tag:theconversation.com,2011:/ca-fr/topics/tesla-motors-16589/articlesTesla Motors – La Conversation2023-12-06T10:14:31Ztag:theconversation.com,2011:article/2191842023-12-06T10:14:31Z2023-12-06T10:14:31ZThe new Tesla Cybertruck is super-fast and bullet-proof – but who is it for? An expert analyses the design<p>Broadcasting <a href="https://twitter.com/i/broadcasts/1ZkKzjaBdmLKv">live on X</a> (formerly known as Twitter) last Thursday, Tesla’s CEO (and X owner) Elon Musk said that the Tesla Cybertruck is a car of the future “that looks like the future”.</p>
<p>The design is bold. Not just due to the unusual shape and the stainless steel finish, but also in the product offerings. The stainless steel panels and finish are reminiscent of the ill-fated <a href="https://www.autozine.org/Archive/DeLorean/classic/DeLorean.html">DeLorean DMC-12</a> that, while beloved for its starring role in the <a href="https://www.motortrend.com/features/back-to-the-future-delorean-time-machine-facts/">Back to the Future</a> franchise, was otherwise disastrous for the company and a rather lacklustre car with many issues.</p>
<p>The angular shape, flat surfaces and triangular roof line of the Cybertruck look like nothing else currently on sale. The vehicle is very different from the traditional Tesla line up, which are more curved and jelly mould-like in their appearance. This means they’re highly aerodynamic, with <a href="https://www.tesla.com/en_gb/models">reduced drag</a> to maximise their electric range. </p>
<h2>Inconsistent brand identity</h2>
<p>Automotive manufacturers typically have a design language that underscores all of their vehicles, clearly indicating the brand. This could be signified by a consistent grille design or the shape and form of their cars. Take the kidney-shaped grille on BMWs or Mazda’s <a href="https://www.mazda.co.uk/why-mazda/news-and-events/mazda-news/articles/mazdas-kodo-design-philosophy/">“Kodo” design philosophy</a>, for example, which aims to evoke motion even when the car has stopped. </p>
<p>However, Tesla seems to have designed the Cybertruck to bear no resemblance to any of its other offerings. Externally, at least, there’s no clear brand consistency. </p>
<p>Sure, pickups often look different to cars made by the same company due to their differing functions, however even the <a href="https://www.tesla.com/en_gb/semi">Tesla Semi</a>, a heavy goods vehicle, retains the jelly mould styling and associated aerodynamic benefits of the Tesla cars. Considering the aesthetics of the existing Tesla lineup, the Cybertruck doesn’t really fit in.</p>
<p>So, if Tesla vehicle designs have traditionally been about efficiency, what is the goal for the Cybertruck? In design there is a well know saying that “form follows function”. In Tesla’s lineup to date, their design language clearly speaks to efficiency and dynamism. </p>
<p>However, the rather surprising outcome of the <a href="https://uk.finance.yahoo.com/news/watch-teslas-cybertruck-delivery-event-183744926.html">Cybertruck delivery event launch</a> on November 30 was the admission by Musk that the angular shape had <a href="https://electrek.co/2019/11/24/teslas-cybertruck-looks-weird-because-otherwise-it-would-break-the-machines-to-make-it/">largely been decided</a> by the material choice: high-strength stainless steel (understood to be <a href="https://stampingsimulation.com/forming-stainless-steel-tesla-cybertruck/">30x cold-rolled stainless steel</a>). This choice has apparently restricted the manufacturing process, resulting in a flatter, angular form.</p>
<p>Why choose a material that is more difficult to form using traditional processes and that compromises your design language and aerodynamic efficiency? The takeaway from the delivery event is that this material has enabled Tesla to make a truck that is bullet proof – which the live stream went to great lengths to demonstrate with the use of a sub machine gun. </p>
<p>So, if form follows function, the key function that has determined the design of the Cybertruck is the requirement to be bullet-proof. For a public-facing consumer vehicle, that’s a rather surprising unique selling point. Especially when taken in the context of Musk’s “why not” reasoning, which <a href="https://www.forbes.com/sites/zacharyfolk/2023/11/30/elon-musk-boasts-cybertruck-is-apocalypse-proof-at-live-delivery-event/">he followed up</a> with the rather worrying statement:</p>
<blockquote>
<p>The apocalypse can come along any moment, and here at Tesla we have the best in apocalypse technology.</p>
</blockquote>
<h2>The Cybertruck’s safety</h2>
<p>While much of Tesla’s PR relates to the Cybertruck’s robustness and security, concerns around safety mean it will never be able to be sold in Europe – in its launch form at least. This is due to a lack of pedestrian safety. </p>
<p>At the launch event, <a href="https://www.cbsnews.com/news/tesla-cybertruck-cost-release-date-price/#text22If20you20have20an20argumentappeal20to20a20wider20audience">Musk said</a> of driving the truck: “If you have an argument with another car, you will win.” The Cybertruck appears to focus very much on protecting its occupants, while negating the advances in road safety that consider vulnerable road users such as pedestrians, cyclists, motorcyclists or even other vehicles. </p>
<p>The <a href="https://www.tesla.com/en_gb/cybertruck">Cybertruck weighs 6,843lb</a> (3,104kg). Most non-EV pickups weigh less than 3,000kg and the average car weighs less than half of this again. This higher mass would mean that any collisions with a lighter vehicle could be very serious.</p>
<p>The high bonnet and bumper means that a pedestrian would likely be hit by the ultra-hard stainless steel structure of the front bumper and bodywork, where the grille would traditionally be. Tesla did not respond to a request for comment on the safety of the Cybertruck.</p>
<p>In contrast, a typical European hatchback is designed so that a pedestrian would fall onto the bonnet, which is made to deform and absorb the impact on the pedestrian’s head. Bonnets of cars are often made from lighter, less dense material such as aluminium for increased pedestrian safety.</p>
<p>While this design feature means the Cybertruck cannot be sold in Europe, it can be sold in North America, Canada and Mexico. That’s because in these markets it falls under a different classification of <a href="https://www.motoringresearch.com/car-news/tesla-cybertruck-production-europe-news/">light-medium duty truck</a>, meaning that it doesn’t have to adhere to passenger-car pedestrian safety legislation.</p>
<p>This is a shame, as Tesla has recently invested in pedestrian-focused technology for its cars. The Model 3, for example, features a detection system and <a href="https://www.tesla.com/ownersmanual/model3/en_eu/GUID-FCD87BBA-BA45-4955-8E3A-2FEBBA7DE9FA.html">active bonnet</a> that lifts to reduce the impact forces of a pedestrian in a frontal collision.</p>
<p>In its design, the aesthetics and safety considerations of the Cybertruck have diverged from Tesla’s previous values. This begs the question: beyond the initial early adopters, celebrities and influencers, who is this truck for? </p>
<p>Surely it won’t appeal to the same core base of existing environmentally-conscious Tesla customers. And a bulletproof, go anywhere, do anything tank with the ability to reach 60mph in 2.6 seconds is quite a tool in the wrong hands.</p>
<p><em>This article has been amended to change the mass of the Cybertruck from 6,843kg, as incorrectly stated by the Tesla website, to 6,843lb, the correct mass.</em></p>
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<p class="fine-print"><em><span>Matthew Watkins does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The angular shape, flat surfaces and triangular roof line look like nothing else currently on sale.Matthew Watkins, Principal Lecturer in Mechanical Engineering, Nottingham Trent UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1663072021-08-23T12:05:42Z2021-08-23T12:05:42ZWhy Tesla’s Autopilot crashes spurred the feds to investigate driver-assist technologies – and what that means for the future of self-driving cars<figure><img src="https://images.theconversation.com/files/417112/original/file-20210819-23-izpx1u.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5184%2C3453&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Tesla's Autopilot enables hands-free driving, but it's not meant to allow drivers to take their eyes off the road.</span> <span class="attribution"><a class="source" href="https://flickr.com/photos/generationstrom/41607991164/">Marcus Zacher/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>It’s hard to miss the flashing lights of fire engines, ambulances and police cars ahead of you as you’re driving down the road. But in at least 11 cases from January 2018 to July 2021, Tesla’s Autopilot advanced driver-assistance system did just that. This led to <a href="https://static.nhtsa.gov/odi/inv/2021/INOA-PE21020-1893.PDF">11 accidents in which Teslas crashed</a> into emergency vehicles or other vehicles at those scenes, resulting in 17 injuries and one death.</p>
<p>In August 2021, the National Highway Transportation Safety Administration <a href="https://www.caranddriver.com/news/a37320725/nhtsa-investigating-tesla-autopilot-crashes-fatalities/">launched an investigation</a> into Tesla’s Autopilot system in response to the crashes. The incidents took place in Arizona, California, Connecticut, <a href="https://www.nytimes.com/2021/08/17/business/tesla-autopilot-accident.html">Florida</a>, Indiana, Massachusetts, Michigan, North Carolina and Texas. It’s also <a href="https://www.theverge.com/2020/2/25/21152984/tesla-autopilot-safety-recommendations-ignored-ntsb-crash-hearing">not the first time</a> the federal government has investigated Tesla’s Autopilot.</p>
<p>The National Highway Transportation Safety Administration announced on June 9, 2022 that it has broadened its investigation of Tesla’s Autopilot <a href="https://www.nytimes.com/2022/06/09/business/tesla-autopilot-nhtsa-investigation.html">to look at 830,000 2014 to 2021 Model S, X, 3 and Y Tesla cars</a> sold in the U.S., virtually every car the company has made since 2014. Also, there were an <a href="https://www.bloomberg.com/news/articles/2022-06-09/tesla-autopilot-scrutiny-escalates-as-us-upgrades-expands-probe?sref=Hjm5biAW">additional three incidents</a> involving Tesla cars crashing into first responder vehicles since the August 2021 report.</p>
<p>On June 15, 2022, the administration also <a href="https://www.nhtsa.gov/press-releases/initial-data-release-advanced-vehicle-technologies">released data about crashes</a> from July 1, 2021 through May 15, 2022 involving cars equipped with advanced driver-assist systems from all carmakers. The data, collected in response to the investigation of Tesla cars, showed that there were 367 crashes in cars with driver-assist technology in use over that 10 month period, including six deaths and five serious injuries. </p>
<p>As a <a href="https://scholar.google.com/citations?user=GJaAw1EAAAAJ&hl=en">researcher who studies autonomous vehicles</a>, I believe the investigation will put pressure on Tesla to reevaluate the technologies the company uses in Autopilot and could influence the future of driver-assistance systems and autonomous vehicles.</p>
<h2>How Tesla’s Autopilot works</h2>
<p><a href="https://www.tesla.com/support/autopilot">Tesla’s Autopilot</a> uses cameras, radar and ultrasonic sensors to support two major features: Traffic-Aware Cruise Control and Autosteer.</p>
<p>Traffic-Aware Cruise Control, also known as adaptive cruise control, maintains a safe distance between the car and other vehicles that are driving ahead of it. This technology primarily uses cameras in conjunction with artificial intelligence algorithms to detect surrounding objects such as vehicles, pedestrians and cyclists, and estimate their distances. Autosteer uses cameras to detect clearly marked lines on the road to keep the vehicle within its lane.</p>
<p>In addition to its Autopilot capabilities, Tesla has been offering what it calls “full self-driving” features that include <a href="https://www.youtube.com/watch?v=KeQm0L5UicM">autopark</a> and <a href="https://www.youtube.com/watch?v=m0hfOZqf-PA">auto lane change</a>. Since its first offering of the Autopilot system and other self-driving features, Tesla has consistently warned users that these technologies require active driver supervision and that these features do not make the vehicle autonomous.</p>
