Tesla & SolarCity usher in the New Energy Era

At some point late in 2013, I think the future business plans for SolarCity and Tesla Motors were mixed together. The page that said "Gigafactory" slipped from one to the other and now they both have a Gigafactory in their future.

Together these two gigafactories will reduce the cost of solar panels and energy storage. These factories, along with the wave of competition and copycats that they kick-off, will create the new energy era of 2030.

Let's look at each of these planned factories and their impact.

Tesla Gigafactory

Tesla is building a massive battery factory in Nevada. The figure below gives you some perspective on the size of the planned Tesla Gigafactory.

This comparison shows the size, but it is a bit of a cheat in that it is comparing the *footprint* of the factory to the *profile* of the other buildings. Below is a comparison of just footprints:

I'm not sure why the above figure (from Reddit) includes a banana on the right, but the comparison to the 80,000 seat Dallas Cowboys' football stadium is telling. This will be a massive factory.

Tesla expects their battery cost to be reduced by 30%. The output of the factory is expected to be 35 GWh/year of cells and, with additional cells from their partner Panasonic, 50 GWh/year of battery packs.

There are the numbers, but what does that mean? Let's put it in perspective, this is more battery capacity than all the factories in the world made in 2013. That is worth reiterating. This factory will produce, under one roof, more batteries than all the factories in the world made in 2013. This is enough battery capacity for:
o 22 billion iPhone 5s
o 1.2 billion iPad Retinas
o 2 Million Nissan Leafs
o 588,000 Tesla Model S P85D

More on the Tesla battery factory later, let's look at the solar gigafactory.

SolarCity Gigafactory 

The SolarCity Gigafactory will be located in Buffalo, New York at the High-Tech Manufacturing Hub. It is a one-million-square-foot site.

SolarCity intends to build a factory with 1 gigawatt of annual solar capacity. The modules will be highly efficient and have the lowest cost per installed kilowatt of any on the market. Depending on where it is installed, 1 GW of panels could generate 1 terawatt-hour of energy annually. This is enough to power over 85,000 US homes each year it is operational.

SolarCity's Silevo Solar Cell

According to SolarCity's press release, the company will spend $5 billion on their gigafactory over the next 10 years.

Putting Them Together 

Solar panels that generate energy and batteries that can store that energy are a natural fit. There are many ways that these can be used together. The Tesla battery gigafactory and acres of the desert around it will be covered in SolarCity's panels. Many of the Tesla supercharger stations will have SolarCity panels. These minor cooperative efforts are nice and to be expected considering the relationship between the companies, but this is just the camel's nose.

In late 2013, SolarCity started offering energy storage systems to businesses using Tesla batteries. The system has energy management software that stores energy when there's surplus and supplies energy during peak times to avoid demand charges and peak rates. Soon we could see projects that allow the utilities to buy this stored energy when they need it, thereby increasing their operating reserve. Another clue to what's to come.

Creating the New Energy Era 

It is easy to see how energy storage and solar are complementary, but the real disruption here is the scope of these two factories. Together they will reduce the cost of solar and energy storage to the point that they are game-changers. By 2030 things will be radically different. The combination of the Tesla and SolarCity gigafactories could make the next great energy powerhouse.

           

The combination of Tesla & SolarCity could be the next energy powerhouse. 

Energy Generation 2030

Cheap energy storage means that renewable energy can be the primary supply for the power grid. Intermittent sources, such as wind and solar, are easily managed when there is energy storage that buffers generation from use. This energy store can be tapped as needed, on-demand, with no spin-up delay. Energy will become "digital". Once we hit this digital-energy tipping point, all new generation plants that utilities bring online will be renewable. With renewable generation, there is no need to pay for ongoing fuel costs, waste disposal, or emission controls. Fossil fuel burning and nuclear will just not pencil out for cost and the "baseload" argument is moot once-massive grid-scale energy storage is viable.

           

Cheap industrial-scale batteries will make energy "digital". 

This might sound like a radical shift in energy production but the trends are already starting. The cost reductions in solar and storage will hasten the transition.

