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. 

For Electric Vehicles, There's No Reverse

  

Globally, plug-in vehicles were only about 4% of automotive sales in 2020. That's a small portion of the market. What difference does a 4% change make? Well, it's a growing percentage and unlike the 1990s EV movement, this time it looks unstoppable. This time, it won't be crushed, it won't be put into reverse. 

This trend looks like it will only increase. Many automakers are vowing to only sell zero-emission vehicles by 2030, '35, or '40 and many states and regions are banning the sale of new gas-powered cars along the same timeframe. 

There would be a major uproar against these initiatives if not for the fact that many consumers now expect their next vehicle will be a plug-in hybrid or an EV. Forbes reports that "consumer interest in purchasing an electric vehicle has doubled in the past three years." The 2020s are the decade of the EV.

Welcome to the electric generation! 

The Tesla Network's Underground Advantage

Elon Musk knows how to cross-promote. The Boring Company uses Tesla vehicles in its Loop service. Space X uses Tesla Model X vehicles to transport astronauts to the launch pad. And who could forget when Space X launched a Tesla Roadster into space. It wouldn't be surprising to someday see a Lunar (or Mars) rover based on the Cybertruck with a large Space X logo on the side of the vehicle.

With this cross-pollination in mind, let's conjecture about the, yet to be deployed, Tesla Network. The Tesla Network is Tesla's planned robotaxi service. Of course, Full Self Driving is needed before there could be a robotaxi service. However, Tesla could launch a preliminary version of the Tesla Network that uses human drivers. This version of the network would be similar to Uber or Lyft, but with a 100% Tesla pure electric fleet.

Let's add one more component before putting the pieces together. The Boring Company Loop system is currently deployed in Vegas and under development in other cities. In this controlled environment, it will be much easier to achieve full self-driving.

Now, let's put this together. Imagine if the Tesla Network had access to the Loop tunnels. If the Tesla Network cars were human-piloted, they would drop into fully automated mode as they enter the Loop, they'd then navigate the tunnels, upon reaching the other end they'd return control to the human pilot as the car exits the Loop system. 

Consider a city that has a Loop tunnel system under the most congested portions of the city. In this example, there are Loop entry and exit points at the airport, the convention center, the multimodal park-and-ride, the stadium, and any other major attractions in the city. 

The Loop system would only be available to Tesla Network vehicles since they have the needed autonomous system to navigate the tunnels with high speed and to coordinate access with the other vehicles in the system.

This would be a major advantage that other ride-hail providers could not match. Image pulling out your phone, opening the "Tesla Hail" app, tapping in your destination; two minutes later a Tesla pulls up to the curb in front of you. You're in a westside suburb and you want to go to an event on the other side of town. It's rush hour (because it's always rush hour nowadays). You hop in the Tesla and head toward the crosstown highway. Instead of getting on the gridlocked highway, the car diverts to a corkscrew, you spiral down a level or two as the steering wheel tucks away, you enter a well-lit tunnel and accelerate to freeway speeds. The few other cars that you see are all engaged in a well-choreographed autonomous ballet. This is not a collection of rude and distracted drivers; this is an orchestrated, efficient system. 

After passing under the congestion of the city, you resurface on the eastside. The steering wheel redeploys and flashes for the driver to take control once again. The trip continues and you are dropped off with door-to-door service in half the time it would've taken on surface streets.

If this were available, why would you use any other service? 

Living In 2030

A friend was complaining about his electricity bill. He said, "With all this the heat this summer, I've been running the air conditioner a lot and the electricity bill is through the roof." 

He knows me well and before I could even say it, he said, "I know, speaking of my roof, I should put solar panels up there, right?" 

"Well, yeah," I said. "It makes more energy during the sunny summer months, so production scales up and down well with AC use; keeping the electric bill pretty flat with even a modestly sized solar system."

Him: "I might do it someday. Last time I looked, it was too expensive."

Me: "I'd check again. The prices have been dropping and there are incentives that can help pay for it. I'd get a quote from Tesla, Sunrun, and at least one other installer."

Him: "It would be cool to get home batteries too. We don't lose power often, but last winter we did and we had to go stay with my in-laws for a couple of days. I'd pay a lot to avoid doing that again, haha."