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<a href="https://images.theconversation.com/files/417113/original/file-20210819-27-13xp50i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Screenshot of a display with the left third showing an icon of a car on a road and the right to third showing a map" src="https://images.theconversation.com/files/417113/original/file-20210819-27-13xp50i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/417113/original/file-20210819-27-13xp50i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=375&fit=crop&dpr=1 600w, https://images.theconversation.com/files/417113/original/file-20210819-27-13xp50i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=375&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/417113/original/file-20210819-27-13xp50i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=375&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/417113/original/file-20210819-27-13xp50i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=471&fit=crop&dpr=1 754w, https://images.theconversation.com/files/417113/original/file-20210819-27-13xp50i.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=471&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/417113/original/file-20210819-27-13xp50i.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=471&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Tesla’s Autopilot display shows the driver where the car thinks it is in relation to the road and other vehicles.</span>
<span class="attribution"><a class="source" href="https://flickr.com/photos/rosenfeldmedia/50511890906/">Rosenfeld Media/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<p>Tesla is beefing up the AI technology that underpins Autopilot. The company announced on Aug. 19, 2021, that it is <a href="https://www.cnbc.com/2021/08/19/tesla-unveils-dojo-d1-chip-at-ai-day.html">building a supercomputer using custom chips</a>. The supercomputer will help train Tesla’s AI system to recognize objects seen in video feeds collected by cameras in the company’s cars.</p>
<h2>Autopilot does not equal autonomous</h2>
<p>Advanced driver-assistance systems have been supported on a wide range of vehicles for many decades. The Society of Automobile Engineers divides the degree of a vehicle’s automation into <a href="https://www.sae.org/standards/content/j3016_201806/">six levels</a>, starting from Level 0, with no automated driving features, to Level 5, which represents full autonomous driving with no need for human intervention.</p>
<p>Within these six levels of autonomy, there is a clear and vivid divide between Level 2 and Level 3. In principle, at Levels 0, 1 and 2, the vehicle should be primarily controlled by a human driver, with some assistance from driver-assistance systems. At Levels 3, 4 and 5, the vehicle’s AI components and related driver-assistance technologies are the primary controller of the vehicle. For example, Waymo’s <a href="https://theconversation.com/robot-take-the-wheel-waymo-has-launched-a-self-driving-taxi-service-147908">self-driving taxis</a>, which operate in the Phoenix area, are Level 4, which means they operate without human drivers but only under certain weather and traffic conditions.</p>
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<figcaption><span class="caption">News coverage of a Tesla driving in Autopilot mode that crashed into the back of a stationary police car.</span></figcaption>
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<p>Tesla Autopilot is considered a Level 2 system, and hence the primary controller of the vehicle should be a human driver. This provides a partial explanation for the incidents cited by the federal investigation. Though Tesla says it expects drivers to be alert at all times when using the Autopilot features, some drivers treat the Autopilot as having autonomous driving capability with little or no need for human monitoring or intervention. This discrepancy between Tesla’s instructions and <a href="https://doi.org/10.1145/3409120.3410644">driver behavior</a> seems to be a factor in the incidents under investigation. </p>
<p>Another possible factor is how Tesla ensures that drivers are paying attention. Earlier versions of Tesla’s Autopilot <a href="https://www.wsj.com/articles/tesla-considered-adding-eye-tracking-and-steering-wheel-sensors-to-autopilot-system-1526302921?mod=e2tw">were ineffective in monitoring driver attention</a> and engagement level when the system is on. The company instead relied on requiring drivers to periodically move the steering wheel, which can be done without watching the road. Tesla announced in 2021 that it has begun using <a href="https://www.cnbc.com/2021/05/28/tesla-starts-using-cabin-cameras-for-driver-monitoring.html">internal cameras to monitor drivers’ attention</a> and alert drivers when they are inattentive.</p>
<p>Another equally important factor contributing to Tesla’s vehicle crashes is the company’s choice of sensor technologies. Tesla has consistently <a href="https://venturebeat.com/2021/07/03/tesla-ai-chief-explains-why-self-driving-cars-dont-need-lidar/">avoided the use of lidar</a>. In simple terms, <a href="https://www.autoweek.com/news/a36190274/what-lidar-is/">lidar is like radar</a> but with lasers instead of radio waves. It’s capable of precisely detecting objects and estimating their distances. Virtually all other major companies working on autonomous vehicles, including Waymo, Cruise, Volvo, Mercedes, Ford and GM, are using lidar as an essential technology for enabling automated vehicles to perceive their environments. </p>
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<p>By relying on cameras, Tesla’s Autopilot is prone to potential failures caused by challenging lighting conditions, such as glare and darkness. In its announcement of the Tesla investigation, the NHTSA reported that most incidents occurred after dark where there were flashing emergency vehicle lights, flares or other lights. Lidar, in contrast, can operate under any lighting conditions and can “see” in the dark.</p>
<h2>Fallout from the investigation</h2>
<p>The investigation could eventually lead to changes in future versions of Tesla’s Autopilot and its other self-driving systems. The investigation might also indirectly have a broader impact on the deployment of future autonomous vehicles. In particular, the investigation may reinforce the need for lidar. </p>
<p>Although reports in May 2021 indicated that <a href="https://www.bloomberg.com/news/articles/2021-05-24/tesla-testing-luminar-laser-sensor-musk-called-fool-s-errand">Tesla was testing lidar sensors</a>, it’s not clear whether the company was quietly considering the technology or using it to validate their existing sensor systems. Tesla CEO Elon Musk called lidar “<a href="https://techcrunch.com/2019/04/22/anyone-relying-on-lidar-is-doomed-elon-musk-says/">a fool’s errand</a>” in 2019, saying it’s expensive and unnecessary.</p>
<p>However, just as Tesla is revisiting systems that monitor driver attention, the NHTSA investigation could push the company to consider adding lidar or similar technologies to future vehicles.</p>
<p><em>This is an updated version of an article originally published on August 23, 2021.</em></p><img src="https://counter.theconversation.com/content/166307/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Hayder Radha’s research is supported by funding from Ford, GM, Semiconductor Research Corporation (SRC), and MSU Foundation. In past years, funding was received from National Science Foundation, Amazon, Google, and Microsoft as well. </span></em></p>An autonomous vehicle expert explains how Tesla’s Autopilot works, what prompted US authorities to investigate the system and what changes might be in store for the company.Hayder Radha, Professor of Electrical and Computer Engineering, Michigan State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1615362021-08-03T10:17:39Z2021-08-03T10:17:39ZWhat electric vehicle manufacturers can learn from China – their biggest market<figure><img src="https://images.theconversation.com/files/414156/original/file-20210802-14-a9se6z.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4260%2C3092&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/chongqing-china-july-14-2018-electric-1136793845">Xujun/Shutterstock</a></span></figcaption></figure><p>Despite the pandemic, global sales of electric vehicles (EVs) <a href="https://www.ev-volumes.com/">increased by 43% in 2020</a>. Total EV sales in China were 1.3 million, an increase of <a href="https://www.spglobal.com/platts/en/market-insights/latest-news/metals/121720-chinas-ev-sales-to-reach-more-than-13-mil-units-in-2020-caam">8% compared to 2019</a>, and 41% of all EVs sold worldwide. Though Europe sold more than China <a href="https://www.ev-volumes.com/">for the first time</a> since 2015, China is still the world’s biggest national market for EVs.</p>
<p>The best-selling EV in China is not Tesla’s Model 3, but the tiny Hongguang Mini EV, produced by SAIC-GM-Wuling Automobile, a joint venture between China’s state-owned SAIC Motor, US carmaker General Motors and another Chinese company, Wuling Motors. </p>
<p>The conglomerate positions the car as “the People’s Commuting Tool” in its advertising, with a starting price of 28,800 yuan (about US$4,485, or £3,200) and a fully charged driving range of 120km. Since its debut in July 2020, the Hongguang Mini EV has sold over <a href="https://www.businessinsider.com/gm-hong-guang-mini-ev-tesla-china-covertible-electric-car-2021-4">270,000 units</a> and was the best-selling EV worldwide in January 2021.</p>
<p>This was quite a surprise, as Chinese consumers have traditionally preferred larger models with <a href="https://www.nytimes.com/2013/04/22/automobiles/autoshow/chinese-auto-market-shifts-toward-larger-cars.html">internal combustion engines</a>. But our recent research on consumer preferences in China reveals significant market opportunities for EVs in small cities and how innovative business models could encourage even more people to ditch their fossil-fuelled cars.</p>
<h2>EVs in big and small cities</h2>
<p>China aims to reach a peak in its carbon emissions before 2030 and achieve <a href="https://edition.cnn.com/2020/09/22/china/xi-jinping-carbon-neutral-2060-intl-hnk/index.html">carbon neutrality by 2060</a>. Since 2009, the Chinese government has offered subsidies and tax waivers and built charging points to encourage EV buyers and manufacturers.</p>
<p>But those subsidies are now <a href="https://fortune.com/2021/01/05/china-electric-vehicle-subsidies-sales-tesla/">drying up</a>. Finding out what Chinese motorists like in EVs could tell us what’s behind growth in the world’s largest national market, and whether it’s likely to continue or stall. This matters not only for China but the rest of the world. China has been the <a href="https://databank.worldbank.org/reports.aspx?source=world-development-indicators">world’s largest emitter</a> since 2006, and internal combustion engine cars are among the biggest sources of <a href="https://doi.org/10.1016/j.trd.2018.06.017">carbon emissions</a> globally.</p>
<p>In a <a href="https://doi.org/10.1016/j.techfore.2021.120687">recent study</a>, we found that most EV sales are made in China’s large cities – those with over five million residents, such as Shanghai and Beijing – largely due to the stronger policy incentives there. But consumers in small cities – each with fewer than a million residents – were the most keen to drive EVs.</p>
<p>In these small cities, drivers tend to enjoy shorter commutes and so have less pressure on their time and living costs. People there tend to care more about how well the vehicle works and the environmental benefits of EVs. Prior research revealed that these consumers are <a href="https://doi.org/10.1016/j.trd.2018.06.017">less likely to buy an EV</a> if it’s the more expensive option. This might explain why Hongguang’s Mini EV – with its limited range and relatively cheap price – originated in Liuzhou of Guangxi province, a small city in the south-west of China.</p>
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<img alt="A panorama of a Chinese city." src="https://images.theconversation.com/files/414159/original/file-20210802-13-xwdotj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/414159/original/file-20210802-13-xwdotj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=393&fit=crop&dpr=1 600w, https://images.theconversation.com/files/414159/original/file-20210802-13-xwdotj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=393&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/414159/original/file-20210802-13-xwdotj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=393&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/414159/original/file-20210802-13-xwdotj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=494&fit=crop&dpr=1 754w, https://images.theconversation.com/files/414159/original/file-20210802-13-xwdotj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=494&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/414159/original/file-20210802-13-xwdotj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=494&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The city of Liuzhou.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/panorama-liuzhou-guangxi-china-1999687634">Gyn9037/Shutterstock</a></span>