Cheap solar panels will mean that any building with an unshaded roof will be a candidate for solar. For example, if you could install solar panels and a scaled-to-fit energy storage system on your home or business, that cost you nothing upfront and this allowed you to pay for all of your electricity at off-peak rates, there are clear economic benefits, it's a no-brainer. Most people would jump at a chance to reduce their electric bill.

Transportation 2030

As batteries become cheaper, plug-in vehicles become cheaper, have longer range, and grab more market share. This also allows batteries to be used in more vehicle types. Today BYD is making electric buses and there are electric garbage trucks on the roads in Chicago and Beijing.

Elon Musk has stated by 2030 that 50% of all new vehicle production will be fully electric. I have made my own prediction here. In my prediction, I did not distinguish between plug-in hybrids and fully electric vehicles. I predicted that 50% of all new vehicle sales will be plug-in vehicles in 2035. So I am only slightly more pessimistic than Mr. Musk, but we are in the same general ball-park. Plug-in vehicles have clearly crossed the chasm by 2030 and are clearly on their way to market dominance.

Not only will batteries become cheaper, they will become lighter. Currently, Li-ion batteries store about 250 Wh/kg. Today this allows for expensive ~200-mile range cars. Battery energy density is improving at about 8% per year. Assuming this general rate continues, things start to get very interesting when the technology crosses the 400 Wh/kg milestone in ~2020.

The 400 Wh/kg milestone is significant because it will allow EVs to be lighter while still carrying a significant energy capacity. This will result in longer range without increasing the capacity. According to Car & Driver, the 2013 Tesla Model S 85 battery pack weighs 1323 pounds. A 30% reduction in pack weight would remove 400 pounds from the car. This would improve the acceleration, range, handling, and braking without any other changes to the car.

2013 Battery Pack Comparison

Let's look at air travel.

Today there are small experimental electric aircraft. At the 2014 Berlin Air Show Airbus demonstrated their E-Fan two-seater electric aircraft shown below.

Smaller aircraft, such as the Embraer Regional Jet and twin-turboprop commuter lines, will likely be among the first commercial planes to be electrified. Airbus has already demonstrated that they want to lead in this space even if it takes a radical redesign of planes.

As the fuel savings for these smaller aircraft becomes apparent, the technology will move up the ranks.

With 400 Wh/kg batteries, it is possible to have battery-powered coast-to-coast commercial airline flights. At 700 Wh/kg (in ~2030s), it would be possible to have battery-powered intercontinental flights.

Where Does It End?

Battery technology will continue to improve. They will get lighter, cheaper, charge faster, and last longer. Our current chemistries will, eventually, be replaced by lithium-air, solid-state, or another breakthrough. These will be refined and eventually displaced by ultracapacitors or a yet-to-be imagined storage system.

This improved energy storage will drive development and new applications in transportation and energy management. By 2070, all transportation (except rockets) will be electrically powered from renewable energy.

Create the future you want to live in

Model 3 Completes Tesla's Secret Plan

One fan's (ultimately incorrect) rendering of what the Tesla Model 3 could look like

As the March 31st reveal date approaches, the Tesla Model 3 has been dominating the alt car news recently. Many people will be hearing about this vehicle for the first time as the reports from the big reveal are circulated, but it has been planned for a long time.

When Tesla was started, they had a plan to start at the high end of the market and work their way down. Plenty of EV startups had tried starting at the bottom and gone bankrupt. Tesla planned to start at the high end of the market because new technology is expensive. For example, when DVD players came out in the mid-1990's they were over $500. Today, you can buy one for less than $30. Economies of scale bring down prices.

Tesla's plan was to follow this natural adoption curve and use a start-at-the-top business model. In 2006, Elon Musk wrote:

        
XX
X
X

In short, the master plan is:
Build sports car.
Use that money to build an affordable car.
Use that money to build an even more affordable car.
While doing above, also provide zero emission electric power generation options.
Don't tell anyone.

So, Tesla's plan was to create a high-priced low-volume car, then a medium-priced medium-volume car, then a low-priced high-volume car. The first car was the Tesla Roadster.

Tesla Roadster

Tesla Roadster

The Tesla Roadster was codenamed DarkStar. The plan was to use Lotus Elise frames, AC Propulsion motors, and commodity batteries. Tesla would work on battery packaging and battery management. The rest would be nearly as simple as the home EV conversions that many hobbyists undertake. That plan didn't work out as expected.