This conversation made me think of an expression, “The future is already here – it's just not evenly distributed.” In a lot of ways, our home is part of that unevenly distributed future. We have 2 long-range EVs in the garage, we have solar panels on the roof, and batteries to time-shift our energy use and back up for grid outages. Each one is great on its own, but when you put them together, they have positive compounding effects that allow you do even more.

Batteries are the most expensive component in an EV. Solar and EVs will be the obvious choice by 2030 (if not sooner). Wright's Law and Swanson's Law provide positive feedback loops for these technologies. Prices will continue to drop for solar and batteries; opening a larger market for them; further increasing economies of scale, further reducing costs, rinse and repeat.

So in 2030, if your roof has sun exposure, you can be assured, you'll have solar up there and if you are shopping for a new car in 2030, an internal combustion vehicle will be harder to find than a stick shift transmission is today in 2021.

Disclosure: I'm long Tesla.

Model 3: Living Gas Free

Musk vs Milton :: forthright vs fraud [allegedly]

Federal prosecutors recently indicted Nikola Motors founder Trevor Milton on three counts of fraud for statements that misled investors about the state of the electric truck startup's technology.

I was discussing this topic with a friend and he said, "Milton copied Musk's playbook and now Milton is likely going to jail. It won't be long before Musk shares a cell with him."

"Woah!", I said, "That's a big leap in logic."

His argument went something like this: 

"Musk has made (and still makes) big boisterous, obviously unrealistic, claims to get media attention and investments. Musk claimed that they'd have a "lights-out alien dreadnaught" factory; that never happened. The Roadster, Semi, and Cybertruck have been announced for years and are still not going to be delivered to customers anytime soon (if ever). Outside of a prototype or two, the Cybertruck. is. not. real! He's obviously trolling. Musk has even said the Roadster will fly or hover, this will *never* happen in a production version. It all just chum for the fanbois. Musk is the P.T. Barnum of our day, not the Edison nor the Tesla."

"Milton followed the same playbook. He even named his company after the same guy, Nikola Tesla. Here's the most telling dead giveaway, Milton said he was going to "Out Elon, Elon." Milton made big claims that they'd have a great factory, great products, a great fueling network, partnerships... The only difference is that Milton was not granted the "Elon Time" to deliver on fifty percent of what he promised and then declare victory."

Tesla's original battery factory --

"Gigafactory Nevada," I interjected. 

"I refuse to call them 'Gigafactories'," he said -- "As I was saying (he continued), Tesla's original battery factory is still not as big as Musk claimed it would be when he made the deal with the state of Nevada. It's been years. That's fraud [allegedly]. What about the solar covered charging stations, only a few of them even have solar panels. That's greenwashing and lying to the public. Then there's, the icing on the sham cake, Full Self Driving. It requires an attentive driver at all times. That's *not* self driving, "full" or any other level. It's a driver assist system, with relaxed operational domains and a chump behind the wheel to take the blame when something goes wrong. Musk has been selling this FSD scam for years, since 2016 in one form or another, with the promise that it will be here "soon." All the while taking people's money while making them the beta testers for it, while endangering everyone around them on the roads."

"The system did what it should with Milton. I'm not sure why it has hesitated to do the same with Musk. He has been given "Elon Time" to deliver on these promises and they are still vapor."  

Those claims certainly don't paint a pretty picture of Musk (or Milton). Both men have certainly made incredible claims. There's, however, an important distinction. Musk makes claims about what they *will* do (forward-looking statements). Milton lied about what they *had* done. Let's deal with Milton first.

Milton [allegedly] had a semi-truck rolling down a hill and passed it off as being powered by their technology. Milton [allegedly] had a supplier's names taped over and then passed the component off as something they had developed. The Hindenburg Report detailed all of these allegations and more. So it's not that Milton wasn't given "Elon Time" to make good on promises. The charges against him are not for saying that they would have a great factory and great products. There are charges against him for misrepresenting things that he was showing to the public and claiming as accomplishments. 

Let's address each of the claims about Musk: 

• Milton used Musk's playbook - Musk's playbook is to sell the idea of a better future. He is far from the first one to sell the vision of a bright future based on their products, but yes Milton did use Elon as a role model. Milton made similar fantastic claims, the difference was that (in my opinion) Milton didn't have the talent or resources to ever deliver on those blusterous claims. And, most importantly, Musk's playbook does not including showing non-working prototypes and claiming that they work. Musk's playbook does not include rolling vehicles down a hill and implying that it's operational.
  