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<p>Larger cities in China commonly implement <a href="https://doi.org/10.1016/j.enpol.2020.112022">car plate lotteries</a> that limit the number of petrol cars licensed each year. The lottery winning rate is smaller than 1%, about <a href="https://doi.org/10.1016/j.enpol.2020.112022">0.0039% in Beijing</a>, so motorists here have no choice but to switch to EVs. Our findings suggest that the Chinese government’s focus on getting people to drive EVs in larger cities may be misplaced.</p>
<p>Smaller Chinese cities demonstrate a desire for cheap, electrified mobility that could be satisfied there and across the world, particularly the burgeoning towns and cities of the developing world. In short, the future of EVs may look very different to the luxury Tesla cars currently attracting the most attention.</p>
<h2>Buy, lease or share EVs?</h2>
<p>To get more people driving EVs, manufacturers have tried new business models in the Chinese market, such as battery leasing plans. The battery is one of the most expensive components of an EV and this scheme allows consumers to buy the vehicle’s body, then lease the battery on a monthly basis.</p>
<p>Our <a href="https://doi.org/10.1016/j.techfore.2021.120639">second study</a> showed that the battery leasing model will probably broaden the appeal of EVs by appealing to people currently put off by the price.</p>
<p>Some EV companies which have introduced battery-leasing models have also offered a service where drivers can <a href="https://www.nio.com/blog/brief-history-battery-swapping">replace</a> their empty batteries with a fully charged one at a service station – a much faster transaction than recharging.</p>
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Read more:
<a href="https://theconversation.com/explainer-for-the-future-of-electric-vehicles-one-size-does-not-fit-all-36052">Explainer: For the future of electric vehicles, one size does not fit all</a>
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<p>We found that it didn’t matter to drivers whether they rented their battery or completely owned the car. Consumers were ready to accept the battery-leasing model because that and battery swapping services help remove two barriers to buying EVs simultaneously: the premium price and long charging wait times. </p>
<p>Separating EV bodies and batteries can even make driving them more sustainable. When the batteries can no longer sustain long-distance driving, they can be <a href="https://doi.org/10.1016/j.resconrec.2020.105249">reconfigured for a second life</a> in grid-connected storage and electrical tools. At the same time, the owners can continue using the EV bodies without needing to renew the batteries or scrap their vehicles.</p>
<p>Our research also looked at EV sharing schemes, such as <a href="https://www.evcard.com/">EV-Card</a>, in which people can just hop in a vacant EV and drive it if they join a membership scheme. They’re charged for using the EV by the minute. Low-income households were most likely to use this service, potentially making it an effective way of broadening their appeal.</p>
<p>Collectively, a picture emerges of promising ways to deliver the decarbonisation of urban mobility – in China and around the world. Rather than subsidising wealthier consumers in megacities to switch to an EV, a more promising strategy may be to focus on novel forms of access to EVs in China’s – and the world’s – smaller and less wealthy cities.</p><img src="https://counter.theconversation.com/content/161536/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Tyfield has received funding from UKRI (UK Research and Innovation) and NSFC (National Natural Science Foundation of China).</span></em></p><p class="fine-print"><em><span>Lixian Qian receives funding from the National Natural Science Foundation of China (grant numbers 71973107 and 71573213). </span></em></p><p class="fine-print"><em><span>Didier Soopramanien and Youlin Huang do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Small cities in China show the way forward for electric vehicle travel.Youlin Huang, Assistant Professor in Marketing and Innovation, Zhejiang Gongshang UniversityDavid Tyfield, Professor in Sustainable Transitions and Political Economy, Lancaster UniversityDidier Soopramanien, Reader in Marketing, Loughborough UniversityLixian Qian, Associate Professor of Marketing & Innovation, Xi'an Jiaotong-Liverpool UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1540712021-02-07T19:06:22Z2021-02-07T19:06:22ZOn an electric car road trip around NSW, we found range anxiety (and the need for more chargers) is real<figure><img src="https://images.theconversation.com/files/381539/original/file-20210131-20282-7r5yh2.jpg?ixlib=rb-1.1.0&rect=0%2C73%2C5472%2C3563&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption"></span> <span class="attribution"><span class="license">Author provided</span></span></figcaption></figure><p>Replacing cars that run on fossil fuels with electric cars will be important in meeting climate goals – road transport produces <a href="https://www.ipcc.ch/site/assets/uploads/2018/02/ipcc_wg3_ar5_chapter8.pdf">more than 20% of global greenhouse gas emissions</a>. But there are obstacles to wider uptake, particularly in Australia.</p>
<p>Too much of the debate about these vehicles revolves around abstract, technical calculations and assumptions about cost and benefit. Tariffs, taxes and incentives are important in shaping decisions, but the user experience is often overlooked. To better understand this we took a Tesla on a road trip from Sydney through some regional towns in New South Wales. </p>
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Read more:
<a href="https://theconversation.com/the-us-jumps-on-board-the-electric-vehicle-revolution-leaving-australia-in-the-dust-154566">The US jumps on board the electric vehicle revolution, leaving Australia in the dust</a>
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<p>We soon found “range anxiety” is real. That’s the worry that the battery will run out of power before reaching the destination or a charging point. It’s often cited as the most important reason for <a href="https://discover.agl.com.au/energy/range-anxiety-becomes-thing-of-past/">reluctance to buy an electric vehicle</a>. </p>
<p>Even as <a href="https://www.racv.com.au/royalauto/moving/news-information/australias-cheapest-ev.html">prices come down</a> and hire and <a href="https://www.evee.com.au/">share</a> options become more widespread, range anxiety about electric vehicles is hindering their wider uptake. We found it can largely be overcome through a range of strategies readily available now.</p>
<h2>Lessons from our road trip</h2>
<p>The first is simply to accumulate driving experience with a particular vehicle. Teslas promise a far simpler machine with fewer moving parts, but also incredibly sophisticated sensing and computational technology to help control your trip. This means you need to get a feel for the algorithms that calculate route and range. </p>
<p>These algorithms are black boxes – their calculations are invisible to users, only appearing as outputs like range calculations. On our trip, range forecasts were surprisingly inaccurate for crossing the Great Dividing Range, for example.</p>
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Read more:
<a href="https://theconversation.com/how-superfast-charging-batteries-can-help-sell-the-transition-to-electric-vehicles-153872">How superfast charging batteries can help sell the transition to electric vehicles</a>
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<p>Second, we found it very helpful to connect with other electric vehicle users and share experiences of driving. Just like any new technology, forming a community of users is a good way to gain an understanding of the vehicle’s uses and limits. Owner associations and lively online groups such as <a href="https://www.facebook.com/groups/1737462746527033/">Electric Vehicles for Australia</a> make finding fellow enthusiasts easy.</p>
<p>This connection can also help with the third strategy. It involves developing an understanding of how companies like Tesla control their vehicles and issue “over the air” software updates. If these specify different parameters for acceptable battery charge, that can change the vehicle’s range.</p>
<h2>Public investment in charging network will help</h2>
<p>Public investment in charging infrastructure could – and should – further ease range anxiety. <a href="https://electricvehiclecouncil.com.au/wp-content/uploads/2020/08/EVC-State-of-EVs-2020-report.pdf">Better planning and co-ordination are needed</a>, too, to build on networks like the <a href="https://www.mynrma.com.au/cars-and-driving/electric-vehicles">NRMA’s regional network</a> of 50 kilowatt chargers.</p>
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<img alt="electric car travelling at speed on highway" src="https://images.theconversation.com/files/382422/original/file-20210204-18-ax56ot.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/382422/original/file-20210204-18-ax56ot.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/382422/original/file-20210204-18-ax56ot.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/382422/original/file-20210204-18-ax56ot.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/382422/original/file-20210204-18-ax56ot.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/382422/original/file-20210204-18-ax56ot.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/382422/original/file-20210204-18-ax56ot.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Long driving distances call for better planning and co-ordination of a nationwide charging network.</span>
<span class="attribution"><span class="source">alexfan32/Shutterstock</span></span>
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<p>Understanding what is involved for users is also crucial to the environmental benefits of electric vehicles. Their sustainability isn’t just a function of taxes and technologies. The <a href="https://journals.sagepub.com/doi/full/10.1177/0162243912441029">practices of people driving electric cars</a> matter too. </p>
<p>You learn with experience what efficient driving requires of you. You can also work out how your charging patterns could match solar generation at home, for those lucky enough to have rooftop PV panels.</p>
<p>These vehicles can deliver significant environmental benefits. They produce zero tailpipe emissions, reducing both local air pollution and global greenhouse gas emissions. </p>
<p><a href="https://theconversation.com/heres-why-electric-cars-have-plenty-of-grunt-oomph-and-torque-115356">Regenerative braking</a> also reduces brake particulate emissions. That’s because the electric motor operating in reverse can slow the car while recharging its battery. </p>
<h2>Electric vehicles won’t cure all ills</h2>
<p>Switching from internal combustion to electric cars won’t address all the problems of our current car-based system. Some, such as road congestion, could <a href="https://theconversation.com/think-taxing-electric-vehicle-use-is-a-backward-step-heres-why-its-an-important-policy-advance-150644">get worse</a>. </p>
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Read more:
<a href="https://theconversation.com/think-taxing-electric-vehicle-use-is-a-backward-step-heres-why-its-an-important-policy-advance-150644">Think taxing electric vehicle use is a backward step? Here's why it's an important policy advance</a>
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<p>Road traffic will still cause <a href="https://theconversation.com/delivery-rider-deaths-highlight-need-to-make-streets-safer-for-everyone-150752">deaths and injuries</a>. Electric vehicles will still produce <a href="https://theconversation.com/fine-particle-air-pollution-is-a-public-health-emergency-hiding-in-plain-sight-106030">deadly PM2.5 particulates</a> as long as they use conventional brakes and tyres. Many models do, providing <a href="https://www.youtube.com/watch?v=wd2ArceiJd0">similar driving experiences to combustion vehicles</a>.</p>
<p>Congestion and the costs of providing and maintaining roads, parking and associated infrastructure will still create enormous social, economic and environmental burdens. Electric vehicles need to be part of a much wider transformation – especially in urban areas where other transport options are available.</p>
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Read more:
<a href="https://theconversation.com/delivery-rider-deaths-highlight-need-to-make-streets-safer-for-everyone-150752">Delivery rider deaths highlight need to make streets safer for everyone</a>