The car body had to be significantly redesigned. Quality problems plagued the AC Propulsion motors. Tesla had to raise the price and delay the launch several times. These problems nearly killed the fledgling company. But they got through them and learned many lessons that they could directly apply to their next project. In 2008 the Roadster was launched and the campaign to change the view of EVs as glorified golf carts was off to a racing start.

Tesla Model S

Tesla Model S

The Tesla Model S was the medium-priced, medium-volume, part two of the strategy. It was codenamed Whitestar. As a designed-from-scratch project, they again had many unforeseen problems and the launch was delayed. They worked through these issues and launched the car in June of 2012. When the Model S was introduced there were three battery options: 40 kWh, 60 kWh, & 85 kWh. The respective prices were: $57,400, $69,900, & $79,900. The smallest battery pack met Tesla's goal to have an offering in the $50k price range ($49,900 after the federal tax incentive).

Then something unexpected happened.

When the GM EV1 was being sold, there were two battery options: the standard lead-acid pack and a longer range nickel-metal hydride option. The cheaper lead-acid model accounted for the vast majority of sales leases. Many of us expected Model S sales to follow a similar course but things were different this time. The Model S is a vastly different vehicle than the EV1 and the design and tech in Model S made it attractive to more than just the environmentalist crowd.

After 3 months of preorders, the 40 kWh version was just 4% of the demand. Tesla canceled the 40 and said that existing preorders for the 40 would receive a vehicle with a 60 kWh pack and a software restriction to make it effectively a 40 kWh vehicle.

This was just the first step in Tesla recognizing their buyers' attraction to the high-end market. They continued to court the high-end making improvements and adding options that led to higher margin products. Battery upgrades, performance models, dual motors, ludicrous mode, and autopilot moved subsequent offerings up the price scale.

All this upscaling helped Tesla's cash flow.

Is it time for the high volume car?

• The Roadster was done - Phase 1 (low volume, high price)  
• Model S was shipping and winning awards left and right - Phase 2 (medium volume, medium price) was complete-ish.
• So now it's time for the affordable high volume car, right? Almost. 

Phase 3 Needs A Gigafactory 

The battery market had not blossomed the way a high volume vehicle would need. Tesla had defined their mission as, "To accelerate the advent of electric vehicles." This meant that if battery price/production was the limiting factor, that is what they would focus on and address.

Tesla Gigafactory Rendering

In a speech announcing the Gigafactory's site location, Elon Musk said, "This factory is very important to the future of Tesla because without it, we could not make the mass market car."

The gigafactory was not just planned as yet another battery factory. The massive scale of it needs to be mentioned. This one factory will double the global battery production. If you add up all the battery factories in China, Japan, Korea and elsewhere that were operating when the Gigafactory broke ground, this one factory would produce more than all of the others combined.

Tesla expects the Gigafactory to reduce the production costs by 30%. The factory is currently under construction and partially operational, but Tesla will need much more of it complete before moving to phase 3.

So what to do while the massive battery factory is being built? If the low price vehicle is not an option, then another phase 2 vehicle. Let's call it Phase 2.5.

Model X

Tesla Model X

After Darkstar and Whitestar, Tesla aimed for the stars with Model X. It was an ambitious project based on the same foundation as the Model S, but this time in a crossover form. The stats for the Model X are filled with in-class superlatives (fastest, safest...). It has the largest panoramic windshield of any vehicle in production. The gullwing doors are double hinged and Tesla has dubbed them falcon wing doors. The double hinge allows them open and close even in tight spaces.

Just as with Tesla's first two cars, this vehicle was plagued with production delays. Again, given time, Tesla's engineers worked through the issues. In a recent earnings report conference call, Elon Musk said that it was hubris that caused Tesla to take on such an ambitious project and that no car company, not even Tesla, will ever again make a vehicle so great.

Many have lamented that the Model X was causing the affordable car to be postponed. This is not the case. What's delaying the Model 3 is lithium batteries produced on a massive scale, but it's coming.

