Speaking of sustainable development and climate change, who does not immediately think of Tesla? [1]<\/p>\n
Today, everybody knows this brand and yet it’s only a dozen years old. Its business idea relied on the superiority of electric motor over gasoline engine. Electric engines have a significantly higher energy efficiency and work on lithium batteries used in smartphones. Everything Tesla has been doing from the very start is all about either fighting or adapting to a changing climate. [2]<\/p>\n
Ten years ago, climate issue was not a global priority, although the level of carbon emissions already reached an alarming level. The world came to realize at the energy summit in 2002 in Johannesburg South-Africa that human race had a major influence on the rise in temperature on Earth: global temperature has increased 0.85 degree since the Industrial Revolution. [3] The Paris Agreement last December has set a target of keeping a maximum 2 degree increase in global temperature by the end of the century for the sustainable survival of human species. This requires a drastic reduction of CO2. The entire transport sector accounts for a quarter of emissions of greenhouse gases worldwide, thus this is a major area to work on.<\/p>\n
An electric vehicle could use 6,100 fewer gallons of gasoline over its life time compared to today\u2019s compact gasoline car. A recent report proved that on average electric cars produce half if not even less the emissions of a comparable gasoline car. [4]<\/p>\n
Tesla launched a sports car model called Tesla Roadster in 2008. In June 2009 Tesla received $465 million in loans at low interest rates from the US Department of Energy as an incentive to support companies working on sustainable businesses. In 2010, its IPO allowed it to invest in a production facility in Fremont and then launch a family model that achieved a great success. As of October 2016, its luxury Model S is the world’s second-best-selling plug-in overall. However, that\u2019s not enough. Electric vehicles are expensive. Only when the new technology becomes affordable to people with thin pockets will the automotive industry make a sound contribution to reduce global warming. The company\u2019s strategy is thus to develop luxury product lines that bring out high profit to afford the development and production of mass market electric vehicles that can really replace most of the gasoline alternative in the market. With the success and reputation earned with latest models, Tesla has announced a plan to launch an “affordable” Model 3 line at $35,000 market price. This vehicle has already been preordered up to 350,000 units. To reach this goal, Tesla partnered with Panasonic to build in Nevada the largest factory of the world lithium battery with the objective to cut cost by half and double its capacity. It is a 5 billion dollars bet, the plant is still not yet fully operational, and Tesla is already planning the construction of other “giga factory” on other continents.<\/p>\n
Tesla also has a high level of vertical integration as noted by Goldman Sachs, since it controls its whole production line like no other automaker. Discussing the very much sought after acquisition of Solar city, the company leader claim that the company will be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers. \u201cThis would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered. With your Model S, Model X, or Model 3, your solar panel system, and your Powerwall all in place, you would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimizing your dependence on fossil fuels and the grid.”[5]<\/p>\n
Tesla clearly wants to be seen as an energy company from now on, a company capable of offering full one-stop solutions addressing carbon footprint issue.\u00a0Elon Musk also made a bold decision to offer patents for free to other car companies for the advancement of sustainable transport industry. [6]<\/p>\n
In order to make a big leap in oil and gasoline consumption, a slow shift towards electric vehicles will not be sufficient. Tesla will not only need to bring the cost even further down quickly but also build many more giga factories to keep up with the huge demand.\u00a0The company also is working on other innovations to utilize more and more of solar, wind, and nuclear power to make a bigger impact.<\/p>\n
What lies ahead of such a brave pioneer company are countless of challenges and uncertainties. However, hope is high for Tesla because governments around the world are loading more and more rules to suppress gasoline and diesel cars while at the same time incentivizing Tesla-alike businesses.<\/p>\n
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Endnotes:<\/p>\n
[1] \u201cTesla\u201d, https:\/\/www.tesla.com\/energy<\/a>, accessed November 2016.<\/p>\n <\/p>\n [2] Eric Mack \u201cHow Tesla And Elon Musk’s ‘Giga factories’ Could Save The World\u201d. Forbes.com, October 30, 2016,\u00a0http:\/\/www.forbes.com\/sites\/ericmack\/2016\/10\/30\/how-tesla-and-elon-musk-could-save-the-world-with-gigafactories\/#3590a2537273<\/a>, accessed November 2016.<\/p>\n <\/p>\n [3] John Sutter, \u201cClimate: 7 questions on 2 degrees\u201d, cnn.com, April 24, 2015,\u00a0http:\/\/www.cnn.com\/2015\/04\/24\/opinions\/sutter-questions-two-degrees-climate\/<\/a>, accessed November 2016.<\/p>\n <\/p>\n [4] Jerry Hirsch, \u201cElectric vehicles beat gasoline cars in cradle-to-grave emissions study\u201d, Los Angeles Times, November 12, 2015, http:\/\/www.latimes.com\/business\/autos\/la-fi-hy-ucs-electric-vehicles-emissions-study-20151110-story.html<\/a>, accessed November 2016.<\/p>\n <\/p>\n [5] James Dodenhoff , \u201cTesla\/SolarCity: Vertical Integration Value Hard To Find\u201d, seekingalpha.com, June 11, 2016, http:\/\/seekingalpha.com\/article\/3987574-tesla-solarcity-vertical-integration-value-hard-find<\/a>, accessed November 2016.<\/p>\n <\/p>\n