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<h2>Rural and regional Australia can benefit too</h2>
<p>Longer distances and lower densities make walking, cycling and public transport more challenging in rural and regional areas. Better support for electric vehicles, particularly chargers, could make a significant difference here. </p>
<p>These vehicles can help rural and regional areas in other ways too. Many holiday towns rely on tourist incomes but their electricity supply is at the mercy of long thin power lines that run through bushland. Electric vehicles could potentially help with this problem: <a href="https://www.energynetworks.com.au/news/energy-insider/2020-energy-insider/could-vehicle-to-grid-accelerate-the-ev-revolution/">when parked they can feed power back into the grid</a>. </p>
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<img alt="Tesla being charged at a rural charging point" src="https://images.theconversation.com/files/382420/original/file-20210204-14-7gnof5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/382420/original/file-20210204-14-7gnof5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/382420/original/file-20210204-14-7gnof5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/382420/original/file-20210204-14-7gnof5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/382420/original/file-20210204-14-7gnof5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/382420/original/file-20210204-14-7gnof5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/382420/original/file-20210204-14-7gnof5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Improving rural and regional charging networks can benefit those areas as well as the drivers of electric vehicles.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/yorke-peninsula-south-australia-january-18-1900371982">Shutterstock</a></span>
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<p>Regional economic planning that supports visits by electric vehicle drivers can reduce the need to invest in energy generation or battery systems. There are huge opportunities to integrate electricity planning and the (re)building of bushfire-affected towns, which a <a href="https://www.ausnetservices.com.au/en/About/News-Room/News-Room-2018/AusNet-Services-to-Install-Gippslands-First-Big-Battery-at-Mallacoota">trial in Mallacoota</a> will explore. </p>
<p>Pooled together, the batteries of an all-electric national vehicle fleet could provide power equivalent to that of <a href="https://www.anu.edu.au/news/all-news/electric-vehicle-fleets-set-to-be-on-call-to-backup-the-grid">five Snowy 2.0s</a>. This would boost energy security and flexibility.</p>
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Read more:
<a href="https://theconversation.com/owners-of-electric-vehicles-to-be-paid-to-plug-into-the-grid-to-help-avoid-blackouts-132519">Owners of electric vehicles to be paid to plug into the grid to help avoid blackouts</a>
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<p>In the US, President Joe Biden has <a href="https://electrek.co/2021/01/25/president-biden-will-make-entire-645k-vehicle-federal-fleet-electric/">announced</a> electric vehicles will replace the entire federal fleet of 645,000 vehicles. An extra <a href="https://www.bloomberg.com/news/articles/2020-12-02/joe-biden-plan-to-fight-climate-change-could-sell-25-million-electric-cars">500,000 public charging stations</a> are to be built within a decade. </p>
<p>In Australia, the policy landscape is more <a href="https://www.abc.net.au/news/science/2020-11-26/ev-tax-slow-electric-vehicle-report/12891524">[contested]</a>. It’s time we caught up here.</p>
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<p>We can start by recognising the importance of governments in the progress made internationally. Examples include the <a href="https://www.wired.com/2009/06/tesla-loan/">US$465 million US government loan to Tesla</a> in 2009 to develop the landmark Model S, and Norway’s co-ordinated national approach to properly <a href="https://elbil.no/english/norwegian-ev-policy/">accounting for the environmental and social costs</a> of cars. Norway’s success is now the focus of a laugh-out-loud <a href="https://twitter.com/GM/status/1356966012646789120">Superbowl ad</a> from GM, a company that in the past <a href="https://en.m.wikipedia.org/wiki/Who_Killed_the_Electric_Car%3F">killed the electric car</a>.</p>
<p>We need to understand users and have democratic debates about planning for charging infrastructure before we can sit back and enjoy the ride.</p><img src="https://counter.theconversation.com/content/154071/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amelia Thorpe receives funding for research on EVs from the UNSW Digital Grid Futures Institute and the RACE for 2030 CRC. </span></em></p><p class="fine-print"><em><span>Declan Kuch receives research funding from The Australian Renewable Energy Agency, UNSW Digital Grid Futures Institute and RACE for 2030 CRC. </span></em></p><p class="fine-print"><em><span>Sophie Adams receives funding for research on EVs from the Australian Renewable Energy Agency, UNSW Digital Grid Futures Institute and RACE for 2030 CRC.</span></em></p>Australia has a lot of work to do to overcome the challenges facing electric vehicles users, starting with the lack of a comprehensive national charging network.Amelia Thorpe, Associate Professor in Law, UNSW SydneyDeclan Kuch, Vice Chancellor's Research Fellow, Institute for Culture and Society, Western Sydney UniversitySophie Adams, Research Fellow, School of Humanities and Languages, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1537932021-01-27T22:55:58Z2021-01-27T22:55:58ZIs Tesla’s share price justified? Probably not<figure><img src="https://images.theconversation.com/files/380783/original/file-20210127-21-q0omku.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5000%2C3218&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Elon Musk is now the <a href="https://www.bbc.com/news/technology-55578403">world’s richest person</a>, edging out previous title holder Amazon’s Jeff Bezos. His rocketing fortune is due to the booming share price of <a href="https://www.tesla.com/">Tesla</a>, the maker of electric vehicles and clean energy technologies.</p>
<p>In the past week Tesla’s share price surpassed US$880, ten times its March 2020 low of US$85, giving the company a market capitalisation (or total value) in excess of US$880 billion – <a href="https://www.visualcapitalist.com/worlds-top-car-manufacturer-by-market-cap/">more than</a> Toyota, Volkswagen, Daimler, General Motors, BMW, Honda, Hyundai and Ford combined.</p>
<p>That’s an extraordinary amount for a company that only last financial year made its first full-year profit since being founded in 2003; and that profit was relatively modest. It gave Tesla a price-to-earnings ratio – a standard measure of a stock’s value – <a href="https://finance.yahoo.com/quote/TSLA/news?ltr=1">close to 1,700</a>. </p>
<p>Compare that to the other shares that have boomed since global stock markets rebounded from the COVID-induced lows of March 2020 – technology companies such as Facebook, Apple, Amazon, Microsoft and Google. Amazon’s PE ratio is about 97, Apple’s about 44, and others in the 30-40 range.</p>
<p>Telsa’s latest quarterly profit is equally modest, <a href="https://www.cnbc.com/2021/01/27/tesla-tsla-earnings-q4-2020.html">missing analysts’ expectations</a> with reported earnings per share of just 80 cents. Its share price has dipped as a result, but still remains a very optimistic valuation. </p>
<p>So can Tesla’s valuation be justified, or is this one more example of a bubble waiting to burst? Well, Tesla is clearly an extraordinary innovator, but there are several reasons to think that, though irrational exuberance may drive its value even higher, sooner or later it’s going to come crashing back down to earth.</p>
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Read more:
<a href="https://theconversation.com/tulip-mania-the-classic-story-of-a-dutch-financial-bubble-is-mostly-wrong-91413">Tulip mania: the classic story of a Dutch financial bubble is mostly wrong</a>
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<h2>The positives</h2>
<p>Tesla has benefited from its founder’s vision. It has established a strong brand as the premiere producer of electric vehicles and renewable energy systems – two industries on the cusp of significant growth as the world moves away from fossil fuels. </p>
<p>It has successfully developed a suite of electric cars where other car companies have failed. It has done this by capturing the imagination of investors and technology enthusiasts alike with technically impressive and aesthetically beautiful products. </p>
<p>It has become a major manufacturer of solar photovoltaic systems.</p>
<p>Connected to both these markets are its developments in batteries to power vehicles, homes and entire communities. In South Australia it built the world’s largest lithium-ion battery, storing renewable energy from nearby wind turbines when generation exceeds demand and balancing out the grid when demand exceeds variable supply.</p>
<p>These industries will accrue a greater share of vehicle and energy markets over time, and Tesla will be a major player in both.</p>
<p>However, Tesla faces serious challenges. </p>
<h2>Tesla has led, but others will follow</h2>
<p>The <a href="https://www.vw.com/en/electric-vehicles.html">major car makers</a>, once wedded to their old internal combustion technologies, are embracing electric in response to what is, for them, an <a href="https://www.reuters.com/article/us-climate-change-eu-transport/eu-to-target-30-million-electric-cars-by-2030-draft-idUSKBN28E2KM">existential threat</a>. Car makers from Korea to Japan to Germany – and of course <a href="https://www.nio.com/">China</a> – are responding with new products to challenge Tesla’s position.</p>
<p>In strategic management, this response is called “disruption”. </p>
<p>The term is most closely associated with the American academic Clayton Christensen. In his influential 1997 book The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail, he describes the inexorable processes of how “early movers” are confronted with a new batch of entrants intent on securing their share of growing markets.</p>
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<figcaption><span class="caption">Clayton Christensen discusses the innovator’s dilemma.</span></figcaption>
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<p>Tesla’s success is tantalising, something both established and start-up competitors will seek to emulate. Late movers may start with simpler, cheaper and by some measures inferior products. But over time they can learn what consumers want and are willing to pay for. They then challenge industry leaders for a share of the market, starting at the bottom but always moving upward.</p>
<p>Indeed, Tesla itself has benefited from these very processes.</p>
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<a href="https://theconversation.com/pursuing-teslas-electric-cars-wont-rev-up-vws-share-price-152279">Pursuing Tesla's electric cars won't rev up VW's share price</a>
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<h2>Smoothing the road for competitors</h2>
<p>As an early mover, Tesla is also laying the foundations for emulators’ success. By establishing the impetus for infrastructure needed for the massive roll-out of electric vehicles, later movers will face fewer entry obstacles than Tesla and other early movers. </p>
<p>These include creating charging stations that, once established, will drive a virtuous cycle of increased demand for electric vehicles and supply of stations.</p>
<p>But the differences between Tesla and its big-tech peers may be a source of serious challenge.</p>
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Read more:
<a href="https://theconversation.com/how-superfast-charging-batteries-can-help-sell-the-transition-to-electric-vehicles-153872">How superfast charging batteries can help sell the transition to electric vehicles</a>
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<p>Other tech companies benefit from what economists call <a href="https://online.hbs.edu/blog/post/what-are-network-effects">network effects</a>: the more ubiquitous a product, the more valuable it become to users.</p>
<p>Social media platforms are an obvious example, but it also applies to companies such as eBay and Amazon: the more buyers and sellers on these platform, the greater their value to sellers and buyers – and therefore the greater the returns to the service provider. </p>
<p>For Tesla, network benefits are harder to protect. More electric vehicles will create more demand for charging stations, and more charging stations will help vehicles sales. But it will be harder for Tesla to protect its stations from benefiting competitors.</p>