Model ≡

So we are finally going to see the Tesla Model 3 at its unveiling set for March 31. The Model 3 was codenamed Blastar Bluestar and it is the final step in the original secret plan. The low-cost, high volume 200+ mile range vehicle. Tesla has confirmed that the base price will be $35,000. As with their other vehicles, there will likely be multiple battery options and possibly an all-wheel drive (dual motor) option.

But enough speculation, we'll learn more about Model 3 in less than a month. The real question is, when the Model 3 is shipping and the secret plan from 2006 is complete, what will Tesla do next?

Can Tesla Power Its Gigafactory with Renewables Alone?

Elon Musk has said that all the energy that the Tesla Gigafactory uses will be from onsite solar, wind, and geothermal renewable sources.

Engineering.com recently pulled out their calculator to run the numbers. They wanted to see if it penciled out. Could the entire Gigafactory run exclusively from onsite renewables sources.

Being both a renewable energy advocate and an electric vehicle advocate, I found this to be a fascinating question.

Since the factory is not yet built, they had to make some assumptions based on the announced plans and the size of the plot. I'll spare you the math (which they did in detail) and cover just the highlights.

Assuming the factory roof is covered in solar panels and considering the regions solar capacity, solar photovoltaic would generate an estimated 850 MWh each day. Additional solar panels could be ground mounted if needed and they could be even more efficient if they have sun tracking mounts. But we'll assume just rooftop solar for now.

The image has 85 wind turbines according to their count. Given the regions average wind speed, this would generate roughly 1836 MWh of wind energy per day.

Nevada has several geothermal energy plants in operation today. The newest of these is a 20 MW plant. They assumed that Tesla would build one that is only half this size. This would produce 240 MWh of electricity each day.

Adding these up:
  850 MWh of Solar
1836 MWh of Wind
  240 MWh of Geothermal
-------
Totals up to 2926 MWh per day.

For perspective, this is enough to power about 97,000 homes.

How Much Does the Factory Need? 

Navigant Research estimates that for all the factory's activities, it will consume approximately 2400 MWh per day (about 80,000 homes worth).

Net Zero? Yes. Even Better, Energy Positive!

Given these assumptions, 2900 MWh are produced and only 2400 MWh are used per day. So it is possible for Tesla's Gigafactory to be powered by 100% onsite renewable energy. The additional capacity will allow the factory to feed the local grid with surplus renewable energy during peak generation times. This will allow for net-metering or "running the meter backwards" during sunny and/or windy days.

Additionally, this is a battery plant. One of their products (in addition to vehicle batteries) will be grid-level energy storage systems. One of these systems would both showcase their product and allow the factory to store surplus energy when it is generated and then draw from it as needed. This would smooth out any intermittence caused from the sun and wind.

Via Engineering.com

Tesla 2026: Cybertruck Could Transform Model S and X

Tesla’s Potential Large Passenger Vehicle Platform: A Unified Future for Model S, Model X, and Cybertruck

Tesla’s Cybertruck has a bold appearance that's unlike pickups of yore. Cybertruck's boldness continues under the surface as well. Traditionally, vehicles use miles of wire to connect everything to a Controller Area Network (CAN) bus. Cybertruck scraps that and opts for a faster network, which they call Etherloop. This uses about 68% less wiring. Munro & Associates) reports ~73% overall wiring weight reduction in Cybertruck compared to prior Tesla architectures.

Similarly, Cybertruck uses a 48-volt auxiliary power system. This offers significant advantages, including improved efficiency and reduced weight by using thinner wiring. The higher voltage supports more powerful electrical systems, such as enhanced lighting and infotainment, while reducing the need for multiple low-voltage batteries. It also simplifies steer-by-wire.

These innovations cannot stay exclusive to the Cybertruck. They must proliferate throughout Tesla's vehicle lineup. The fastest way forward for this proliferation would be the bold step of unifying the Model S, Model X, and Cybertruck on a shared platform based on the Cybertruck’s architecture. This would create Tesla's new large passenger vehicle platform. It would streamline production for these vehicles, reduce costs, and bring cutting-edge technology to Tesla’s flagship models. 

We'll explore the advantages, implications, manufacturing location, and timeline for such a platform and redesign, along with the potential for features like four-wheel steering to enhance the Model X.

