The Secret Masterplan of Tesla (You Know, I Know)

Elon Musk, co-founder and CEO of Tesla, August 2, 2006

As you may know, Tesla's initial product was a high-performance electric sports car called the Tesla Roadster. However, some readers may not be aware that our long-term plan is to produce different models of cars, including affordable family vehicles. This is because Tesla's primary goal (and the reason I invested in the company) is to help transition from an economy based on hydrocarbon fuels to one based on solar power. I believe this is a major solution for sustainable development, although not the only one.

To achieve this goal, it is crucial to produce uncompromising electric vehicles. The purpose of the Tesla Roadster is to directly compete with and surpass gasoline-powered sports cars like Porsche or Ferrari. Furthermore, it is twice as energy-efficient as a Prius. Despite this, some people question its relevance to the world. Do we really need another high-performance sports car? Can it make a difference in global carbon emissions?

Well, the answer is no, not a significant one. But that's not the point, unless you understand the secret grand plan mentioned at the beginning of this article. Almost all new technologies initially have high unit costs before gradually improving, and electric vehicles are no exception. Tesla's strategy is to enter the high-end market, where consumers are willing to pay higher prices. Then, with the introduction of each subsequent model, we can quickly move towards a larger market with larger unit volumes and lower prices.

I can say that our second model will be a four-door sports family vehicle, priced at about half the price of the Tesla Roadster ($89,000), without sacrificing many other features. The price of the third model will be even more affordable. As a rapidly growing technology company, all of our free cash flow is used for research and development to reduce costs and bring subsequent products to market as soon as possible. When someone buys a Tesla Roadster, they are actually helping to fund the development of the family vehicle.

Now, let's talk about two recurring objections to electric cars: battery disposal and power plant emissions. The answer to the first question is short, while the second requires a little math:

Non-toxic batteries for the environment!

Tesla's lithium-ion batteries are not classified as hazardous products and can be safely landfilled. However, throwing them in the trash is like throwing away money because these battery packs can be sold to recycling companies (without subsidies) when they reach the end of their designed lifespan of 100,000 miles (160,000 kilometers). Additionally, at this point, the batteries are not completely depleted, just with reduced driving range.

Power plant emissions, or "long exhaust pipes"

A common objection to electric vehicles as a carbon emissions solution is that they simply shift CO2 emissions to power plants. However, the obvious response is that we can develop various ways of generating electricity that do not involve CO2 emissions, such as hydroelectric, wind, geothermal, nuclear, and solar power. However, for now, let's assume that electricity is produced from hydrocarbon fuels, such as natural gas, which is the most commonly used fuel for new power plants in the United States in recent years.

The natural gas power generation efficiency of the H System combined cycle generator produced by General Electric is 60%. The "combined cycle" process burns natural gas to generate electricity, and the waste heat is used to produce steam to drive the second generator. The gas extraction efficiency is 97.5%, the gas processing efficiency is also 97.5%, and the transmission efficiency of the power grid averages 92%. Therefore, the efficiency from the gas well to the power user is 97.5% x 97.5% x 60% x 92% = 52.5%.

Although the design of the body, tires, and transmission system is focused on high performance rather than maximum efficiency, the Tesla Roadster requires 0.4 megajoules per kilometer, which means that it can travel 2.53 kilometers per megajoule of electricity. The overall charge-discharge efficiency of the Tesla Roadster is 86%, which means that approximately 86 megajoules of the 100 megajoules of electricity used to charge the battery are delivered to the motor.

Taking all these calculations into account, we obtain a final quality factor of 1.14 kilometers per megajoule, calculated as 2.53 kilometers/megajoule x 86% x 52.5%. Let's compare this number with the Prius, which is generally considered energy-efficient, and several other models.

Considering the efficiency from the gas well to the wheels, the efficiency of a gasoline-powered car is equal to the energy content of gasoline (34.3 megajoules per liter) minus refining and transportation losses (18.3%), multiplied by miles per gallon or kilometers per liter. Therefore, under the EPA-rated 55 miles per gallon, the energy efficiency of the Prius is 0.56 kilometers per megajoule. This number is actually very good compared to the 0.28 kilometers per megajoule of the Toyota Camry (a so-called "normal" model).

Please note that the current usage of the term "hybrid" for vehicles on the road is incorrect. These vehicles are actually gasoline-powered cars with a small battery assist, and unless you are one of the few people who have access to the aftermarket, this small battery must be charged from the gasoline engine. Therefore, these vehicles can be seen as slightly more efficient gasoline-powered cars. If the EPA sets the mileage efficiency at 55 miles per gallon, it is no different from a non-hybrid vehicle that can achieve 55 miles per gallon. As a friend of mine said, a world where everyone drives a Prius still relies 100% on oil.

The carbon dioxide content of any given fuel source is already well established. Natural gas contains 14.4 grams of carbon per megajoule, while oil contains 19.9 grams of carbon per megajoule. When calculating vehicle efficiency using these carbon content levels, including Honda's natural gas combustion-powered vehicles and Honda's fuel cell natural gas-powered vehicles as references, it is clear that the clear winner is the pure electric vehicle:

If we assume the average CO2 emissions per joule of energy generated in the United States, Tesla Roadster still comes out significantly ahead. While coal (for electricity generation) has higher CO2 content compared to natural gas, the CO2 emissions from hydroelectric, nuclear, geothermal, wind, and solar power can be considered negligible, offsetting the higher CO2 content of coal. The specific mix of power generation varies across different regions in the United States and changes over time, so we use natural gas as the benchmark for comparison here.

Becoming an "Energy Positive" Individual

I would like to mention that in addition to cars, Tesla will also collaborate with other companies to promote its sustainable energy products. For example, in addition to other options, we will offer solar panels produced by SolarCity, a company specializing in solar photovoltaic technology (of which I am also a major investor). These panels come in a size and price range suitable for residential use. They can be installed on rooftops without interfering with other activities, either as standalone units or integrated into the structure of a garage. Each day, they can generate enough electricity to drive approximately 50 miles (80 kilometers).

If your weekly mileage is within 350 miles (560 kilometers), you can become an individual who makes a "positive contribution to energy" in your personal transportation. This goes beyond energy conservation or even eliminating your transportation energy consumption because you will actually be sending more electricity back to the grid than you consume for transportation! So, in summary, our overall plan is:

1. Produce sports cars
2. Use the profits to produce affordable cars
3. Use the profits to produce even more affordable cars
4. Offer zero-emission power generation options while accomplishing the above

Don't tell anyone.