  
• Alien dreadnaught - Tesla's factories are highly automated (as are all modern auto factories), but it's not a lights-out (no humans) factory by any means. Musk admitted he was wrong about this and called humans "underrated." Being wrong about something, learning, and then admitting you were wrong is not the same as lying. Tesla still built factories, they just changed the plans when they found the current state-of-the-art in robotics to be lacking. 
  
  
• Roadster, Semi, and Cybertruck - Every vehicle that Tesla has ever made (with one notable exception) has been late. Tesla does not just change a few tailfins and release a vehicle calling it a new model. Each one is a clean-sheet design to maximize safety, range, and manufacturability. When a product is not derivative, delays are common (if not inevitable). Tesla has delivered millions of vehicles, there's no reason to believe that these three will be any different. These will go to production. It doesn't matter if it's in 2022, '23, or '24. These vehicles will be the yardstick by which every electric entrant into that market space is measured. Saying things like 'the Cybertruck is fake' frankly makes you sound like you are hating on Tesla with no basis in facts.
   
• Flying Roadster - The SpaceX edition of the next-gen Roadster will have cold gas thrusters. These are the same type that are used as maneuvering thrusters on rockets. I think Musk knows where to find a few engineers with experience designing these. Sure there may be legal restrictions about where they can be used, but, as wild as this claim is, there are no laws of physics that have to be suspended for this to occur. Just because no one has ever done it, doesn't make it impossible.
  
  
• Gigafactory Nevada is not done - In 2020, the show Super Factories covered Gigafactory Nevada. They said that 13 million battery cells were produced per day. Panasonic later disputed this number but did confirm that in 2019 Gigafactory Nevada producing at a rate of 54 Gigawatt-hours annually. And by the way, this is why they are called 'Gigafactories' because they produce in the gigawatt-hour order of magnitude. So this is a massive factory by any measure. As for the incentives with Nevada, these were based on milestones that Tesla has to meet over a 20 year period to receive the tax incentives.  If Tesla does not meet the milestones, they don't receive the benefit. The contract even has clawback provisions that could allow the state to rescind prior-year incentives in some cases. 
  
  
• Solar-powered charging stations - Tesla has installed charging stations around the world. They have more DC fast-charging stations than the next three providers combined. Most of these are leased areas on the parking lots of retailers like Target or Walmart. Installing a solar canopy would be up to the site owner, not Tesla. And many of those sites do have solar panels on their roofs (not as visible or sexy as a solar car cover canopy, but still there). At the sites that Tesla owns, like Kettleman City, they have solar canopies providing shade and energy. Additionally, Tesla has sold residential solar and commercial solar systems.
  
  
• Full Self Driving - No one is required to buy FSD. It is an option. Tesla is not twisting people's arms to buy it. There's no high-pressure salesman trying to get you into an FSD system today. It's a checkbox on the website, if you think it's worth the money, get it; if not, don't. The people that have bought FSD are overwhelmingly satisfied with it. And, yes, right now FSD is just a driver assist system because it is in Beta. Yes, the people that are using it, are beta testing it because they want to. They are even willing to pay to use and test it. That's their prerogative. With the new subscription option, you could try it for a month or two and they decide if you want to buy it or not (or continue subscribing). 
   
• Wild Claims - Musk has big ambitions. He wants to move humanity to sustainable energy production and consumption. He wants to make life multi-planetary... He leads with Moonshot aspirations. He is forthright with these goals. He puts them out there for scrutiny and feedback. So yeah, Musk often misses timeline estimates. If you don't fail occasionally, you are not thinking big enough.

Apparently, my friend is not the only one to draw a comparison between Musk and Milton. Forbes claimed that the indictment of Milton was a "veiled warning" to Musk. Although I didn't see anything in the article to support this claim.

Certainly, Musk does not need my little blog coming to his defense, but if you wind up in a similar conversation where someone equates Musk and Milton because they read something in Forbes or the like, now you understand how they are fundamentally different.

