What did Tesla just do?

This is Bright Ideas, a weekly newsletter about how clean energy is taking on the world and winning. I’m Julian Spector—I live in L.A. and report on clean energy news for Greentech Media. I write this newsletter for fun. What do you do on Monday nights?

If this is your first time here, please subscribe to keep in touch. If you have questions or comments, I’d love to hear them. Reply to the email, or send your thoughts to brightideas@substack.com. My goal is to shed some light on the surprisingly rapid uptake of clean energy; I want to hear what works or doesn’t about how I tell the story.

Last week, among all the mind-bending things that happen in a week these days, Tesla’s corporate value (AKA market cap) surpassed every other carmaker and the not-so-invincible Exxon Mobil. 

That’s quite stunning. Tesla is a 17-year-old startup trying to produce 500,000 cars this year. It just surpassed the market cap of Toyota, which manufactured 30 times as many cars last year and made 10 times the revenue. Ford’s market cap sits around $25 billion, GM at $37 billion, Tesla at $254 billion. I reread those figures a few times to make sure the wild discrepancy was accurate.

Investors buying Tesla stock are betting on a few things: that high quality electric cars are going to become increasingly desirable; that Tesla is better at serving that demand than the incumbents; and, longer term, that the autonomous driving capabilities baked into Tesla vehicles eventually come to fruition.

Among all the companies working on clean energy, none match Tesla’s reach and notoriety. And no individual from Clean Energy World fascinates and infuriates people quite like CEO Elon Musk. I’ve covered countless clean energy companies that my friends have never heard of, and never will. Tesla is the rare crossover between this niche and the broader world. But too much salacious focus on Musk distracts from the actual work the company has done to advance clean energy in the world.

All of this makes for a fitting moment to examine Tesla’s successes, failures and ambiguities in the clean energy sector, at which point you can decide for yourself how you feel about it. 

Made electric cars S3XY

Electric cars are like cauliflower: bland and unappealing when prepared poorly, but surprising and stimulating in the hands of the right chef (come over some time after quarantine and I’ll prove that case).

Humans need to quit emitting carbon to get around, and Tesla finally made emissions-free driving look sexy and desirable. It began by copying a high-end sports car but engineering an all-electric drivetrain; the plan was to use that sports car revenue to fund increasingly affordable, mass market models. Tesla now leads the U.S. electric vehicle market by a long shot.

The launch of the more-affordable Model 3 nearly broke the company, but Tesla pulled through, much to the chagrin of an army of short-sellers who bet on its demise. Elon toasted their fortunes this week by selling Tesla “short shorts,” for the low price of $69.420.

The Model 3’s survival forced legacy automakers to up their game, and they’re still trying. Chevy’s got a boxy Bolt, Ford’s coming out with an electric Mustang at some point, the Europeans are a bit further along. But the incumbents have yet to match Tesla’s style (subjective, but hard to argue with), nor battery performance (quantitative, unarguable). Who wants to pay more for a battery with less range?

Tesla ramped manufacturing of the Model 3 without collapsing, defying the short-sellers that Musk recently taunted.

Evangelized energy storage

As I told you, storing electricity is absolutely crucial for the transition to clean energy, and Tesla has done more to popularize that than any other company. 

After spending time and money engineering high-performance battery packs for cars, Tesla repackaged them for the home as the Powerwall. It can store solar power for the evenings, or keep your lights on in a blackout. Tesla set the price low, blowing away the competition.

For several years, the hype around the Powerwall vastly outstripped the actual presence in people’s homes. By now, Tesla has delivered more than 100,000 units worldwide—still limited compared to the cars. 

I cover the storage beat, and I can name the companies making competing batteries for the home. But none of them match Tesla’s brand awareness. Somehow, adoring fans just don’t clamor for an LG Chem RESU or sonnen ecoLinx in quite the same way.

