Look Out Utility Companies: Tesla is Disrupting More

Than Just the Auto Industry!

Cole Mellino | February 10, 2015 ECOWATCH

Elon Musk, founder of Tesla Motors, has been leading the way in innovation in the auto
industry for more than a decade. The Model S made waves at this
year’s International Auto Show. Tesla announced it will build the world’s largest battery
factory ; this “gigafactory,” will produce batteries for cars, making their all-electric cars
more affordable. But the company also has plans for new products in solar and in-home
energy storage.
In a partnership with SolarCity, Tesla plans to use rooftop solar panels fitted with Tesla’s
batteries to allow customers to use that stored energy to, say, charge their electric car
overnight.
Tesla will be the most significant competition utility companies have seen in 100 years, “In
a single factory we’re doubling the worldwide capacity to manufacture lithium-ion
batteries.” That will be huge for Tesla’s all-electric fleet, but the company also plans to
develop batteries for use with solar power generation.
In places such as California, where solar is becoming commonplace, there is a huge
demand for these batteries. “We sign up approximately one new customer every minute of
the workday”. Much of the excess energy harnessed by solar panels is returned to the
power grid (net metering) and homeowners have no control over where that excess
energy goes.

But now, in a partnership with SolarCity, Tesla plans to use rooftop solar panels fitted with
Tesla’s batteries to allow customers to keep that energy in-house. That way, homeowners
can use that energy when they want and how they want. It’s what investors call a
disruptive technology and it puts Tesla in direct competition with utility companies.

“Stationary storage, or backup storage, is really being considered the ‘Holy Grail’
of renewable electricity generation.” With the ability to store energy, renewable
energy sources can compete head-to-head with utility companies for customers.
Musk has never been afraid of the competition. Tesla released its patents in an
unprecedented move to advance electric vehicles. “Forward-minded utilities might look at
Tesla’s business model as an opportunity.” “Energy-storage technology could be used to
build capacity in their existing grids and also to build new infrastructure for battery-
powered cars and homes.”
Welsh home installs UK's first Tesla Powerwall
storage battery
Battery could revolutionise UK energy market by enabling people to store excess energy
generated from rooftop solar panels Steven Morris Friday 5 February 2016

This may be the starting point for an energy revolution in the UK. Mark Kerr has become
the first British owner of a Tesla Powerwall, a cutting-edge bit of kit that may well
provide a “missing link” in solar energy. Like many owners of solar panels, Kerr and his
family have a basic problem. They tend to be out at work and school when the sun is
shining and the 16 solar panels on the roof of their home in Cardiff are producing power.

The excess they miss out on is fed into the grid and they make a return on it but it does not
seem right that they don’t get to use the power from their panels. However, from now,
energy produced but not used during the day will charge the Powerwall and can then
provide them with the energy needed for their lights, music centers, computers, televisions
and myriad other devices at other times (night). …

Since its launch in California last year, the Powerwall has gathered something of a cult
following. Kerr is clearly a disciple: “It’s a gorgeous-looking piece of technology, its
design is very sleek and minimalistic. 2016 could be the year of energy storage. The 7kWh
Powerwall is a lithium-ion-battery. Tesla CEO Musk heralded the battery as “a
fundamental transformation [in] how energy is delivered across the Earth”.

A company called Solar Plants has installed Kerr’s Powerwall. Kerr’s is a freebie. Solar
Plants CEO, Farr, said he wanted to check how it worked before he sold it to other
customers. At the launch event, Musk said it cost $3,500, and this doesn’t take into
account other costs. However, Kerr believes his solar panels have already reduced his
electricity bills by 20% and the Powerwall might lead to a total reduction of 80%. “But it’s
not just about the money. We’re environmentally minded and this seems the right thing to
do.”
Elon Musk's New Solar Project: 'It’s Not a Thing on the
Roof. It is the Roof' ECOWATCH Aug 10, 2016 Lorraine Chow

With Tesla's historic acquisition of SolarCity now pending, Elon Musk has announced
two new solar products, including one that could disrupt the roofing industry.

Musk and SolarCity CEO L. Rive said they were working on creating a roof made entirely
of solar panels—solar shingles, if you will. Instead of tacking on solar panels onto an
existing roof, the whole roof itself will be integrated with photovoltaic material. "I think
this is really a fundamental part of achieving differentiated product strategy, where
you have a beautiful roof," Musk said. "It's not a thing on the roof. It is the roof."

Rive confirmed the project., “there are 5 million new roofs installed every year in the U.S.
and if your roof needs replacing, you don't want to invest in solar panels to install on it
since you are about to take it down, but if the solar panels are the roof and you need to redo
it anyway, there's no reason not to go with a power-generating roof."

Roofs certainly don't last forever;depending on the material, roofs can last more than 50
years but in some cases, you can expect a lifespan of 20-25 years. Inclement weather—
snow, hail and hurricanes—can cut a roof's lifespan even shorter.

Asphalt roofs - by far the most common in the U.S. - also create about 11 million tons
of waste each year. Though inexpensive, asphalt shingles are also a petroleum-based
product which carries major environmental impacts. So if a homeowner needed to re-
shingle the roof anyway, why not go with shingles that could double as an electricity
generator instead and might be better for the environment?

In announcing its decision to combine with SolarCity, Tesla said it has a vision of "creating
the world's only vertically integrated sustainable energy company."