Disclosure: I'm long TSLA

F-150 Lightning: A Threat To Rivian, Not Tesla

Big players and startups alike are jumping into the electric truck market: Tesla Cybertruck, Ford F-150 Lightning, GMC Hummer Electric, Chevy Silverado EV, Rivian R1T, Canoo Pickup, Nissan Titan Electric, Atlis XT, Lordstown Endurance, Bollinger B2, Hercules Alpha, Fisker Alaska, Alpha Wolf...

2021 is turning out to be the year of the electric truck, well... at least the electric truck hype. We'll see which ones come to market and which ones follow the Nikola Badger and disappear (looking at you Lordstown). 

Ford recently revealed their F-150 Lightning electric truck and the EV media is swimming with Cybertruck vs Lightning articles. I see the headline appeal :: America's best-selling truck goes electric to take on Tesla, the innovative electric up start.

Despite the headline narrative, this seems like the wrong comparison to me. If you are interested in the Cybertruck, then Ford's offering is not likely to sway you. Similarly, if you are interested in a normal-looking truck like the Lightning, you are not interested in the Cybertruck. The Cybertruck is a divisive love-it-or-hate-it wedge design. It literally looks like a wedge and the design acts as a figurative wedge. Certainly, you can compare them on price and range and other factors to pump a story out, but the actual cross-shopping audience is likely very small.

An overlooked aspect of Cybertruck's quirk design is that this allows Tesla to sidestep this head-to-head fight with the electric offerings from the legacy automakers.

The EV startups, not Tesla, are the ones that should really be frightened by the launch of the Ford Lightning. Let's look at one electric truck startup in particular, Rivian. Truck buyers are among the most loyal of brand shoppers, which puts Rivian in a tough spot. If buyers were dedicated to a brand (Ford, Chevy, Nissan...) but wanted an EV pickup, then they are likely to wait for an EV pickup in their favorite brand (F-150, Silverado, Tundra...). 

So this leaves Rivian only with the truck buyers that are not as brand loyal, the ones that are willing to take a chance on a start-up when purchasing the most expensive thing, other than a home, that most people ever buy. If Ford didn't have an EV pickup coming out soon, maybe this would have left the door open for Rivian to woo buyers as their current gas-powered trucks aged. This is how Tesla was able to move into the luxury car market, there was a void of EVs from the majors and Tesla was able to thrive in a space with little-to-no competition for nearly a decade until they eventually reached escape velocity.

This time, however, the majors don't want to allow a startup to take away their most profitable market. They are going to move in with products that will suck the oxygen out of the room, leaving startups gasping for air. 

I guarantee you that the list of EV trucks on the market in 2025 will not be the same list at the start of this article. Most of the start-ups will be acquired or go under. The Fisker Alaska might be Baked Alaska by then; Canoo might float away, Rivian might reach the river's end, the B2 might bomb, the Endurance might run out of steam, the sky may crash around Atlis, and Hercules might not complete the 12 labors. The well-funded startups (like Rivian) have a chance, but Ford and Chevy are not going to make it easy on them. 

Disclosure: I'm long TSLA

Sunrise Applies Heat to ODOT

The Oregon Transportation Commission held a meeting on July 15th. One of the items on the agenda was i205 improvements and expansion of 7 miles from West Linn to Oregon City including the Willamette River crossing. This work would add a third lane in each direction and reinforce the Abernethy Bridge and the eight other i205 bridges in the project area to be able to withstand a major earthquake.

The commission says the project will make the section of i205 "safer and allow more reliable travel to access work and critical services, even after an earthquake or other major disaster as well as address congestion."

This meeting included a public comment section. Several members of The Sunrise Movement made their voices heard.

From their website: The Sunrise Movement is a youth movement to stop climate change and create millions of good jobs in the process. We’re building an army of young people to make climate change an urgent priority across America, end the corrupting influence of fossil fuel executives on our politics, and elect leaders who stand up for the health and wellbeing of all people.

The Sunrise members brought up several points:

1. Expanding freeways increases traffic and does not reduce congestion (citing the Katy freeway in Huston with 26 lanes and yet it still has congestion)
2. 40% of Oregon's emissions are from transportation
3. Dollars spent on freeways are not available public transit (give people an option other than sitting in their car on a congested freeway)  

This commission meeting and testimony came right after Oregon's "once in a millennium" heatwave. At least 54 people died because of this global warming amplified heatwave. Other estimates put the number of deaths over 100. So there was a sense of urgency to do something to reverse this "global weirding" trend.

