Tesla Is The Only Automaker Positioned To Lead The Energy Transition

3 months ago by EVANNEX 13

Tesla Model 3

The Tesla Model 3 will be the first significant leader in the vehicle energy transition.

The hot topic these days, anywhere that trends in the tech and business worlds are being discussed, is the coming transition away from fossil fuels.

Wise men and women are considering the impending upheaval from every possible angle, but one common denominator that always comes up is Tesla.

Tesla Model 3

Tesla Model 3

In a talk at Singularity University’s Exponential Manufacturing Summit, machine learning expert, investor and science fiction author Ramez Naam explains some of the reasons for the energy transition – falling technology costs, choking air pollution, – and discusses some of the business opportunities that are being created (Mr. Naam is an investor in early-stage clean tech companies).

As is the case with all major reorganizations of human society (the industrial revolution, the spread of automobiles, the rise of the internet, etc.), the brave new world of energy and transportation can be examined through different lenses, so to speak: environmental, geopolitical, technological or financial, to name a few. Mr. Naam focuses mainly on the tech angle, explaining how innovation is rapidly reducing the prices of key energy-related technologies, and why this will disrupt the existing order.


Above: Ramez Naam discusses transformation in the energy sector (Youtube: Singularity University Summits)

He illustrates his points with plenty of charts showing the declining costs of renewable energy and its enabling technologies: wind power, photovoltaic cells, battery storage – all have seen exponential increases in capability and decreases in price. Will current trends continue? Well, forecasts are all over the map, but the entrepreneurs who are making this all happen (such as Elon Musk) tend to believe that the trend of declining costs will continue, or even accelerate. Mr. Naam’s take? “Believe in the innovators more than the forecasters.”

Most of Naam’s audience consists of people involved in manufacturing, and he points out that energy is one of their largest cost items. A reduction in the cost of energy could revolutionize manufacturing. People tend to assume that clean energy is expensive energy, but if current trends continue, solar energy combined with energy storage will soon be by far the cheapest form of energy. In some parts of the world, it already is – last September in Dubai, a deal was signed to produce electricity from a 1.3 GW solar plant for 2.42 cents per kWh. That’s less than half the average price of natural gas-generated electricity in the US, and in other parts of the world, the disparity is even greater.


Tesla vehicles charging under solar canopy (Instagram: better.e)

Naam shows us chart after chart with steep curves. Renewable energy and storage: capacity up, costs down. Coal: down. Did you know that over half of the coal used in the US is now being produced by companies that are in some form of bankruptcy? The curves begin to look ominously like the curves that illustrated the decline of film cameras.

For impatient Elon Musk fans: the Iron Man makes his appearance about 17 minutes into the show. Raam says he didn’t believe in electric vehicles a few years ago, but he does now. What changed his mind? It sounds like it was Tesla, which almost single-handedly changed the public perception of EVs from clunky, unreliable golf carts to glamorous, cutting-edge computers on wheels. He illustrates his point with a video of someone experiencing the now-famous Insane Mode revelation (or should we call it the “Oh s–t revelation?”). For Raam, the final nail in the ICE coffin was the advent of Model 3, which “drives like a Porsche and is priced like a high-end Camry.”

Tesla Model 3

The futuristic Tesla Model 3 unlocks via a key card and a phone app. Most everything inside the car is controlled via the touch screen.

The charts keep coming, an inexorable succession of steep lines leaving no doubt that the electromobility transition is upon us. The Energy Information Administration predicted in 2015 that there would be a mere 10 or 20 thousand 200-mile EVs on the road by 2040(!). Naam says (with a bit of overstatement) that Tesla just sold half a million of them.

Battery costs make up a third the price of current EVs, and those costs have been dropping by about 25% every time global battery manufacturing capacity doubles. What happens to EV demand if current cost trends continue? Another hockey-stick chart.


Tesla battery cells are dramatically dropping in price

Naam compares a photo of the elegantly simple Tesla powertrain with one of the thousands of parts that make up an ICE vehicle, to illustrate his prediction that, before long, EVs will actually be much cheaper than legacy vehicles – within 15 years, a luxury vehicle with Porschesque performance will be cheaper than a two-seater smart car is today.


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13 responses to "Tesla Is The Only Automaker Positioned To Lead The Energy Transition"

  1. Pushmi-Pullyu says:


    No, I didn’t.

    How wonderful! Not only in terms of using less fossil fuel every year, but also in terms of breaking the horrible endless cycle, an economic slavery in many or most cases, of men doomed to work themselves to death in coal mines, and raising their sons to do the same.

  2. Mark.ca says:

    That’s why we elected Trump, to save the coal sector.
    Go Trump….very far away!

    But seriously, coal is a natural victim here and will go down no matter what. The big problem is how you get out of the other fossil fuels cycle. There is no cheap or easy way out.

    1. Bacardi says:

      Obama was a “clean coal” champion with a couple of carbon capture projects which have now failed, yet coal is dying on its own as plants convert to cheaper and cleaner natural gas…The good news with that conversion is it’s fairly difficult politically to go back to coal…

      Trump is anti wind and is anti-solar unless it has to do with his wall…

      1. Mark.ca says:

        “The good news with that conversion is it’s fairly difficult politically to go back to coal”
        I’m sure you meant it’s fairly difficult economically to go back to coal because politically it should be easy as the republicans have majority now. To keep burning coal for energy it may soon require much bigger subsidies than the ones offered for green energy…ironically.

      2. mx says:

        Solar is cheaper than natural gas in the lower 20 US States today. Utilities are now starting to build solar & storage and shut down natural gas.

        1. Mark.ca says:

          It’s not cheaper when you account for storage and storage is a must if you want to ditch nat gas.

    2. Mister G says:

      Mark, I would argue that staying on fossil fuels is extremely expensive, Harvey catastrophe will cost tax payer billions.

      1. Mark.ca says:

        I agree with you on the long term argument but in today’s business environment no one looks beyond tomorrow and as long as the government won’t intervene nothing will ever change. “Free” market will never make this change unless people start demanding it.

        1. Mister G says:

          Just heard Texas Governor say about $120 billion needed from tax payer…and here comes hurricane Irma.

  3. Just_Chris says:

    “Tesla Is The Only Automaker Positioned To Lead The Energy Transition” – Nope there are a number of Chinease manufacturers who can do it (BYD springs to mind) as could Nissan/Renault/Mistu. There are also a whole heap of other companies that make solar panels, wind turbines, smart energy stuff, and batteries that will be equally important.

    1. Will says:

      + exactly. Yeah .30 % global car sales is leading a electrical car revolution

      1. Mister G says:

        Nailed it…maybe after harvey catastrophe ev sales will jump to .31% LOL, I’m so frustrated by how many humans refuse to go electric.

      2. kbm3 says:

        0.3% with 80% growth rate.

        Plus if robo-taxi’s takeoff, ICE sales will plummet.

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