On Wednesday, Elon Musk posted his Master Plan, Part Deux online. It calls for Tesla to build vehicles for other market segments, including pickup trucks and heavy duty tractors for hauling freight. It says Tesla will continue to develop its Autopilot system to the point where people can get in their cars and go to sleep in perfect safety. It says Tesla owners will be able to share their cars when they are not using them and generate some extra income to help pay for them. It also says Tesla will jump into the ride hailing business in major cities.
All of that is exciting news. Elon has made it his life’s work to show the world how to stop using fossil fuels and exist on clean, renewable solar energy. Here is how he describes his mission, as he sees it. “The point of all this was, and remains, accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good. That’s what “sustainable” means. It’s not some silly, hippy thing — it matters for everyone.
“By definition, we must at some point achieve a sustainable energy economy or we will run out of fossil fuels to burn and civilization will collapse. Given that we must get off fossil fuels anyway and that virtually all scientists agree that dramatically increasing atmospheric and oceanic carbon levels is insane, the faster we achieve sustainability, the better.”
What does the Master Plan have to do with solar power? Plenty. Tesla has already proposed buying SolarCity for $2.8 billion in Tesla stock. Wall Street is nervous about the audacity of that proposal, but the ones who should be nervous are the traditional utility companies. Elon is planning to eat their lunch and then devour them for desert. Here’s what he says his Master Plan will do.
“Create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility (emphasis added), and then scale that throughout the world. One ordering experience, one installation, one service contact, one phone app.
“We can’t do this well if Tesla and SolarCity are different companies, which is why we need to combine and break down the barriers inherent to being separate companies. That they are separate at all, despite similar origins and pursuit of the same overarching goal of sustainable energy, is largely an accident of history. Now that Tesla is ready to scale Powerwall and SolarCity is ready to provide highly differentiated solar, the time has come to bring them together.”
Ummm, 7 little words that represent a dagger pointed right at the heart of the utility companies — empowering the individual as their own utility. Musk has taken on powerful franchise dealer lobbies with his plan to sell cars direct to customers. The dealers have fought tooth and nail, but time is on Musk’s side and he knows it.
The traditional utility companies are fighting tooth and nail to make it difficult if not impossible for individuals and small businesses to create their own electricity using solar panels. Warren Buffett’s NV Energy has convinced the Nevada PUC to impose exorbitant fees on people with rooftop solar systems. The state of Florida is about to vote on a referendum that would allow state officials to impose similarly burdensome requirements.
Musk is preparing a full frontal assault and has shown time and time again he is not a man who backs down from a challenge. His vision of the future is clear. Free, renewable, sustainable solar power for all and a total reboot of the utility industries that have enjoyed a monopoly since the days when Thomas Edison and George Westinghouse were creating the first electrical grids.
Musk’s vision spells big trouble for entrenched interests in the electrical power industry. For investors, the choice is between the known, the familiar, and the safe or what’s behind door #2, the one that says Elon Musk on it. Some think a combined Tesla/SolarCity business could be worth a trillion dollars in 10 years. That could be a big win for investors who get in early.
It’s hard not to think Elon Musk will get his comeuppance eventually. Perhaps he will. But in the meantime, he is the ultimate disruptor. Inside the boardrooms of utility companies around the country, those who understand what can happen when Musk gets the bit between his teeth are nervous. Or they should be. Business as usual will not be quite so usual if Musk has his way.