The Sunrise Movement is youth-led and one of the more galvanic testimonies came from a 15-year old that started by scolding the commission, saying that she should not have to wake up at 7AM to tell a bunch of adults things that they should already know. This same testimony ended by asking the commission how many people have to die before they take the climate crisis seriously. 

The commission handled this compelling and emotional testimony very professionally. 

So what do we do? What would you do? i205 is a primary path for goods moving up and down the west coast. I-5 runs through downtown Portland, so 205 is the bypass for freight heading north and south. This freight is typically on diesel semi-trucks. I don't want them stuck in traffic, polluting. Are the lanes the problem or the tailpipes of the vehicles that utilize them? If you allow this expansion, is it just one more slice in a death of 1000 cuts? 

The expansion takes this portion of 205 from 2 lanes to 3. This is far from the 26 lanes of the Katy freeway. Most of 205 is already 3 lanes, so it is not surprising that this stretch, where it's choked down to 2 lanes is a bottleneck. I think each action must be considered and, where reasonable, allowed. 

For me, I go back to the three ways to change the world. 

1.  Pass laws to change/control behavior 
2.  Set an example that some might follow 
3.  Invent a better way that people will rush towards

Generally, I lean toward option three. I see electrified transportation as the better option. People want freedom of movement. People want things delivered to their houses. That means that we need freeways, highways, and roads that are kept up and maintained and yes, in some cases, expanded. I'd like to see a multimodal transit center and charging infrastructure added as part of the improvement plan. These would allow more public transportation options and electric vehicle charging. I wouldn't even mind seeing a few more tunnels to give people another option for personal transportation.

You can listen to the complete testimony (and the EV infrastructure presentation that immediately followed it) here.

Let me know what you think.

Portland VPP Supporting The Grid During Heatwave

Portland is having *another* heatwave. And our local utility, Portland General, is dispatching our Virtual Power Plant (VPP) to help alleviate the grid strain that the additional air conditioner usage will cause. 

As I pointed out during the last time the VPP was dispatched, in our situation, this dispatch operation can actually increase our grid load. That's because we are load-shifting and reducing our electricity bill. 

The VPP control software will improve. Next summer, they'll likely be able to account for our use case. In the meantime, our minor increase in load will be more than made up for by others in the VPP. 

Alternatively, I might disable the VPP temporarily to stay "islanded" so that we don't increase our grid load. After all, I volunteered our batteries to help the grid, not increase the burden on it.

It Takes Talent - How Tesla is different #95

Most companies advertise their products. Outside of a college recruiting event, most companies don't advertise much if at all to attract talent.

The small amount of advertising that Tesla has done, has primarily been to recruit talent, rather than to sell their products. This is true at Tesla's "Day" events (Battery Day, AI Day...) as well as in their social media. This philosophy extends into other Musk-run companies too. The Neurolink Launch Event did demo the product but they spent an equal amount of time talking about the roles in the company and how they need to hire animal caretakers, programmers, chip designers, signal integrity engineers...

One recent interesting example of Tesla "advertising for talent" was a video that starred Tesla's chief vehicle designer, Franz Von Hausen. The video looks more like a cyberpunk video game than real life. It starts with Franz spraypainting Chinese characters on a wall. Someone hands him a tablet, as the glow from the tablet illuminates his face, you can see that he is both impressed and intrigued by the design. He asks, "Who did this?" as the caption asks, "What will you design?" 

Certainly an enticing thought. If you are a designer, you'd want to work at a company that's trying new things, this might catch your attention. The Cybertruck is featured prominently in the ad as an example of something that likely would have never been attempted at another company. 

Tesla plans to design an affordable car for the worldwide market in the Chinese design center that they are beginning to staff with this ad. 

The specifics of this effort are part of the bigger picture. Tesla knows that to achieve things that have never been done before, you have to hire talented designers and engineers. You have to hire people that are going to push things too far (in a controlled environment), see where they break, learn from that, and use that knowledge to make something that not just a derivative product, but a disruption.