<p>Perhaps for Tesla’s visionary founder that’s just fine. His plans extend far beyond making money – and Earth.</p>
<p>But if you’re an investor, it’s something to be careful about. You might be able to ride the speculative rocket, so long as you time when you hop off. But if you’re looking at Tesla as a long-term investment – as you should – there are no guarantees.</p><img src="https://counter.theconversation.com/content/153793/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Tesla is now valued at more than Toyota, Volkswagen, Daimler, General Motors, BMW, Honda, Hyundai and Ford combined. But don’t expect that to last.John Rice, Professor, College of Business, Zayed UniversityNigel Martin, Lecturer, College of Business and Economics, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1266792019-11-25T05:54:20Z2019-11-25T05:54:20ZTesla’s Blade Runner-inspired pickup truck kind of flopped. Here’s why<p>Tesla’s new “Blade Runner-inspired” electric cybertruck has the world turning its head. </p>
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<p>The internet has had a field day since the vehicle’s launch on Thursday, with users finding creative ways to ridicule the truck’s eccentric design. </p>
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<p>This isn’t the first time Tesla chief executive Elon Musk has invoked science fiction in his product designs. In 2017, his space agency <a href="https://www.smithsonianmag.com/smart-news/astronauts-test-out-their-new-flight-suits-180972882/">SpaceX introduced</a> a new type of sleek, form-fitting space suit – in contrast with NASA’s bulky astronaut attire. </p>
<p>Some have accused Musk of tapping into “<a href="https://www.engadget.com/2018/02/02/how-elon-musk-plays-on-our-science-fiction-dreams/">the public’s science fiction fantasies</a>” as a marketing ploy. </p>
<p>Whether or not this is the case, Tesla’s newest product proves it is possible to go too far on the sci-fi fantasy train. </p>
<h2>A sparkling finish, but not a sparkling reception</h2>
<p>When it comes to technologies of the future, vehicles and transportation are in the limelight. </p>
<p>In a 2014 <a href="https://www.pewresearch.org/internet/2014/04/17/us-views-of-technology-and-the-future/">Pew Research Centre survey</a>, Americans were asked to describe “futuristic inventions they themselves would like to own”. One of the most common answers was “travel improvements like flying cars and bikes”. </p>
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<a href="https://theconversation.com/teslas-gamble-on-its-affordable-electric-car-57046">Tesla's gamble on its 'affordable' electric car</a>
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<p>Similarly, if you consult real estate blogs, you’ll come across <a href="https://listwithclever.com/real-estate-blog/should-you-upgrade-your-appliances-before-selling-your-home/">debates</a> regarding the merits of upgrading to stainless steel or mirror finish appliances before selling a house. Those on the pro side argue the futuristic look will inspire purchases by projecting a more modern image. </p>
<p>So why did the same stainless steel aesthetic fail Tesla completely?</p>
<p>It’s already known Tesla’s consumer base is motivated by a variety of factors, including <a href="https://www.tandfonline.com/doi/abs/10.1080/00223980.2018.1511515?journalCode=vjrl20">emotional engagement with new products</a>. </p>
<p>But a more important element at play here is the fact that many customers’ purchasing habits reflect Tesla products as being symbols of <a href="https://www.sciencedirect.com/science/article/pii/S0965856415303153">self-identity</a>. </p>
<p>When cast in this light, the fact that the cybertruck has been labelled “<a href="https://www.forbes.com/sites/johnkoetsier/2019/11/22/tesla-cybertruck-is-ugly-as-sin-there-i-said-it/">ugly</a>” goes a long way towards explaining why fans of the brand have shunned the newest family member.</p>
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<p>Before Thursday’s reveal, Musk said he “doesn’t care” if people aren’t interested in buying his “<a href="https://www.theverge.com/2018/11/2/18055158/elon-musk-tesla-pickup-truck-bladerunner-futuristic">futuristic-like cyberpunk, Blade Runner pickup truck</a>”. But from a business perspective, that seems an unlikely opinion for a chief executive to hold. </p>
<p>On Sunday, Musk tweeted claiming the truck had <a href="https://www.smh.com.au/business/companies/elon-musk-says-there-are-146-000-orders-for-the-tesla-cybertruck-20191125-p53doh.html">received 187,000 orders</a> (not the same as sales) since the unveiling, up from 146,000 announced in a tweet on Saturday.</p>
<p>This is comparable to demand for Tesla’s 2016 Model 3, which supposedly <a href="https://money.cnn.com/2016/04/01/news/companies/tesla-model-3-stock-price/index.html">received 200,000 orders within 24 hours</a>.</p>
<h2>It doesn’t seem safe</h2>
<p><a href="https://www.wired.com/story/why-tesla-cybertruck-looks-weird/">According to Raphael Zammit</a>, who heads a transportation design program at Detroit’s College for Creative Studies, the Tesla cybertruck’s design “failed” because it focused on style rather than consumer perception. </p>
<p>Zammit says the roof doesn’t “look stable” to a consumer’s non-specialist eye. It’s not that the structure isn’t expected to be sound, it’s that it goes against the standard design principles intended to instil public trust. </p>
<p>Another factor that may have contributed to the truck’s critical reception is the <a href="https://www.forbes.com/sites/johnkoetsier/2019/11/22/tesla-demo-fail-transparent-metal-armored-glass-smashed-during-cybertruck-reveal/#33a102703fce">botched “transparent metal” window demonstration</a> during the unveiling. The vehicle’s glass was visibly damaged after being hit with a steel ball.</p>
<p>Nothing undermines consumer confidence like a supposedly armoured window being smashed in the middle of a product launch. </p>
<p>The news for the company’s <a href="https://www.forbes.com/sites/hayleycuccinello/2019/11/22/elon-musk-net-worth-cybertruck/#428dc56a73aa">bottom line is not good</a>, feeding a trend of <a href="https://qz.com/1604080/tesla-is-losing-money-at-a-frightening-pace/">losses</a> over the year. </p>
<h2>The impact of sci-fi on technological progression</h2>
<p>The Tesla cybertruck is just the most recent node in ongoing speculation around what <a href="https://electronics.howstuffworks.com/future-tech/10-futurist-predictions-in-the-world-of-technology9.htm">future technologies</a> will look like.</p>
<p>There are countless examples in recent media, ranging from discussions of <a href="https://www.dazeddigital.com/beauty/body/article/46748/1/gene-selection-enhancement-editing-designer-baby-genetics-future">CRISPR</a> and <a href="https://www.technologyreview.com/s/614690/polygenic-score-ivf-embryo-dna-tests-genomic-prediction-gattaca/">gene testing</a>, to <a href="http://www.bbc.com/culture/story/20191111-are-we-living-in-a-blade-runner-world">artificial intelligence and flying cars</a>.</p>
<p>Tesla’s sci-fi-inspired cybertruck design is making the headlines, but draws attention away from the greatest contribution sci-fi cinema makes to society. That is, it provides a safe space to explore the possible harms and benefits of new developments, before they become reality.</p>
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<p>Sci-fi worlds “test” potential futures for us. Utopian and dystopian sci-fi, in particular, raise questions around ethical and legal structures we might want to pursue or avoid, to achieve the future we want. </p>
<p>Science fiction professor <a href="https://hieroglyph.asu.edu/2014/11/interview-sherryl-vint/">Sherryl Vint</a> notes the genre occupies a unique position, by allowing us to work through our anxieties about our rapidly changing world. </p>
<p>She provides the example of <a href="https://www.imdb.com/title/tt2234222/">Orphan Black</a> as a sci-fi show that discusses fears associated with human cloning, while also considering the complexities of medical patenting and personalised medicine. </p>
<p>Even if Orphan Black doesn’t end up shaping the technical future of gene technology (let’s hope not), it has certainly made many people think about its possible impact.</p>
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<figcaption><span class="caption">Orphan Black is a science fiction thriller television series which focuses on genetic tinkering, among other technology-related themes.</span></figcaption>
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<p>And this is probably where the true value of sci-fi lies: in raising questions around the consequences of our emerging technologies, rather than inspiring their designs. </p>
<h2>The chicken and egg dilemma</h2>
<p>One could even argue it’s problematic to say futuristic technologies are inspired by sci-fi at all. </p>
<p>It may just as easily be the case that such technologies were inspired by early scientific thought, which simply didn’t receive as much attention as the resulting products. </p>
<p>After all, many early sci-fi authors were themselves <a href="https://archive.org/stream/Science_Fiction_and_the_Prediction_of_the_Future_Essays_on_Foresight_and_Fallacy/Science_Fiction_and_the_Prediction_of_the_Future_Essays_on_Foresight_and_Fallacy_by_Gary_Westfahl_and_Donald_E._Palumbo_djvu.txt">scientists and engineers</a>, and described possible future developments that were an extension of what they were working on in real life. </p>
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<a href="https://theconversation.com/scientists-on-their-favourite-science-fiction-51738">Scientists on their favourite science fiction</a>
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<p>It could be argued that real science inspires sci-fi, rather than the other way around. </p>
<p>In either case, sci-fi should be a shared language through which we can discuss technological change, rather than a marketing ploy for companies looking to capitalise on people’s love of futurism.</p>
<p>Plus, as Musk’s cybertruck demonstrates, styling your vehicles on cyberpunk visions of the future may not be the soundest business strategy anyway.</p><img src="https://counter.theconversation.com/content/126679/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Evie Kendal does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Elon Musk’s latest venture has been met with confusion and ridicule. But drawing inspiration from science fiction for new technology should go beyond simplistic futurist fantasies.Evie Kendal, Lecturer in Bioethics and Health Humanities, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1264062019-11-07T12:16:38Z2019-11-07T12:16:38ZInequality is higher in some states like New York and Louisiana because of corporate welfare<figure><img src="https://images.theconversation.com/files/300474/original/file-20191106-12521-1n5z88i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">New York's offer of incentives to Amazon to open a headquarters in the state faced significant opposition.</span> <span class="attribution"><span class="source">AP Photo/Karen Matthews</span></span></figcaption></figure><p>Income inequality <a href="https://markets.businessinsider.com/news/stocks/income-inequality-reached-highest-level-ever-recorded-in-2018-2019-9-1028559996">made</a> <a href="https://www.washingtonpost.com/business/2019/09/26/income-inequality-america-highest-its-been-since-census-started-tracking-it-data-show/">big</a> <a href="https://www.axios.com/income-inequality-united-states-record-c78b1ff4-4b71-4a88-a890-db20ff8222f3.html">headlines</a> in 2019, after the <a href="https://www.census.gov/programs-surveys/acs/news/data-releases/2018/release.html#par_textimage_copy">U.S. Census Bureau</a> released data showing that the gap between the richest and poorest Americans is at its <a href="https://www.npr.org/2019/09/26/764654623/u-s-income-inequality-worsens-widening-to-a-new-gap">highest level in at least half a century</a>. </p>
<p>Less reported was the <a href="https://data.census.gov/cedsci/table?hidePreview=true&q=B19083%3A%20GINI%20INDEX%20OF%20INCOME%20INEQUALITY&table=B19083&tid=ACSDT1Y2018.B19083&lastDisplayedRow=155&g=0100000US.04000.001&tp=true">significant variation among the states</a>. New York and California had the highest inequality in 2018, while Utah and Alaska had the lowest. In addition, states as diverse as Alabama, Texas and New Hampshire experienced large increases from the prior year.</p>
<p>Why are some states more or less equal than others? </p>
<p>It usually comes down to policies. States with <a href="https://scholars.org/contribution/how-states-can-fight-growing-economic-inequality">more generous welfare programs</a> and <a href="http://csivc.csi.cuny.edu/Thomas.Volscho/files/volscho1.pdf">higher minimum wages</a> often have lower inequality, while those with <a href="https://doi.org/10.1177/1532440018760198">weaker unions</a> and <a href="https://www.nytimes.com/2019/07/20/opinion/sunday/inequality-taxes.html">lower taxes on the rich</a> have higher levels.</p>