Tesla also packages batteries for very large power plants. Indeed, Tesla built the largest battery plant in the world in less than 100 days for South Australia’s grid. That episode resulted from a bet Musk made on Twitter, joining the rich tapestry of human achievement stemming from bets made on Twitter. Now Tesla is supplying those batteries to even bigger projects.   

The Powerwall, also known as the industry’s most desirable box.

Coronavirus meltdown

The quixotic Twitter persona took a sinister turn as Musk delved into a series of confusing and outright false statements about the coronavirus. He used an earnings call with investors this spring to rant about stay at home orders: 

“That is not democratic — this is not freedom. Give people back their goddamn freedom."

Musk’s idea of freedom turned out to be forcing workers back to the line at his Fremont factory in violation of local public health policies to contain the coronavirus.

Previously, Musk and the company repeatedly violated labor law while resisting unionization efforts at the Fremont factory. That left workers with limited bargaining power to protect their safety during the pandemic.

Tesla aims to build a better, cleaner world that empowers people to take control of their destiny. But those ideals did not apply internally when the lockdown threatened car production.

Solar slowdown

In 2016, Tesla acquired the largest rooftop solar company in the country, SolarCity. Musk billed it as a logical marriage of the leaders in electric cars and solar power, part of his long term strategy to build a clean energy superpower. It made sense—if you considered it thematically, instead of seeking actual overlap between the business of making cars and the business of installing solar panels on rooftops.

Post-acquisition, Tesla dismantled the strategies that defined SolarCity, and sales plummeted. It now sits at a distant third behind Sunrun and Vivint Solar. Tesla doesn’t even “sell” solar in an active sense: it switched to a passive model, where motivated customers seek out standard configurations online. The company argues this solves the solar industry’s problem with spending too much money to find customers. That may be true, but as the overall home solar market grew, Tesla sales fell.

There were also a slew of corporate governance red flags that Tesla shareholders politely overlooked. SolarCity was founded by Musk’s cousins. He served as chairman and was the largest shareholder in the company. If SolarCity had stayed on its own, it would have had to grapple with the fallout from its growth-at-all-costs strategy. As it happened, the acquisition turned (Elon’s) SolarCity stock into Tesla stock, which is now more valuable than Toyota and Exxon, and SolarCity’s rapid decline became a largely overlooked footnote in the balance sheet of a sexy car manufacturer.

And the “solar roof,” touted as a reason to join forces, turned out to not really exist, and has taken lengthy and halting steps toward existence in the years since. It’s a prettier but significantly more expensive version of the cheaper and easier panels Tesla sells exclusively online.

The Energy Stream

While you were sipping last week’s vermouth cocktails and pondering who gets to enjoy true independence in this country and why, you may have worked up an appetite. This week’s quarantine activity is making the most delicious and refreshing coleslaw, with big thanks to Samin Nosrat’s Salt, Fat, Acid, Heat.

First, make your own mayo. Who goes to grocery stores for that any more? Just take an egg yolk, dribble in a tiny bit of olive or canola oil, and whip it like you’re Tesla and this stuff is a fossil fuel stock. Once the drop of oil disappears, whip in another droplet, up to about three-quarters cup oil per egg yolk. Once the yolk-and-oil combo transforms into a fluffy white emulsion, mix in a little salt and lemon juice to season. That’s how normal people get their mayo in quarantine.

Now slice up a cabbage into nice thin strips, and salt it so some liquid sweats out. Chop up red onion and stick it in a bowl of lemon juice for 20 minutes. Then mix the cabbage and onions in a big bowl, and spoon in the mayo until it reaches your desired consistency. Season as you like, throw in herbs, etc. If there’s some brine left over from your last round of picklebacks, throw that in, too.

Sam and I have been crushing this coleslaw. It gives you the crunch and acidic bite to cut through rich, fatty foods, like ribs or sausage or what have you. It’s both creamy and refreshing, like a Ramos gin fizz. It’s worth making a big batch (two yolks-worth of mayo, at least) to eat for a few days before you crave another round.

Have some friends with too many egg yolks? Send them this recipe.