Analysis Questions (in class)

1. How will the combination of rooftop solar and affordable batteries encourage the
use of electric cars?
2. Why is the combination of rooftop solar and batteries “the most significant
competition utility companies have seen in a 100 years”? How will this
revolutionize the way we produce, distribute and use energy? Is that a good thing?
Why?
3. Why is the ability to keep the energy produced by rooftop solar “in house”
important?
4. Was it a wise business decision for TESLA to buy SolarCity? Why?

PAIRS: Write a paragraph – following the essentials of a paragraph structure:

Would you describe the creation of lithium batteries (such as Powerwall), electric
cars, combined with rooftop solar as good business opportunities in today’s world?
Why? Date due: March 4 2019
Will a Merged Tesla-SolarCity Put a Solar-powered
Battery in Every Home?
September 7, 2016 By W. Rocky Newman

One year ago Tesla Motors announced plans to build its Gigafactory to produce huge numbers of
batteries, giving life to the old saying, “if you want something done right, do it yourself.”
By making electric car batteries that Tesla used to buy from others, CEO Elon Musk adopted a
strategy made famous by Henry Ford — build a vertically integrated company that controls the
many stages of production. By integrating “backward” into its supply chain, Musk is betting Tesla
can improve the performance and lower the costs of batteries for its vehicles.
Now, Musk wants Tesla to acquire SolarCity for similar reasons, but with a slightly different twist.
SolarCity is one of the largest installers of solar photovoltaic panels, with some 300,000 residential,
commercial and industrial customers in 27 states. The proposed merger with SolarCity would
vertically integrate Tesla forward, as opposed to backward, into the supply chain. That is, when
people come to Tesla stores to buy a vehicle, they will be able to arrange installation of solar panels
— and potentially home batteries — at the same time.
This latest move would bring Tesla one step closer to being the fully integrated provider of
sustainable energy solutions for the masses... But does it make business sense?
The real issue in my mind comes down to batteries and innovation.
Creating Demand and Scale
Although installing batteries is not a big part of SolarCity’s current business, the company is a
potentially large consumer of Tesla’s batteries from the Gigafactory. Tesla makes Powerwall
batteries for homes and larger Powerpack systems for commercial and industrial customers.
Any increase in the flow of batteries through the factory gives Tesla better economies of scale and
potential for innovation. Innovation comes with the accumulated experience… As the company
manufactures more batteries, it will find ways to innovate around battery design and production.
Because batteries are the single most important component to driving range between recharges and
the cost of cars, the synergy between battery and electric vehicle production is obvious.
Similar synergy could be argued between SolarCity and the Powerwall stationary battery business.
SolarCity’s integration into Tesla would likely give a combined company more opportunities to
pair Powerwall systems with solar panel installations in the near term. And more demand for
batteries pulled by SolarCity’s marketing to solar customers should make the Gigafactory more
profitable once it is up and running. …
Manufacturing Feeds Innovation
Even as Tesla makes another move to increase accumulated demand for batteries, it will also be
ramping up the pace by which it accumulates opportunities for innovation in the design of those
batteries. Greater demand means greater production scale and scale leads to innovation and cost
reductions. Better battery design and lower cost make products like electric vehicles and,
potentially, solar photovoltaic installations more economically feasible to a broader market.
This approach worked for Ford more than 100 years ago. There is no reason to think it won’t work
for Musk today. …
Will Consumers Buy It?
Another catalyst in this situation will be the increasing availability of “time of use“ rates for grid-
sourced electricity. For years, utilities have instituted rate plans that charge more for usage during
peak hours (typically midday) versus steeply discounted nonpeak (nighttime) rates. This allows
consumers the option to shift demand to nonpeak hours or simply reduce peak consumption to
lower their electricity bills….
By adding a 10 kWh Powerwall, the user can store excess solar generated power or nonpeak grid-
sourced power and use it when most advantageous.
Starting the peak period every day with a fully topped-off Powerwall could save, by my estimate, as
much as 3,650 kWh of peak usage per year. Added to the solar energy generated and used
immediately, many users could avoid peak demand use from the grid altogether — at least on sunny
days. …
Focus on Innovation
So will the Tesla name and potential for seamless integration between the home energy storage
and car markets (made possible with the merger) increase demand for SolarCity’s solar panels? It
seems logical. Will the same integration as well as increased market share for SolarCity increase
battery demand? Also logical. Will this advantage also hold for industrial users who tend to value
sourcing both from the same vendor? Again, logical.
But the real game-changing question I see is: Will the increase in accumulated demand for batteries
generate the opportunities for innovation?
By ramping up production at the Gigafactory, will Tesla find ways to lower battery cost and
improve battery performance with better energy storage capacity relative to weight? And will that
lower cost and better performance attract more first-time users, broadening the market and
increasing the likelihood of even better and cheaper batteries? …
Is this the synergy that Musk is really banking on? I think so.
This article was originally published on The Conversation. Read the original article.
 TESLA INNOVATES!

INITIAL REFLECTION ON INNOVATION.

Two basic Questions:

Why is it important to innovate to be

successful in business endeavors?

- To lead, set a trend, establish a reputation

- To produce at a lower unitary cost

- To be at the forefront of change, to be a pioneer

- To gain market share

- To contribute to a better world: healthier, fairer,

environmentally and socially sustainable.

What is needed to be an
innovative business?

- Creativity, Vision, To invest in R & D, Willingness

to take risks (and open to criticism)

- Forward-looking (to “see” the coming trends

before others)

- Look for win-win alliances (products or services

that are complementary!)