we'll be getting the camper out soon to prep it for our summer fun.

In addition to pulling the camper, the tow package has other advantages too. We can mount the bike rack there and we can rent a trailer if we need to move large items or hardscape. I had been driving a Honda Passport to pull the camper. I traded it in for the Model X. There were a few things I had to learn when we switched to towing with the Model X.

The optional tow package comes with a proprietary hitch receiver. I suggest installing the receiver and hitch before you need it so you can take your time and learn how to do it. The unit has a twist lock system that installs vertically, this is different than any that I've used previously. Here's a video that explains the twist-lock system. Once you figure out how it works, it's nice, but there is a small learning curve.

At the rear of the car, there's a cover underneath that removes to expose the dock for the hitch receiver. This dock is attached to the frame. This is where you insert the hitch receiver. Once it is installed, you have to lock it into the dock.

There are three main parts to this process:
  1. Hitch Receiver - This is the part that Tesla supplies when you buy the tow package. It comes in a zip case; sometimes referred to as a hitch box
  2. Ball Mount - This is the bar that goes into the Hitch Receiver; sometimes called ball mount shank or hitch bar. Sold separately.  
  3. Hitch ball - This is what the trailer attaches to. Sold separately
The Tesla Hitch Receiver (US) installed in the dock, ready to accept a 2" ball mount/hitch bar.
Tesla Hitch Receiver Installed, photo by David Pullen
In the US, there are three common sizes of trailer hitch balls, 1 7/8", 2", and 2 5/16". The 2" ball is the most common for light trailers and the size we used with our Model X. In addition to the ball, you will need a mount which fits in the 2" receiver which holds the ball at the correct height for the trailer to be level, and pins to secure the mount. You can buy the ball mount and ball separately and assemble them, or you can buy a kit like this one that comes preassembled with both of them plus the pull pin and cotter pin. I recommend a kit.

2" Hitch Ball, Ball Mount, and Reciever 

Unfortunately, it is not as simple as just installing the ball mount. The bumper of the Model X is lower than it is on most trucks, so to put the ball at the right height, you have to flip the ball mount over and remount the ball such that it is raised, rather than dropped.

To get the ball loose from the receiver and to remount it, you are going to need a really big wrench.
Reese Towpower 74342 Hitch Ball Wrench
After you have the ball mounted in the raised position, I suggest that you lock the threads with Loctite Red or a similar product. This will be rattling around for miles and miles, a little loctite is a good idea.
Loctite 262 Red Threadlocker

Now that you have the receiver installed and the ball at the right height. It's time to look at the electrical connection. The Model X only has one type of trailer electrical hookup, the 7-way round electrical connection. If your camper or trailer uses the same type, you're ready to go. If, however, your trailer uses a 4-pin electrical connector, then you'll need an adapter like this one.
Reese Towpower 7-Way to 4-Way Wiring Adapter

Next on the list are the safety chains. One thing that I didn't like about the Model X tow setup, was the location of the safety chain connectors. They are very hard to reach. This made hooking and unhooking the camper a difficult job. You can see where they are located in this photo:
Photo by Dan Patrick via ‎Tesla Model X Towing Club
To avoid sliding under the car every time I wanted to connect or disconnect the safety chains, I installed a pair of safety chain extensions. These are rated for 8000 lbs, while the X is only rated for 5000 lbs, so I feel safe using them and it makes the connect/disconnect process much easier.
Safety Chain Extensions

That's it for the basics. You are ready to hook up and roll.

For the pro-towers, here's one bonus tip. If you expect to tow for more than 1000 miles each year, I'd consider adding a Hitch Tightener like this one. It will stabilize the ball mount and stop it from wobbling in the receiver. This will make it smoother, quieter, and reduce wear. Live the adventure!
Hitch Tightener for 2" Hitch
Special thanks to the Tesla Towing Facebook page. I learned much of this from them.
Happy hauling! 

In the comments, someone mentioned that, depending what you're hauling, you might need lights, so I'm adding a magnetic brake light set to this list of things that you might find helpful while towing. 

MaxxHaul 80778 Magnetic Towing Light Kit
Dual Sided for RV, Boat, Trailer... DOT Approved

This article includes Amazon Associates links.
I'm Long Tesla