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Musk is thinking 8 steps ahead of almost everyone. While Tesla is a huge play with revolutionizing the car world, there are some other parts in play. First, h

Musk is thinking 8 steps ahead of almost everyone. While Tesla is a huge play with revolutionizing the car world, there are some other parts in play. First, his Gigafactory to produce batteries. When the other big automakers get into the electric car mindset, who are they going to buy batteries from? Musk who owns the single largest and high-tech battery factory (that produces on an enormous scale), or other battery producers who have less economies of scale and higher prices? Obviously, lower prices win and Musk ends up selling batteries to his competitors...genius. Second, when other manufacturers get into the electric car game they are going to need nationwide chargers. Did you think that the Tesla and Supercharger of proprietary connectors for no reason? Since Tesla will have a huge nationwide system before anyone else, Musk will license the rights to use his chargers. Again, making money from the competition. Competitors will not have the ability to compete on charging when they release cars because Tesla will already have an established network. As for SpaceX...thats a whole another post for another day.

purringmeow 13y ago
Makes me think how much we need a revolution in batteries. I am wondering if there will be a new type of batteries soon or maybe we'll get improved capacity by slapping a software layer that manages charging/discharging.
- will_hughes 13y ago
  As far as I can tell - there's lots of "interesting" energy storage technology being researched, but there's nothing that's close to being ready for at-scale manufacturing.
- cushychicken 13y ago
  We've needed one for ages! Lithium ion is the best we can do so far, and it has two GAPING flaws: * tons of energy is lost as heat * volatility of the chemical storage mechanism occasionally causes that heat to get released as an explosion I'd love to see Musk's solution end up in a massive increase in battery performance.
  - purringmeow 13y ago
    I've looked around and it seems there are lithium-sulfur based batteries with 10x capacity and all in all lasting 4x Source: http://www.extremetech.com/extreme/157525-new-sulfur-based-battery-is-safer-cheaper-more-powerful-than-lithium-ion http://www.extremetech.com/extreme/157525-new-sulfur-based-b...
  - thret 13y ago
    I've been adamant that we've needed a battery revolution since Terminator. Batteries were the major hurdle 30 years ago and they still today. I can't believe it's been 30 years.
    - jjoonathan 13y ago
      It's been 160 years since the first hydrogen fuel cell and the lead-acid battery were invented.
adventured 13y ago
I agree with a lot of what you said. However, this: "Competitors will not have the ability to compete on charging when they release cars because Tesla will already have an established network." is dramatically wrong. They will absolutely compete on charging, stubbornly so, and probably leveraging politics in the process. The major energy companies will also get into the charging business (much like the oil companies did with gasoline stations), and they too will fight with Tesla on standards, and attempt to set their own. The one guarantee is that the energy industry, filled full of extremely powerful companies used to dominating and getting their way, will not simply go along with Musk because he got there first (ditto for Ford and GM). That's not to say Tesla's standard will or won't prevail (or whether several will win out), but rather that there will be a long fight over it, and the competition will be belligerent.
- cushychicken 13y ago
  I'm still going to bet on the guy who has put something in space.
  - threeseed 13y ago
    Yes. Because it's not like the other guys have decades of experience in the automobile industry.
    - 001sky 13y ago
      Or, the regulatory capture industry.
- coreymgilmore 13y ago
  I very much agree with you: energy companies and other auto manufacturers will get into the charging business. They have to! But I defend my point based on this: Would you buy a car that has an established charging network, or a car with only a few chargers nationwide? Of course, the established network since there is less worry about "filling up". This is a direct mirror of today's issue with electric vehicles: there isn't a large charging network. Tesla has been competing against other vehicles that have no range anxiety. Similarly, if GM produces a car to use only a GM charger buyers will feel this anxiety and tend toward an easier solution. Therefore, it would only make sense for GM to license the rights to use Tesla chargers since GM can quell range fears and still make money off the car sale. As for a standard in charging. This is going to be a long fight. The energy and auto industry (minus Tesla) has the political power and money to force a standard many times over. The question becomes: accept a standard because it exists and was funded well (feature phones), or choose something new because it is supremely better (iPhone 1). Who knows, I enjoyed your response. It made me rethink about this.
dpcheng2003 13y ago
