Paul Knittel

Electric cars and Tesla (& the future of energy)

January 2016

Trying something a little different here: A formal essay analyzing how the Tesla Model S P85D sports car has shaped the car industry and defined a new era of electrical energy.

Looking back at the past two years of innovation, the 2014 Tesla Model S P85D stands out as truly revolutionary. With the sure instinct to recognize that the technology was ready, the Model S P85D has pulled the electrical car out of its niche market for wealthy environmentalists only, and into the larger, everyday market. It stands testament that electronic vehicles (EVs) can perform better than their gas-powered alternatives, jump-starting a larger conversation around the very real possibility of a cleaner, better world. This essay will analyze how the P85D has dramatically changed the consumer experience, how this has rippled into the competitive climate, and its anticipated evolution moving forward.

EVs are not a new idea. Since the early nineteenth century, electric drive trains have promised a cleaner, quieter and more efficient alternative to gasoline-based systems, however due to limitations in battery technology, this potential could never be fully realized until recently. The rise of mobile computing has brought significant improvements to battery technology, enabling the EV dream to become a reality (MATULKA 2014). The automobile industry has largely responded by releasing quirky EV concepts, avoiding the risks associated with opening a new business sector when healthy ones already existed. Tesla, in contrast, has embraced the vision that EVs can be desirable performance cars today.

The Model S possesses substantial advantages over gasoline-powered vehicles. Firstly, the driving experience has been dramatically improved; the drive train is completely silent, and the absence of gears result in a perfectly consistent acceleration with instantaneous performance response, leading to a smoother drive for customers. With an acceleration of 2.8s from 0 to 100 km/h, the P85D benchmarks against top-of-the-range sports cars for a fraction of the cost and complexity. Additionally, the reduction in moving parts means the vehicle requires almost no maintenance, saving users money and time.

The Model S’s improvements lie beyond simply releasing an EV, but entail a re-imagination of the car to fundamentally improve the consumer experience. Tesla realized that the technology inside existing cars was years behind consumer electronics. The Model S discarded most mechanical controls and buttons, replacing them with a single 17-inch multi-touch screen, crafting an easier and more intuitive method of interacting with the car. Additionally, the Model S removes the external need for a petrol station, and instead seamlessly integrates with existing power outlets already installed in everyone’s homes. Fundamentally, the Model S isn’t designed to be futuristic, but simply introduces its customers to the new era of everyday driving.

To the greater competitive climate, Tesla’s rapid growth and adoption has demonstrated the viability of all-electric vehicles on a large scale. The Model S is not only a historic milestone for electric cars, but also a competitive product. Inspired by Tesla, legacy companies are beginning to release electric vehicle lines (e.g. BMW’s i Series) and alternatives to popular premium models (e.g. Mercedes SLS AMG Electric). Furthermore, by reducing the number of mechanical parts by over a factor of ten (ANDREW 2010), the industry will begin to shift its emphasis from hardware to software optimization and manufacturing. Considering the current trend towards self-driving cars, future cars will be differentiated by the performance of their software. It is therefore not unlikely that we will see large technology companies such as Google and Apple enter the industry, considering their existing experience in building world-class digital consumer products.

With the foreshadowing future competition, a notable challenge Tesla faces is quickly evolving its range from premium cars to more mainstream market segments. Competitors boast a large range of models that cater for a variety of customer needs, regularly investing over 1 billion to release new models (SHEA 2010). In comparison, Tesla only possesses three models, and in the past has struggled to launch them, with the new Model X seeing delays of over 2 years (ANGELO 2013). Tesla needs to be faster to market to remain competitive, as big players in the game have the capital and infrastructure to rapidly respond.

This challenge additionally requires driving the price down on electric components, most notable the battery, which is being limited by the increasing demand of the rare material lithium (RODINA 2015). The cost of batteries on a Tesla Model S is estimated to exceed $12,000 (COLE 2013), barricading EVs from entering lower priced markets, ultimately limiting its potential in wide spread adoption. By prioritising to rapidly reach these affordable price points, the swap from gas-based vehicles will become more viable to the larger market, and Tesla can solidify itself as a big competitor in the automotive industry.

While the Model S has proven that EVs come with ground-breaking advantages, the battery continues to remain a breaking point. Tesla continues to pioneer technology improvements in this space, however storing electricity via batteries remains over 10 times less efficient in comparison to the energy dense fossil fuel (CAMPBELL 2012). Instead of waiting for improvements to land, there are several alternative angles to bridge the gap. Tesla can design the battery component to be easily exchanged, and offer infrastructure to quickly replace batteries, which could be rolled out in a similar way to petrol stations. Another angle is to provide a consistent supply of energy, for example through wireless charging built into highways. This proposal opens up the possibility of lower priced models without the uncertainty that invariably comes with waiting on battery technology improvements.

Fantastic opportunities also exist in improving the Model S’s software. By rethinking its capabilities as an internet-connected device, along with a powerful array of sensors, Tesla has opened up vast possibilities in automation. For example, a user’s calendar could be used to automatically preheat the car in cold weather and setup the GPS. An application programming interface (API) to connect with the car already exists, and can be further expanded into an app store to fast track the product’s integration into customers’ everyday lives. In the bigger picture, more than just an exciting new product, Tesla’s Model S has triggered a global conversation around a more sustainable future. Electricity can be generated renewably, via hydro and solar methods, closing the creation and consumption loop for vehicles. Furthermore, electric cars provide the large network of batteries necessary to facilitate the reliance on solar energy (which is created by solar panels during the day for peak use at night). A solar powered world has enormous positive repercussions on our society as we can generate electricity independently, without the dependence on sophisticated power networks and the complexities of the international oil trade.

In conclusion, with its exceptional technical performance and killer customer experience, the Tesla Model S P85D has demonstrated that EVs are not just a quirky, futuristic concept, but are desirable and powerful cars. Although Tesla faces huge competitive challenges to expand its products into larger markets, it has forever changed the consumer’s, and by extension, the industry’s, perspective of electric cars. Ironically, beyond being an excessively powerful sports car, the Model S has foreshadowed a precedence that will accelerate the world towards a more sustainable future.