Advantages of a Shared Platform

A unified platform would allow Tesla to standardize components across the Model S, Model X, and Cybertruck. Shared parts could lower production costs through economies of scale, as Tesla would purchase components in bulk. Manufacturing would become more efficient, with simplified assembly lines and reduced setup times. The Cybertruck’s 48-volt architecture, steer-by-wire, and Ethernet-based wiring system would modernize the Model S and Model X, which currently lack these features. Additionally, steer-by-wire tech would enable right-hand drive variants, which Tesla discontinued for Model S and X in 2023. This would reopen the UK and Australian markets to the S and X.

A shared platform for Model S, Model X, and Cybertruck means shared components and architecture. It does not mean a similar exterior design for all three. The Model S and Model X would not adopt the Cybertruck’s angular stainless steel exterior. The Model S and Model X would utilize the Cybertruck’s 48-volt system and steer-by-wire technology, rather than its aesthetics. Their sleek, curved designs would be preserved.

Implications and Manufacturing Locations

A shared platform could reshape Tesla’s production strategy. Currently, Model S and Model X are built at the Fremont factory in California, while the Cybertruck is produced at Gigafactory Texas in Austin. A unified platform would likely lead to consolidated production at Gigafactory Texas. A shared platform would also support adding four-wheel steering to the Model X, complementing its falcon-wing doors, making the X even cooler.

Shared Production Line

A shared platform would allow Model S, Model X, and Cybertruck to share a production line. A typical production line produces 100,000 to 250,000 vehicles annually, depending on automation and model complexity. The vehicle mix on a shared production line could be adjusted based on demand, enabling flexibility for Tesla to optimize and respond to market shifts for these three relatively low-volume vehicles.

Timeline for Redesign

The Model S and Model X received major refreshes in 2021, with minor updates in June 2025, adding features like a front bumper camera and improved interiors. Tesla’s typical refresh cycle spans 5-7 years, so a major redesign in 2026 fits this pattern. A major platform overhaul that brings all of Tesla's latest and greatest tech to their flagship vehicles would be exciting.

Manufacturing and Feature Summary

Aspect	Details
Current Manufacturing Location	Model S/X: Fremont, CA; Cybertruck: Austin, TX
Potential Manufacturing	Likely Gigafactory Texas on shared platform
Last Major Refresh	S/X 2021 (interior, powertrain updates)
June 2025 S/X Update	Front bumper camera, new wheels, enhanced interiors, new paint colors
Proposed Features	48V architecture (all), steer-by-wire(all), four-wheel steering (CT and new for Model X)
Right-hand Drive Variants	Currently unavailable for S/X; possible with new platform; (Re)opens regions
Redesign Timeline	Speculatively Sept 2026

Conclusion

A large passenger vehicle platform based on the Cybertruck could transform Tesla’s Model S, Model X, and Cybertruck production by reducing costs, unifying technology and production lines, while enabling right-hand drive variants. Manufacturing would shift to Gigafactory Texas. The refresh cycle history hints at 2026 as the year this redesign could happen. Adding a four-wheel steering option to Model X would elevate its appeal, making it a standout in Tesla’s lineup.

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

Musk of Mars

Disclaimer, Disclaimer, Disclaimer: The below article makes inferences, speculations, leaps of logic, and several WAGs. This is just a blog, not PLOS ONE; please treat it as such.

It's not a stretch to say that Elon Musk is obsessed with Mars. He wants to make life multi-planetary (read populate Mars and beyond). He has even said that he wants to die on Mars, "Just not on impact." In 2002, he started SpaceX with the explicit objective for the rocket company to become the primary means to populate the red planet.

           

It's important that we attempt to extend life beyond Earth now. It is the first time in the four-billion-year history of Earth that it's been possible, and that window could be open for a long time - hopefully it is - or it could be open for a short time. We should err on the side of caution and do something now. ~Elon Musk

SpaceX is not Musk's only company. The other companies that Musk runs promise to make Earth a better place with renewable energy production and storage, zero-emission transportation, and high-speed rail in low-pressure underground tunnels. What if these Earthly benefits are only a side-effect and not the true reason Musk funds and helms these companies? What if these are pieces to a bigger secret plan?