What's amazing is that Tesla has been providing NRE R&D for OTHER automotive companies for years already. Last year, $15 million of their revenue was from development services but as early as 2011, $55 million of revenue (>25%) was from basically doing powertrain design for companies like Toyota and Mercedes. Link to last 10-K: http://www.sec.gov/Archives/edgar/data/1318605/000119312514069681/d668062d10k.htm#tx668062_9 http://www.sec.gov/Archives/edgar/data/1318605/0001193125140... Tesla will definitely make a killing on batteries. I actually think the supercharger network is going to REMAIN proprietary as a competitive advantage for Tesla vs. other electric car companies. As someone who's done research in this in the past, there are already well-established standards adopted by the IEEE and companies like GE for charging. This is obviously to encourage the adoption of the technology. However, since most electric charging networks are run by private companies or utilities, we may have the "roaming charge" issue that telecom had once upon a time. In other words, if you lived in Texas and got your electric charge from your local utility as part of your monthly bill, you may have to pay "roaming charge fees" for charging in California. But if you're on the Tesla network, the "fuel" is part of your purchase price. This is Apple-level walled garden tactics and it demonstrates the foresight of Elon Musk and his team. What an incredible entrepreneur.
- andrewtbham 13y ago
  Tesla has always said their goal is to accelerate the adoption of electric vehicles. I suspect they will try to sell other car companies the drivetrains and rights to the super chargers.
- threeseed 13y ago
  The charging network also has a lot of risks associated with it. There are 192 other countries in this world all of whom will be looking to charging standards as opposed to relying on a single American company. This means that some time in the near future Tesla will have to go back and retrofit their cars/stations to meet this standard. Apple's walled garden strategy works because the devices are cheap and relatively throw away. Cars are not.
  - hippee-lee 13y ago
shas3 13y ago
It is not uncommon for manufacturers of 'systems' to hedge their bets by becoming suppliers of components to competitors. Examples abound in the cell phone industry: Samsung makes Apple's A series chips and possibly, other components. It is not a certainty that Tesla's battery manufacturing facilities can lower the price of batteries to achieve the < $30k per-car price point. I'd imagine a single factory that also sells to other car makers will solve the existing problem with scale. Currently, making/procuring 10k batteries a year is probably a big factor in making them so costly. It is almost universally true that manufacturing in larger numbers will bring down the price (probably not in a linear way, rather logarithmically).
jcdavis 13y ago
> Did you think that the Tesla and Supercharger of proprietary connectors for no reason This isn't just entirely for a competitive advantage, although I'm sure they plan on licensing as you mention. The fact is none of the existing DC charging standards can handle nearly as much power as Tesla's system can. CHAdeMO can handle up to 62kW (but most are 50kW or less), and some of the new Combo chargers have demonstrated (but not implemented) ~100kW. Superchargers can do 120kW right now, and Tesla has claimed they will up this to 135. As with so much of what they do, the existing state of the art is just so far behind they had no option but to roll their own. Everything else that exists currently is simply too slow for recharging during long distance trips (which nobody else cares about, because no other BEV has anywhere near the range)
- WalterBright 13y ago
  This reminds me of how Edison decided he needed to invent and build an electric utility system in order to sell light bulbs.
stcredzero 13y ago
Musk is thinking 8 steps ahead of almost everyone. I think he's just thinking from first principles and it's the rest of us that have convoluted reality with a panoply of suppositions and just-so stories. People like Musk only seem like they have a "reality distortion field because we're seeing his simple conclusions through the lens of our own distortions. (It's us that have the 8-steps, in a tortured circle.)
- bittercynic 13y ago
  He seems to have a Reality Clarification Field to me.
- eli_gottlieb 13y ago
  That's a really good way to put it. And combining with that, he's got enough money that he can afford far-sightedness.
hyp0 13y ago
Infrastructure has been surprisingly important to a few innovations in the past: Edison didn't just invent a commercially viable light bulb... he also built the power stations (which of course didn't exist before they were needed); Mr Birdseye didn't just freeze fish... he (actually the company that bought him out) established freezers in supermarkets (which of course didn't exist before they were needed).
nawitus 13y ago
Nissan has built far more battery producing capabilities.
- mncolinlee 13y ago
  They certainly won't be dependent upon Tesla. In fact, Nissan's Tennessee plant can already manufacture 200,000 battery packs per year. They have been in the game of producing new battery chemistry technologies since 2009, when they started work on a technology partnership to bring Lithium NMC batteries to production vehicles.
Fuxy 13y ago
His move is economical as well as and advantage for his business. If you take him for his word and since he believes in breaking down a problem into its individual components and improve it the the only reason he is building the battery factory is because he saw the opportunity and the potential to make a batter and cheaper battery. And on the issues of charging stations is he needs them anyway and it's not like there's a standardized connector for quickly charging a car so he made his own, he would have done the same it there was a connector but it wasn't any good, however i doubt he would have done it if there wasn't an engineering advantage.
Cthulhu_ 13y ago
I'm not convinced about the success of their mega battery factory; after all, wasn't there a big problem with getting rare earth materials for things like batteries a while ago? Is there enough raw material to keep it supplied?
- cfreeman 13y ago
  There aren't any rare-earth materials in Tesla's batteries.
  - warfangle 13y ago
    The S doesn't use any rare earth materials in its motor, either.