<p>My <a href="https://jmjansa.files.wordpress.com/2019/11/chasing-disparity-sppq-final-version-w-cover.pdf">research suggests</a> there’s another, less-noticed reason behind the disparities: corporate welfare. </p>
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<h2>Incentivizing inequality</h2>
<p>States offer economic development incentives to businesses in order to encourage their investment and expansion in the state.</p>
<p>Famously, <a href="https://www.nytimes.com/2018/01/18/technology/amazon-finalists-headquarters.html">hundreds of states and cities offered</a> Amazon property and income tax credits, bonds, grants, reimbursements and infrastructure assistance in their efforts to convince the Internet giant to open a “second” headquarters in one of their cities. One of the finalists even offered to provide Amazon with <a href="https://www.cnbc.com/2018/11/14/atlanta-offered-amazon-the-chance-at-its-own-train-car-for-hq2.html">a private train car</a>. New York and Virginia won the sweepstakes with a combined <a href="https://www.nytimes.com/2018/11/13/business/economy/amazon-hq2-va-long-island-city-incentives.html">US$2 billion in incentives</a> – although Amazon dropped New York after it met political resistance.</p>
<p>But the amount of incentives states offer can vary significantly. For example, New Hampshire spent just $9.9 million on incentives, or 75 cents for every state resident, per year from 1999 to 2014, while Louisiana paid out an average of $1.2 billion a year, or $267 per capita.</p>
<p>I wanted to know if how much a state spends on corporate incentives affects its level of income inequality. So I analyzed incentive spending using <a href="https://www.goodjobsfirst.org">Good Jobs First</a> data and income inequality as measured by the <a href="https://data.census.gov/cedsci/table?hidePreview=true&q=B19083%3A%20GINI%20INDEX%20OF%20INCOME%20INEQUALITY&table=B19083&tid=ACSDT1Y2018.B19083&lastDisplayedRow=155&g=0100000US.04000.001&tp=true">Gini coefficient</a> from 1999 to 2014. </p>
<p>The Gini coefficient measures inequality by assigning a decimal number that can range from 0, which represents perfect equality, to 1, meaning perfect inequality. New York had a Gini of 0.513 in 2018, while Utah’s was 0.426. A change in the Gini coefficient of as little as 0.01 means the top 10% of households earned $1,500 to $2,400 more per year, depending on the state. </p>
<p>I found that when states spend more on incentives, their level of inequality tends to spike within a year or so. This holds true even when controlling for other economic and demographic factors and other public policies.</p>
<p>The data showed that, on average, for every $180 per citizen that a state spends on incentives, the Gini coefficient increases by 0.004. In other words, $600 to $1,000 more winds up in the pockets of people from wealthy households.</p>
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<p>In big-dollar terms, $180 per citizen is the equivalent of a state spending $200 million to $2 billion a year on incentives, depending on its population. To put it in context, states frequently give billion-dollar incentive packages to individual companies, such as <a href="https://www.scientificamerican.com/article/nevada-gives-1-3-billion-tax-break-to-electric-car-maker-tesla/">Tesla</a>, <a href="https://www.cnbc.com/id/100315374">Nike</a>, <a href="https://www.oregonlive.com/silicon-forest/2018/12/intels-oregon-tax-breaks-are-among-the-nations-biggest-new-report-finds.html">Intel</a>, <a href="https://news.bloombergtax.com/daily-tax-report-state/boeings-8-7-billion-washington-state-tax-break-under-scrutiny">Boeing</a> and <a href="https://www.goodjobsfirst.org/study-nissans-mississippi-subsidies-top-13-billion">Nissan</a>.</p>
<p>Incentives serve to redistribute funds to the wealthy and reduce resources for broadly redistributive policies over the long run.</p>
<h2>The whole story</h2>
<p>Incentives, of course, do not explain everything. New Hampshire, for example, has growing inequality but doesn’t spend much on incentives.</p>
<p>Yet, looking at incentives can help explain why states that are <a href="https://scholars.org/contribution/how-us-states-are-tackling-inequality-and-what-more-can-be-done">leaders in mitigating inequality</a> through higher minimum wages or welfare spending on the poor, such as New Mexico and New York, are still seeing growing inequality.</p>
<p>So the next time you hear an elected official cite big <a href="https://madison.com/wsj/news/local/govt-and-politics/ap-fact-check-scott-walker-embellishes-return-on-new-milwaukee/article_f00d4074-d403-5944-a00f-902705e8153f.html">returns on investment</a> as their reason for offering a company billions in incentives to open a factory or office, remember they aren’t telling the whole story. Those big returns come at a cost: higher inequality, which in turn can <a href="http://dx.doi.org/10.2139/ssrn.178708">hamper economic growth</a>.</p><img src="https://counter.theconversation.com/content/126406/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joshua Jansa does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The gap between rich and poor is at record levels in the U.S., yet it varies widely among the states. A political scientist explains why.Joshua Jansa, Assistant Professor of Political Science, Oklahoma State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1009902018-08-03T16:17:50Z2018-08-03T16:17:50ZElon Musk’s claim that Tesla won’t need rescuing is for the birds – here’s why<figure><img src="https://images.theconversation.com/files/230568/original/file-20180803-41357-13797sr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/brenner-italy-may-8-2016-tesla-420663502">Jag_cz</a></span></figcaption></figure><p>Wall Street is full of <a href="https://www.cnbc.com/2018/08/02/wall-street-believes-this-could-be-teslas-inflection-point.html">turnaround talk</a> following Tesla’s <a href="http://ir.tesla.com/static-files/7235e525-db16-470c-8dce-9ecac0ad7712">second-quarter earnings</a> results, sending shares in the futuristic electric car pioneer up almost 10%. Investors welcomed news that the company was burning through cash at a lower rate and revenues were considerably higher, yet the results also showed that Tesla’s financial and operational weaknesses have not gone away. From my reading of the figures, this is a company in real trouble.</p>
<p>With superstar tycoon Elon Musk in the driving seat, Tesla has become synonymous with niche luxury electric vehicles. Starting with the Roadster sports car in the late 2000s, it has been instrumental in overcoming barriers such as battery size and low maximum speed that were preventing electric cars from reaching the mass market. Now the company is ramping up production of the car it hopes will finally achieve that goal – the <a href="https://www.tesla.com/en_GB/model3">Tesla Model 3</a>. This is turning out to be the toughest challenge so far. </p>
<p>In Tesla’s <a href="http://ir.tesla.com/static-files/0fbefe56-326c-412e-a33c-aa1b342e9469">2017 annual report</a>, the company reported a net operating loss of more than US$2 billion (£1.5 billion) for the year, more than doubling to US$3.5 billion the total losses since inception in 2003. In the latest results, the size of the loss has wrongfooted analysts yet again, coming in at US$3.06/share when it was expected to be US$2.90/share. To break even this year and stop these losses piling up, the company needs to double its 2017 annual revenue. This rests on two things: it must produce and sell many more units of the <a href="https://www.tesla.com/en_GB/model3">Model 3</a> – and it must get control of its spiralling costs. </p>
<h2>Factory frustrations</h2>
<p>Tesla missed a crucial target to be making 5,000 Model 3s a week by the end of last year. Though it <a href="https://www.bloomberg.com/news/articles/2018-07-01/tesla-said-to-reach-model-3-production-goal-in-june-s-final-week">reached that milestone</a> by the end of June 2018 – or 7,000 cars a week when you add in the slightly more upmarket <a href="https://theconversation.com/could-teslas-model-x-drive-us-towards-electric-cars-for-all-48452">Model X</a> and Model S cars – Tesla will still take two years to meet the current backlog of more than 450,000 Model 3 pre-orders. This backlog prevents timely delivery of new orders and will thus damage future cash flows, unless Tesla can ramp production up. </p>
<p>Musk has a <a href="https://electrek.co/2018/07/12/elon-musk-tesla-production-model/">stated objective</a> to bring the company out of “production hell” in the coming months. Tesla says it will hit 10,000 Model 3s a week at some point in 2019, which would be a huge step towards clearing the backlog, but question marks exist as to whether this is really achievable without significantly increasing capital expenditure. Indeed, <a href="https://www.reuters.com/article/us-tesla-china/tesla-plans-to-invest-5-billion-building-factory-in-china-bloomberg-idUSKBN1KM4DF">plans to</a> expand global sales in China have led to more questions about financing.</p>
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<p>The genesis of the company’s financial woes seems obvious. In 2017 Tesla held a massive inventory of US$2.2 billion, which represents 18.8% of annual turnover. This has since risen to a staggering US$3.3 billion. Tesla claims it is due to late deliveries, but the reasons are much more complex than that. </p>
<p>Two key features that differentiate Tesla from its competitors are that it relies heavily on automation and is <a href="https://cleantechnica.com/2016/12/17/vertical-integration-teslas-elon-musk-employs-long-lost-approach-bygone-era-american-business/">highly vertically integrated</a>, creating much more in-house than most carmakers – from the software to the batteries to the electronics inside its cars. These strategies have imposed a very high capital requirement on the business, <a href="https://theconversation.com/teslas-problem-overestimating-automation-underestimating-humans-95388">particularly</a> the cost of investing in <a href="https://www.investopedia.com/news/teslas-hyperautomated-assembly-line-could-be-its-downfall/">hyper-automated assembly</a>. </p>
<p>The trade-off should have been that it would improve the production process, but it ended up creating a bottleneck that led to large production delays for the Model 3s. Musk admitted as much earlier this year:</p>
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<p>To have any chance of staying solvent, Tesla needs to stop burning cash at such a colossal rate. The company’s <a href="https://www.thebalancesmb.com/what-is-the-quick-ratio-and-how-is-it-used-393219">quick liquidity ratio</a> – the ability to meet short-term obligations – stood at 0.6 at the end of 2017, and has now fallen to an alarming 0.4. This means the company’s current assets are only 40% of what is required to cover short-term debts – way below the <a href="https://yourbusiness.azcentral.com/quick-ratio-tell-company-2924.html">ideal level</a> of 1. Cash burn may have improved, but the company is still going through it at an incredible pace – cash reserves have fallen to US$2.7 billion compared to US$3.2 billion three months ago. </p>
<p>While revenue significantly increased to US$4 billion with the new results, the net loss remains almost the same. In other words, Tesla is selling more cars but not harnessing the economies of scale it should be. The company’s quarterly <a href="https://www.investopedia.com/terms/g/grossprofit.asp">gross profit</a> from automotive sales is also down from 27.9% to 20.6% in the space of a year – dragged down by the Model 3. This suggests that the company is still beset with the operational bottlenecks and inefficiencies that have plagued its production for years. The fact that the company is dependent on an unprofitable vehicle has serious implications for the long-term future of the business. </p>
<p>Besides the production issues, the Model 3’s pricing strategy has also looked questionable since it launched last April. It is meant to start at US$35,000 to make it competitive with other cars in the same bracket, but Tesla is currently only selling the <a href="https://www.engadget.com/2018/05/22/tesla-model-3-35000-base-delayed-again/">higher spec version</a>, which starts at $49,000 and increases to $64,000 for the “<a href="https://electrek.co/2018/07/13/tesla-model-3-performance-lower-suspension-brake-elon-musk/">performance edition</a>”. </p>