All of Musk's other current companies were formed after SpaceX; or more specifically after colonizing Mars was his stated goal. These companies include Tesla Motors (2003, now Tesla Inc), SolarCity (2006, now part of Tesla Energy), and most recently The Boring Company (2016). Additionally, in 2013, Musk was the impetus behind Hyperloop. He penned the 58-page first draft* for the idea for a "fifth-mode of transport" in low-pressure tubes. Musk is not involved in any of the companies currently working on Hyperloop, but SpaceX does host a student competition twice each year that draws in over 800 students including teams from California-Berkeley, Carnegie Mellon, and MIT.

Why did he create each of these efforts?

           

I don't create companies for the sake of creating companies, but to get things done.   ~Elon Musk

What if, like SpaceX, each of Musk's companies had an explicit Mars mission statement. Let's look at each of his current endeavors through the red-colored lens of Mars and see what they might "get done" there.

SolarCity

A colony on Mars will need energy. As far as we know, Mars does not have deposits of oil, coal, or methane. There are no flowing rivers that can be dammed. The thin atmosphere would not power wind turbines very well.

Mars is farther from the Sun than Earth is, so solar panel energy output will be about 40% lower than it would be here. However, the panels will not have to deal with cloud cover or weeks covered in snow. These factors and the cool ambient temperature helps to make up for the increased distance from the giant fusion reactor known as the Sun. The solar panels that go to Mars will not be the same type that you put on your roof. They will be the most efficient full-spectrum panels that we can produce. One more solar consideration is that pesky dust problem. Looking at all these factors, solar panels will likely be a significant energy source for a Mars colony.

The people of Mars may eventually derive their primary power from nuclear or a fuel source extracted from the soil. Even if solar is not the final primary energy source, it would be useful for excursions and as they expand into new areas, before the infrastructure for other methods is setup.

Solar panels may not be the only energy source, but they are very likely a significant energy component for this Mars colony of the future. When SolarCity's Gigafactory** facility in Buffalo is complete, they will be able to produce the necessary solar panels for Mars.

Tesla Motors (i.e., the transportation division of Tesla Inc.)

A colony on Mars will need transportation. There is no significant atmosphere on Mars, so an internal combustion engine, like the ones that power most ground transportation here on Earth, would not work on Mars without the supply of air to suck in. Just as the Lunar Rovers were battery powered electric vehicles, so too will be the vehicles for Mars excursions.

Similarly, if the colony becomes large enough that you need transportation within habitation areas, then a polluting internal combustion engine indoors is a bad idea when every liter of breathable air must be scrubbed. Without miles of atmosphere above you, running an internal combustion engine would be like running a gas car in your garage with the door closed. It's a very bad idea.

So both surface transportation and intra-hab transportation will be electrically powered on Mars. Tesla Motors will be able to make vehicles for these needs.

Tesla Energy 

Batteries will play a vital role in both energy and transportation. If you live in a solar powered world, you need energy storage. Batteries will provide nighttime energy needs such as lighting, refrigeration, and heating. Batteries will also be important to power the electric vehicles mentioned above.

Tesla's Gigafactory (eventually Gigafactories plural), will be able to produce batteries for Mars colonies. Mars colonies will eventually need to be able to produce their own supplies of things like batteries, but supplies from Earth will kickstart them.

Perhaps the surface of Mars will eventually be dotted with a matrix of solar powered, battery-based Supercharger stations. This could be our chance to actually have a single universal planetary standard for fast charging (on at least one planet).

The Boring Company 

Musk has recently started a company to dig tunnels. He has stated that his engineering team can reinvent tunnel boring and create a machine that will bore through the earth five to ten times faster than any of the massive earth-boring rigs that exist today.

Would you need tunnels on Mars?

Without a significant magnetic field, like the one we have here on Earth, Mars is far more vulnerable to cosmic background radiation and highly energetic events that emanate from the sun such as solar flares, coronal mass ejections, and coronal holes.

On Mars, the easiest way to avoid solar energetic particles (SEPs) and galactic cosmic rays (GCRs) is to live underground. Five meters of soil should provide a level of protection similar to that which we enjoy on Earth.