purringmeow 13y ago

Makes me think how much we need a revolution in batteries. I am wondering if there will be a new type of batteries soon or maybe we'll get improved capacity by slapping a software layer that manages charging/discharging.

will_hughes 13y ago
As far as I can tell - there's lots of "interesting" energy storage technology being researched, but there's nothing that's close to being ready for at-scale manufacturing.
cushychicken 13y ago
We've needed one for ages! Lithium ion is the best we can do so far, and it has two GAPING flaws: * tons of energy is lost as heat * volatility of the chemical storage mechanism occasionally causes that heat to get released as an explosion I'd love to see Musk's solution end up in a massive increase in battery performance.
- purringmeow 13y ago
  I've looked around and it seems there are lithium-sulfur based batteries with 10x capacity and all in all lasting 4x Source: http://www.extremetech.com/extreme/157525-new-sulfur-based-battery-is-safer-cheaper-more-powerful-than-lithium-ion http://www.extremetech.com/extreme/157525-new-sulfur-based-b...
- thret 13y ago
  I've been adamant that we've needed a battery revolution since Terminator. Batteries were the major hurdle 30 years ago and they still today. I can't believe it's been 30 years.
  - jjoonathan 13y ago
    It's been 160 years since the first hydrogen fuel cell and the lead-acid battery were invented.

adventured 13y ago

I agree with a lot of what you said. However, this: "Competitors will not have the ability to compete on charging when they release cars because Tesla will already have an established network." is dramatically wrong. They will absolutely compete on charging, stubbornly so, and probably leveraging politics in the process. The major energy companies will also get into the charging business (much like the oil companies did with gasoline stations), and they too will fight with Tesla on standards, and attempt to set their own. The one guarantee is that the energy industry, filled full of extremely powerful companies used to dominating and getting their way, will not simply go along with Musk because he got there first (ditto for Ford and GM). That's not to say Tesla's standard will or won't prevail (or whether several will win out), but rather that there will be a long fight over it, and the competition will be belligerent.

cushychicken 13y ago
I'm still going to bet on the guy who has put something in space.
- threeseed 13y ago
  Yes. Because it's not like the other guys have decades of experience in the automobile industry.
  - 001sky 13y ago
    Or, the regulatory capture industry.
coreymgilmore 13y ago
I very much agree with you: energy companies and other auto manufacturers will get into the charging business. They have to! But I defend my point based on this: Would you buy a car that has an established charging network, or a car with only a few chargers nationwide? Of course, the established network since there is less worry about "filling up". This is a direct mirror of today's issue with electric vehicles: there isn't a large charging network. Tesla has been competing against other vehicles that have no range anxiety. Similarly, if GM produces a car to use only a GM charger buyers will feel this anxiety and tend toward an easier solution. Therefore, it would only make sense for GM to license the rights to use Tesla chargers since GM can quell range fears and still make money off the car sale. As for a standard in charging. This is going to be a long fight. The energy and auto industry (minus Tesla) has the political power and money to force a standard many times over. The question becomes: accept a standard because it exists and was funded well (feature phones), or choose something new because it is supremely better (iPhone 1). Who knows, I enjoyed your response. It made me rethink about this.

dpcheng2003 13y ago

What's amazing is that Tesla has been providing NRE R&D for OTHER automotive companies for years already. Last year, $15 million of their revenue was from development services but as early as 2011, $55 million of revenue (>25%) was from basically doing powertrain design for companies like Toyota and Mercedes. Link to last 10-K: http://www.sec.gov/Archives/edgar/data/1318605/000119312514069681/d668062d10k.htm#tx668062_9 http://www.sec.gov/Archives/edgar/data/1318605/0001193125140... Tesla will definitely make a killing on batteries. I actually think the supercharger network is going to REMAIN proprietary as a competitive advantage for Tesla vs. other electric car companies. As someone who's done research in this in the past, there are already well-established standards adopted by the IEEE and companies like GE for charging. This is obviously to encourage the adoption of the technology. However, since most electric charging networks are run by private companies or utilities, we may have the "roaming charge" issue that telecom had once upon a time. In other words, if you lived in Texas and got your electric charge from your local utility as part of your monthly bill, you may have to pay "roaming charge fees" for charging in California. But if you're on the Tesla network, the "fuel" is part of your purchase price. This is Apple-level walled garden tactics and it demonstrates the foresight of Elon Musk and his team. What an incredible entrepreneur.