<p>In comparison, the Model S starts at US$65,200. It is said to offer significantly better performance, but the differences with the Model 3 are actually quite modest. I am sure Musk would disagree, but it seems the principal difference between Tesla’s models are their exteriors. You therefore worry about the Model 3’s potential to cannabilise the <a href="https://www.tesla.com/models">Model S</a>. </p>
<h2>The future</h2>
<p>Musk may believe that creating a mass-market product is the most important step to achieving his vision of an electric car future, but he has yet to deliver on the financial and operational competencies essential to sustain this. Many analysts have pointed out that Tesla’s current market valuation of US$50 billion seems to be extremely inflated. The shares are valued at 35 times the mean of <a href="https://www.reuters.com/article/us-tesla-results-breakingviews/breakingviews-elon-musk-ekes-out-tesla-breathing-space-idUSKBN1KM6AC">analysts’ estimates</a> for 2020 earnings. Historically, the <a href="http://www.multpl.com/">average ratio</a> on the S&P500 index is just 15. </p>
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<a href="https://images.theconversation.com/files/230570/original/file-20180803-41357-k3q0xh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/230570/original/file-20180803-41357-k3q0xh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/230570/original/file-20180803-41357-k3q0xh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/230570/original/file-20180803-41357-k3q0xh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/230570/original/file-20180803-41357-k3q0xh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/230570/original/file-20180803-41357-k3q0xh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/230570/original/file-20180803-41357-k3q0xh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/230570/original/file-20180803-41357-k3q0xh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Unmistakeable Musk.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/september-2017-elon-musk-sketch-vector-710717998?src=QiLNRhfvpoK8rAlN4CGBDg-1-16">Piusillu</a></span>
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<p>Tesla’s credit rating has been <a href="https://ftalphaville.ft.com/2018/03/20/1521544062000/Tesla-s-debt-price-is-deteriorating--Update-/">deteriorating</a> recently, making it harder to raise money from issuing bonds. The company has <a href="http://ir.tesla.com/static-files/7235e525-db16-470c-8dce-9ecac0ad7712">US$2.1 billion of debt</a> to repay within the next six months – a repayment it will find extremely hard to make based its current cash position. </p>
<p>Deposits from pre-orders for the <a href="https://electrek.co/guides/tesla-semi/">Semi</a> truck and <a href="https://electrek.co/2018/06/05/tesla-new-next-gen-roadster-prototype-shareholder-meeting/">Roadster 2</a> sports car, due respectively in 2019 and 2020, have helped bring in some operating cash. All the same, it seems Tesla will need to raise additional funds, probably through equity, to avoid becoming completely insolvent.</p>
<p>Musk has just <a href="https://www.telegraph.co.uk/technology/2018/08/01/tesla-steadies-losses-model-3-production-takes-toll/">reiterated</a> previous promises that Tesla would return to profit later this year and that no additional capital will be necessary. From where I’m standing, these claims seem simply outrageous.</p><img src="https://counter.theconversation.com/content/100990/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Price is grateful to his student Heet Shah for his input into this article. </span></em></p>Shares in the wundercompany rocketed after the Q2 results. Why?Michael Price, Research associate, Newcastle UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/968832018-05-30T18:57:53Z2018-05-30T18:57:53ZIs Elon Musk a super‑hero?<figure><img src="https://images.theconversation.com/files/219594/original/file-20180518-42210-13d4gjc.jpg?ixlib=rb-1.1.0&rect=0%2C7%2C1198%2C682&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In the film _Iron Man 2_, Elon Musk (playing himself, in white), meets one of his sources of inspiration: Tony Stark (R. Downey Jr.), super-hero of the Marvel Universe.</span> <span class="attribution"><a class="source" href="https://www.disneypixar.fr/films/261-iron-man-2">DisneyPixar</a></span></figcaption></figure><p>On May 2, 2018, after the announcement of the results for the first quarter of 2018, Tesla’s stock fell by 6%, showing the limits of the “super powers” of Elon Musk. Is reality finally catching up?</p>
<h2>Elon Musk, human after all</h2>
<p>With his promises of a better and less polluted world thanks to his electric vehicles, Elon Musk has galvanised crowds and investors. Self-driving hardware in all cars, space tourism, reusable satellite launchers… His futuristic ideas sell dreams.</p>
<p>A communication champion, Musk even sent his own <a href="https://theconversation.com/elon-musk-and-tesla-a-magician-in-space-92541">roadster into space</a>. Yet it’s sometimes hard to bring dreams to life, as Tesla’s difficulties in achieving its goals regularly remind us. After each disappointing announcement, Elon Musk reassures investors about his perspectives and future targets for the firm. Musk’s ability to convince allowed him to propel Tesla to great heights in terms of market capitalisation. On February 17, 2018, the company’s market cap reached $56.7 billion.</p>
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<figcaption><span class="caption">A red Tesla roadster is now drifting in space…</span></figcaption>
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<p>For some, Elon Musk is all about Tony Stark, the brilliant and tech-savvy billionaire of the American comic book publisher Marvel. Wearing a combat armour of his design, Stark becomes Iron Man, a super-hero who is almost invulnerable.</p>
<p>Like Stark, Elon Musk is rich, passionate about high technology, daring… and condescending. Indeed, some of his recent comments to financial analysts irritated the analyst community. If his strategy has worked very well so far, that may no longer be the case. Here are four reasons that could explain the recent fall in Tesla’s share price.</p>
<h2>1. A worrying cash situation</h2>
<p>When analysing Tesla’s cash flow statement provided with the Q1 2018 results (unaudited figures), it is not enough to look at the net position at the end of the accounting period: $3.2 billion at the end of March 2018 compared to $3.9 billion at the end of December 2017, which still represents a drop of $745 million. It is more important to look at the cash generated by the firm’s operating activities (<a href="https://www.investopedia.com/terms/c/cash-flow-from-operating-activities.asp"><em>cash flow from operating activities</em></a>), which stands out strongly negative at $398 million at the end of March 2018.</p>
<p>In other words, on every car produced and sold, as well as on the energy-storage business, Tesla loses money. For comparison, in the last quarter of 2017, operating cash flow was positive at $510 million. This means that Tesla burned through $908 million just in operating. If the company manages to maintain a positive net cash position at the end of the period, it is only thanks to new borrowing and issuance of shares, and a decrease in its investments.</p>
<h2>2. Tesla cannot yet generate profits</h2>
<p>With an overall gross margin level of 19% at the end of December 2017, Tesla generated a loss of $1.96 billion. At the end of March 2018, the gross margin on the automotive activity (80.2% of sales at the end of March 2018) stood at 19.7%, almost the same level and Tesla posted a loss of $710 million (against a loss of $330 million at the end of March 2017). More worrying, in the press release announcing the results of the first quarter of 2018, Elon Musk and Deepak Ahuja specify that the margin on Model 3 is still “slightly negative”. Despite this, they maintain their gross margin target will be 25% as soon as they can produce 5,000 units Model 3 per week.</p>
<p>But even if Elon Musk says that the 5,000 vehicles per week will be reached in two months, the challenge is not yet met. The leader himself acknowledged, <a href="https://theconversation.com/teslas-problem-overestimating-automation-underestimating-humans-95388">“We made a mistake by introducing too much robotisation too quickly”</a>, and added:</p>
<blockquote>
<p>“In the medium term, we expect to achieve slightly lower margin [than the 25%] due to higher labour content in certain areas of manufacturing where we have temporarily dialled back automation, as well as higher material costs from recently imposed tariffs, commodity price increases and a weaker US dollar.”</p>
</blockquote>
<p>Despite his repeated use of the qualifier “slightly”, these cumulative elements are not reassuring about Tesla’s ability to post a positive short-term gross margin. For now, the gross margin on Model 3 is still negative. Already in April, Elon Musk admitted that he wanted to automate Tesla too quickly:</p>
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<h2>3. Tesla will have to raise funds despite a reduction in investments</h2>
<p>Tesla said in its 2017 annual report that investments in 2018 would be similar to those of 2017, more than $4.4 billion. Announcing the results of the 1st quarter 2018, investment projections (capital expenditure or Capex) were revised down to less than $3 billion. Elon Musk insists he will not need additional funding. But the group will have to face more than $4 billion of payments between April 2018 and 2019 and with its negative operating cash flows and forecast investments, Tesla will clearly need additional cash soon. And on top of that, Tesla already has a debt of more than $10 billion.</p>
<p>Today, Tesla is in a critical situation. At the end of March 2018 its net financial debt stands at 213% (237% at the end of December 2017) and its total debt to equity stands at 512.7% (576% at the end of December 2017). All financial analysts are legitimately raising the question of its funding needs, an issue that Elon Musk persistently refutes.</p>
<p>This time, however, his <a href="https://www.ft.com/content/9ac8b1f2-4ef1-11e8-a7a9-37318e776bab">disdain toward financial analysts</a> seems to have undermined market confidence. Beyond the over-indebtedness of Tesla, this attitude could be one of the reasons leading to the fall of the share price on May 3. Even if the share reached $284.45 at closing, still valuing Tesla at nearly $49 billion, the price is below the symbolic bar of $300. And this first drop could well be a prelude to a much more brutal fall.</p>
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<figcaption><span class="caption">Elon Musk’s attitude during the question-and-answer session of Tesla’s last earnings call on May 2 surprised and irritated.</span></figcaption>
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<h2>4. Accumulation of departures at the highest level and strong signals</h2>
<p>Tesla’s treasurer and vice president of finance, Susan Repo, left the company in March 2018, just after the resignation on March 7 of the chief accountant, Eric Branderiz. Executives turnover certainly exist in all groups but can we really believe this is a coincidence? In February 2018, the global sales manager had also left, and a year earlier, the chief financial officer <a href="https://www.forbes.com/sites/chuckjones/2017/02/25/teslas-cfo-abrupt-resignation-doesnt-pass-the-smell-test/">Jason Wheeler resigned</a> – a resignation that had been announced on the eve of the quarterly results communication.</p>
<p>Recent retiree Deepak Ahuja, who was Tesla’s chief financial officer for more than seven years, from August 2008 to November 2015, was then called to the rescue. Recall that in 2008 it was he who had saved Tesla from bankruptcy. Should we see a sign on his return? And why all these departures? A working environment loaded with adrenaline and stress? Elon Musk says he sleeps regularly at the Fremont factory in California and says the plant will be running 24 hours a day until the end of June. He reportedly sent an internal e-mail announcing that he would hire an additional 400 people a week from the Fremont and Gigafactory 1 factories – a new decision that may further increase costs, while margins are insufficient and even negative on the Model 3. On May 14, Elon Musk said there was a need for “flattening the management structure” and that he was <a href="https://www.ft.com/content/e7a6172c-578d-11e8-bdb7-f6677d2e1ce8">“undertaking a thorough reorganisation”</a>. It followed the announcement of the temporary departure of Doug Field, senior vice-president of engineering, at a crucial time.</p>