This means that, at least initially, our Martian colony will be living underground. Natural caves might provide an initial starting point, but the colony will want to expand as the population increases with more areas to grow food, living quarters, recreation areas... Drill, baby, drill (horizontally)!

Hyperloop

Hyperloop is the idea of an ultra-high-speed train in a (mostly) evacuated tube. The ~one-mile long test track on the SpaceX campus is the second largest vacuum chamber in the world (second only to the Large Hadron Collider).

In 2015, Japan's maglev train set the world record at 374 MPH. Musk hopes that Hyperloop will be able to double this speed. But it's turning out to be a very difficult problem.

The long tubes, that Hyperloop requires, makes maintaining a low-pressure environment very difficult. The tubes expand and contract with temperature changes. This means that they have to have some sort of expansion joint to avoid buckling. This makes maintaining pressure seals very difficult. One solution to this is to go underground where the temperatures are more stable. See The Boring Company above.

However, in places like California, where the earth has been known to quake, people may not be excited to travel underground.

Hyperloop is turning out to be very difficult here on Earth. Would it work on Mars?

On Mars, things are much easier for Hyperloop. Low-pressure environments are not hard to come by. And tectonically, Mars is stable. With the planet's likely solid core, Marsquakes are not something that Hyperloop riders would need to worry about above or below the surface. Although a Marsquake may have occurred in 2012.

Mars - The Puzzle Pieces Fit Better

Batteries, electric cars, & solar panels work well both, here on Earth and on Mars. These products make sense for both planets. Looking at tunnels and Hyperloops, the earthly benefit is not as clear.

Musk has said that he wants to drill tunnels to alleviate traffic. Studies have shown that adding more traffic lanes only invites more cars. This will be true if the lanes are in tunnels or on the surface. I'm sure Musk is aware of these studies. Perhaps his vision is to add far more levels and lanes than any historical road expansion, so prior studies of roadway expansions that added a lane or two to an already congested area just don't apply. On Mars, if we're living underground, the roadways could be designed from the beginning to be multi-level.

Looking at Hyperloop, there're several teardown articles and videos that discuss many of the problems of hurling people through an evacuated tube at near the speed of sound. Again, I am sure that Musk is well aware of these challenges. Hyperloop low-pressure levels are not easy to maintain (on Earth).

Musk is a genius. I don't think that he has simply overlooked the things that a YouTuber has pointed out. I think he has a different, Martian endgame in mind. If you were building Hyperloop on Mars, the near vacuum comes for free. The lower gravity will even make the train levitation easier.

Mars - The Secret Plan 

Musk's real secret plan: develop technologies to be utilized on Mars. If they also make Earth a better place, great. Shhh, it's a secret. Don't tell anyone.

Here's the Mars vision: Solar panels collect energy, batteries to store the energy, electric vehicles to move about on the surface, in the hab, and for farming drones. Tunnels between sites (farms, habs, loading docks...) with Hyperloop trains to move people, equipment, and supplies. And, of course, SpaceX will take all the people and supplies to Mars. It all fits nicely.

It's important to note that Musk's companies may not be the ones to ultimately deliver these technologies to Mars. Rather the mere founding of Tesla, SolarCity and the others would help to create a worldwide market for these technologies that would then drive the industry to invest billions of dollars into R&D to create better batteries, solar panels, high-speed trains, and even tunnel boring machines. All technologies that Mars will need. If another company can do it better, faster, cheaper than Musk's, Mars (and Musk) still win.

If Mars is the real mission of all these efforts and it just happens to make life a little better on Earth along the way, that sounds good to me. Maybe I'll sell my home in 2030 and retire to Mars. 😃

Where does OpenAI fit in? I'll leave that as an exercise for the reader.

* Arguably Musk revived an old idea. See Robert Goddard's vactrain concept. 
   As a rocket-man, Goddard is someone with which Musk is familiar.

** The SolarCity Gigafactory is now called Gigafactory 2 and Tesla has announced plans for Gigafactories 3, 4, & 5.

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 

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

Software

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

Gigafactory

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

Dreadnaught

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.

Summary

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
http://ts.la/patrick7819