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Why Elon Musk wants SolarCity: Tesla will replace the Grid

My mom works for a hotel and conference center. Sometimes she would show me some interesting conferences that would be in town. In high school, I would sneak into some of these conferences. One of these conferences was about the future of transportation. The most interesting speaker there was Joel Anstrom. He presentation models of electric vehicles: Vehicles to Grid (V2G) and Vehicle to Solar to Grid (VSG). Tesla is going after these systems. 

Grid Demand

One of the problems with our power grid is that we do not have a constant demand. During the day there are large peaks that stress our power grid. V2G is one solution. V2G is the idea that power can be stored in the electric vehicle. The power can then be taken to power the peak times of the day. Tesla is close to this model. This is a “smart grid”.

Smart Grid

What’s beyond the smart grid? Well, no grid at all. When electrics travels on a power line some electricity is lost. Each mile decreases the amount of electric we can use. Then logically you would want the shortest distance from power production to usages. That means the future of power production might be the same place people use it: the house.

A house with solar panels on it. The article is about SolarCity and Tesla. The future of the grid will probably be solar panels using batteries and electric vehicles.

VSG is that system. Solar panels charge batteries and your electric car during the day, then power is taken from the batteries and your car during the night to power your house. Then the grid backups and supplements your electricity needs. How does this relate to Tesla?

Batteries

One of Elon Musk’s core philosophy is; reason by principles, not analogies. What does this mean? For other who thought about an electric car, their first problem is batteries. The assumption is that electric cars are expensive because batteries are expensive. This is reasoning by analogies. One thing is a certain way the next thing is just like it. Reasoning by principles looks at why batters are expensive. Batteries are expensive because no one makes batteries from start to finish. Parts are shipped around the world. Each stop takes profit margin and increases the cost. Tesla is planning to solve the battery problem with the Gigafactory. The factory was designed and built to have vertical integration. Batteries there are made from start to finish in one location.

Great Tesla will make a lot of batteries. Who will use them? The people who will use them are ones with solar installations. Moving towards a VSG system. Tesla isn’t selling cars, batteries, or solar. They will be selling a system, one that will replace the electric grid. 

Solar

When Elon Musk is asked about his motivation he refers to his interest in making sure humanity continues to exist. He believes the best way to do this is alternative energy and space travel. All business moves are not based on increasing profit, but contributing in a valuable way to save humanity. I laugh when stock analyst talks about the Tesla and SolarCity deal. They don’t understand it. SolarCity has debt, why buy it? Elon Musk is thinking more about the future than the present. That’s why Tesla is buying SolarCity, the future. 

Epilogue:

After the conference I snuck into I participated in my High School mentoring program. When I filled out the form to get a mentor it asked for my interests. I know I am not typical. Others probably put sports or the stockmarket. Wanting to matched with coaches and business professors. I think I put; Synthetic Biology, Electric Vehicles, and Nanotechnology. The program organizer called me to ask what was Synthetic Biology. Fortunately, they found someone in Electric Vehicles that would be my mentor for a week: Joel Anstrom. He seemed unfazed by my instant knowledge in his field and research. I got a tour of the Electric and Hybrid Vehicle Center at Penn State. They were working on many cars and I got to see the the cars. I learned a lot. 

Also see:

Profile of Joel Anstrom

More of my articles about Entrepreneurship

3 Comments

  1. Great article! I didn’t think about Tesla’s future in this way.

  2. Tesla now has a lot of competition with electric car companies on their way. I know of 3 in my area alone.

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