andrewtbham 13y ago
Tesla has always said their goal is to accelerate the adoption of electric vehicles. I suspect they will try to sell other car companies the drivetrains and rights to the super chargers.
threeseed 13y ago
The charging network also has a lot of risks associated with it. There are 192 other countries in this world all of whom will be looking to charging standards as opposed to relying on a single American company. This means that some time in the near future Tesla will have to go back and retrofit their cars/stations to meet this standard. Apple's walled garden strategy works because the devices are cheap and relatively throw away. Cars are not.
- hippee-lee 13y ago

shas3 13y ago

It is not uncommon for manufacturers of 'systems' to hedge their bets by becoming suppliers of components to competitors. Examples abound in the cell phone industry: Samsung makes Apple's A series chips and possibly, other components. It is not a certainty that Tesla's battery manufacturing facilities can lower the price of batteries to achieve the < $30k per-car price point. I'd imagine a single factory that also sells to other car makers will solve the existing problem with scale. Currently, making/procuring 10k batteries a year is probably a big factor in making them so costly. It is almost universally true that manufacturing in larger numbers will bring down the price (probably not in a linear way, rather logarithmically).

jcdavis 13y ago

> Did you think that the Tesla and Supercharger of proprietary connectors for no reason This isn't just entirely for a competitive advantage, although I'm sure they plan on licensing as you mention. The fact is none of the existing DC charging standards can handle nearly as much power as Tesla's system can. CHAdeMO can handle up to 62kW (but most are 50kW or less), and some of the new Combo chargers have demonstrated (but not implemented) ~100kW. Superchargers can do 120kW right now, and Tesla has claimed they will up this to 135. As with so much of what they do, the existing state of the art is just so far behind they had no option but to roll their own. Everything else that exists currently is simply too slow for recharging during long distance trips (which nobody else cares about, because no other BEV has anywhere near the range)

WalterBright 13y ago
This reminds me of how Edison decided he needed to invent and build an electric utility system in order to sell light bulbs.

stcredzero 13y ago

Musk is thinking 8 steps ahead of almost everyone. I think he's just thinking from first principles and it's the rest of us that have convoluted reality with a panoply of suppositions and just-so stories. People like Musk only seem like they have a "reality distortion field because we're seeing his simple conclusions through the lens of our own distortions. (It's us that have the 8-steps, in a tortured circle.)

bittercynic 13y ago
He seems to have a Reality Clarification Field to me.
eli_gottlieb 13y ago
That's a really good way to put it. And combining with that, he's got enough money that he can afford far-sightedness.

hyp0 13y ago

Infrastructure has been surprisingly important to a few innovations in the past: Edison didn't just invent a commercially viable light bulb... he also built the power stations (which of course didn't exist before they were needed); Mr Birdseye didn't just freeze fish... he (actually the company that bought him out) established freezers in supermarkets (which of course didn't exist before they were needed).

nawitus 13y ago

Nissan has built far more battery producing capabilities.

mncolinlee 13y ago
They certainly won't be dependent upon Tesla. In fact, Nissan's Tennessee plant can already manufacture 200,000 battery packs per year. They have been in the game of producing new battery chemistry technologies since 2009, when they started work on a technology partnership to bring Lithium NMC batteries to production vehicles.

Fuxy 13y ago

His move is economical as well as and advantage for his business. If you take him for his word and since he believes in breaking down a problem into its individual components and improve it the the only reason he is building the battery factory is because he saw the opportunity and the potential to make a batter and cheaper battery. And on the issues of charging stations is he needs them anyway and it's not like there's a standardized connector for quickly charging a car so he made his own, he would have done the same it there was a connector but it wasn't any good, however i doubt he would have done it if there wasn't an engineering advantage.

Cthulhu_ 13y ago

I'm not convinced about the success of their mega battery factory; after all, wasn't there a big problem with getting rare earth materials for things like batteries a while ago? Is there enough raw material to keep it supplied?

cfreeman 13y ago
There aren't any rare-earth materials in Tesla's batteries.
- warfangle 13y ago
  The S doesn't use any rare earth materials in its motor, either.