<p>Currently, the CEO of Tesla has still not managed to solve the production problems of Model 3. His company is far from profitable, its over-indebtedness has not been reduced, and the thorny problem of its financing remains. Despite the tremendous communication efforts, the varnish of the invulnerable superhero begins to crumble. As of May 28, shares traded at $278.85. Investors are no longer fooled, but they have a lot to lose. The production results of the Model 3 at end of June 2018, will constitute a serious test for the supposed super-powers of Elon Musk… and may cause the fall of the man who had considered himself to be Iron Man.</p><img src="https://counter.theconversation.com/content/96883/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Isabelle Chaboud ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>Elon Musk is an open admirer of the fictional Tony Stark, whose alter‑ego is none other than Iron Man. But Tesla’s recent financial results prove Musk to be more vulnerable than his hero…Isabelle Chaboud, Professeur associé d’analyse financière, d’audit et de risk management, Grenoble École de Management (GEM)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/949802018-04-17T03:48:58Z2018-04-17T03:48:58ZNot so fast: why the electric vehicle revolution will bring problems of its own<figure><img src="https://images.theconversation.com/files/214654/original/file-20180413-566-7ngvnq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Electric cars are taking over – but they really as green as they look?</span> <span class="attribution"><a class="source" href="https://flic.kr/p/8MsDDB">Jack Amick / flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc/4.0/">CC BY-NC</a></span></figcaption></figure><p>After years of being derided as a joke by car manufacturers and the public, interest in electric vehicles has increased sharply as governments around the world move to <a href="https://www.theguardian.com/politics/2017/jul/25/britain-to-ban-sale-of-all-diesel-and-petrol-cars-and-vans-from-2040">ban petrol and diesel cars</a>.</p>
<p>We have seen a tremendous rise in availability, <a href="https://electrek.co/2018/02/20/tesla-dominates-luxury-segment-europe-gas-powered-german-cars/">especially at the premium end of the market</a>, where Tesla is giving established brands a run for their money. Electric cars are likely to penetrate the rest of the market quickly too. Prices should be on par with conventional cars <a href="https://about.bnef.com/blog/electric-vehicles-to-be-35-of-global-new-car-sales-by-2040/">by 2025</a>. </p>
<p>Electric cars are praised as the answer to questions of <a href="https://www.eea.europa.eu/articles/the-electric-car-2014-a-green-transport-revolution-in-the-making">green and clean mobility</a>. But the overall sustainability of electric vehicles is far from clear. On closer examination, our entire transport paradigm may need to be rethought.</p>
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Read more:
<a href="https://theconversation.com/australias-electric-car-revolution-wont-happen-automatically-90442">Australia's 'electric car revolution' won't happen automatically</a>
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<p>Compared with combustion engines, electric transport has obvious advantages for emissions and human health. Transport is responsible for around <a href="http://science.sciencemag.org/content/350/6263/911.full">23% of energy-related carbon dioxide emissions globally</a>. This is expected to double by 2050. </p>
<p>Motor vehicles also put a burden on society, especially in urban environments where they are chiefly responsible for <a href="https://www.sciencedirect.com/science/article/pii/S2214140516304145">noise and air pollution</a>. Avoiding these issues is why electric vehicles are considered a <a href="https://enveurope.springeropen.com/articles/10.1186/2190-4715-24-14">key technology</a> in cleaning up the transport sector. However, electric cars come with problems of their own.</p>
<h2>Dirt in the supply chain</h2>
<p>For one, electric vehicles have a concerning supply chain. Cobalt, a key component of the lithium-ion batteries in electric cars, is linked to reports of <a href="https://www.amnesty.org/en/latest/news/2017/09/the-dark-side-of-electric-cars-exploitative-labor-practices/">child labour</a>. The nickel used in those same batteries is <a href="https://www.theguardian.com/sustainable-business/2017/aug/24/nickel-mining-hidden-environmental-cost-electric-cars-batteries">toxic to extract</a> from the ground. And there are environmental concerns and land use conflicts connected with lithium mining in countries like <a href="https://www.washingtonpost.com/world/asia_pacific/tibetans-in-anguish-as-chinese-mines-pollute-their-sacred-grasslands/2016/12/25/bb6aad06-63bc-11e6-b4d8-33e931b5a26d_story.html?utm_term=.563bda3533d6">Tibet</a> and <a href="https://democracyctr.org/dc_2017/wp-content/uploads/2017/01/DClithiumfullreportenglish.pdf">Bolivia</a>. </p>
<p>The elements used in battery production are <a href="https://www.sciencedirect.com/science/article/pii/S0048969713005858">finite and in limited supply</a>. This makes it <a href="https://www.theguardian.com/environment/2017/jul/29/electric-cars-battery-manufacturing-cobalt-mining">impossible</a> to electrify all of the world’s transport with current battery technology. Meanwhile, there is still no environmentally safe way of <a href="https://www.theguardian.com/sustainable-business/2017/aug/10/electric-cars-big-battery-waste-problem-lithium-recycling">recycling lithium-ion batteries</a>.</p>
<p>While electric cars produce no exhaust, there is concern about <a href="https://www.sciencedirect.com/science/article/pii/B9780128117705000121">fine particle emissions</a>. Electric cars are often heavier than conventional cars, and <a href="https://www.sciencedirect.com/science/article/pii/S135223101630187X">heavier vehicles are often accompanied by higher levels of non-exhaust emissions</a>. The large torque of electric vehicles further adds to the fine dust problem, as it causes greater tyre wear and dispersion of dust particles.</p>
<h2>Different motor, same problem</h2>
<p>Electric vehicles share many other issues with conventional cars too. Both require roads, parking areas and other infrastructure, which is especially a problem in cities. Roads divide communities and make <a href="https://www.sciencedirect.com/science/article/pii/S2214140516304145">access to essential services</a> difficult for those without cars. </p>
<p>A shift in people’s reliance on combustion cars to electric cars also does little to address sedentary urban lifestyles, as it perpetuates our <a href="https://academic.oup.com/jpubhealth/article/33/2/160/1591440">lack of physical activity</a>. </p>
<p>Other problems relate to congestion. In Australia, the avoidable social cost of traffic congestion in 2015 was estimated at <a href="https://bitre.gov.au/publications/2015/files/is_074.pdf">A$16.5 billion</a>. This is expected to increase by 2% every year until 2030. Given trends in population growth and urbanisation <a href="https://www.sciencedirect.com/science/article/pii/S2214140516304145#bib107">globally</a> and <a href="https://infrastructure.gov.au/infrastructure/pab/soac/index.aspx">in Australia</a>, electric cars – despite obvious advantages over fossil fuels – are unlikely to solve urban mobility and infrastructure-related problems.</p>
<p>Technology or regulation may solve these technical and environmental headaches. Improvements in recycling, innovation, and the greening of battery factories can go a long way towards reducing the impacts of battery production. Certification schemes, such as the one proposed in <a href="https://www.copenhageneconomics.com/publications/publication/critical-metal-value-chains-deep-dive-into-barriers-and-policies-for-a-battery-value-chain">Sweden</a>, could help deliver low-impact battery value chains and avoid conflict minerals and human rights violations in the industry. </p>
<h2>A new transport paradigm</h2>
<p>Yet, while climate change concerns alone seem to warrant a speedy transition towards electric mobility, it may prove to be merely a transition technology. Electric cars will do little for urban mobility and liveability in the years to come. Established car makers such as Porsche are working on new modes of transportation, especially for congested and growing markets such as China. </p>
<p>Nevertheless, their vision is still one of <a href="https://www.porscheengineering.com/filestore/download/peg/en/pemagazin-02-2015-artikel-06/default/006e5a5e-bdd7-11e5-8bd4-0019999cd470/Future-Mobility-Concepts%2C-Digitization-and-Driving-Pleasure-Interview-with-Dirk-Lappe-Porsche-Engineering-Magazine-02-2015.pdf">personal vehicles</a> – relying on electric cars coupled with smart traffic guidance systems to avoid urban road congestion. Instead of having fewer cars, <a href="https://amp.theguardian.com/environment/2017/oct/16/our-cities-need-fewer-cars-not-cleaner-cars-electric-green-transport">as called for by transport experts</a>, car makers continue to promote individualised transport, albeit a greener version.</p>
<p>With a growing population, a paradigm shift in transport may be needed – one that looks to urban design to solve transportation problems.</p>
<p>In Copenhagen, for example, <a href="https://www.theguardian.com/cities/2016/nov/30/cycling-revolution-bikes-outnumber-cars-first-time-copenhagen-denmark">bikes now outnumber cars</a> in the city’s centre, which is primed to be car-free within the next ten years. Many other cities, <a href="http://www.businessinsider.com/cities-going-car-free-2017-2/?r=AU&IR=T/#oslo-will-implement-its-car-ban-by-2019-1">including Oslo in Norway and Chengdu in China</a>, are also on their way to being free of cars. </p>
<p>Experts are already devising new ways to design cities. They combine efficient public transport, as found in <a href="https://www.theguardian.com/cities/2015/may/26/curitiba-brazil-brt-transport-revolution-history-cities-50-buildings">Curitiba, Brazil</a>, with principles of walkability, as seen in <a href="https://books.google.com.au/books?id=G5lODwAAQBAJ&pg=PA58&lpg=PA58&dq=walkability+Vauban&source=bl&ots=ebamFe93Mi&sig=kkAXIbQ-NnpOx9Oa9qqyCwRIIm0&hl=en&sa=X&ved=0ahUKEwiTvsToga_aAhVPv5QKHbsVAW4Q6AEIcTAL#v=onepage&q=walkability%20Vauban&f=false">Vauben, Germany</a>. They feature mixed-use, mixed-income and transit-oriented developments, as seen in places like <a href="https://communityinnovation.berkeley.edu/sites/default/files/gccframingpaper_final.pdf?width=1200&height=800&iframe=true">Fruitvale Village in Oakland, California</a>. </p>
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Read more:
<a href="https://theconversation.com/designing-suburbs-to-cut-car-use-closes-gaps-in-health-and-wealth-83961">Designing suburbs to cut car use closes gaps in health and wealth</a>
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<p>These developments don’t just address transport-related environmental problems. They enhance liveability by <a href="https://www.sciencedirect.com/science/article/pii/S187734351730221X">reclaiming urban space for green developments</a>. They reduce the cost of living by cutting commuting cost and time. They deliver <a href="https://ajph.aphapublications.org/doi/pdf/10.2105/AJPH.93.9.1446">health benefits</a>, thanks to reduced pollution and more active lifestyles. They <a href="https://www.tandfonline.com/doi/abs/10.1080/08111146.2015.1118374">improve social cohesion</a>, by fostering human interaction in urban streetscapes, and help to <a href="https://www.sciencedirect.com/science/article/pii/S0264275115300159">reduce crime</a>. And of course, they improve <a href="https://www.greenbiz.com/article/how-sustainable-cities-can-drive-business-growth">economic performance</a> by reducing the loss of productivity caused by congestion.</p>
<p>Electric cars are a quick-to-deploy technology fix that helps tackle climate change and improve urban air quality – at least to a point. But the sustainability endgame is to eliminate many of our daily travel needs altogether through smart design, while improving the parts of our lives we lost sight of during our decades-long dependence on cars.</p><img src="https://counter.theconversation.com/content/94980/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>A/Prof. Martin Brueckner does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Electric cars might be a quick fix to clean up transport, but the problems with cars go beyond just emissions.A/Prof. Martin Brueckner, Senior Lecturer in Sustainability, Murdoch UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/925412018-03-04T20:54:01Z2018-03-04T20:54:01ZElon Musk and Tesla: a magician in space?<figure><img src="https://images.theconversation.com/files/208104/original/file-20180227-36674-a74733.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Starman takes a drive in his Tesla.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/peterthoeny/39417002964/">Peter Thoeny/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>Elon Musk is the undisputed champion of communication. Day after day announcements keep coming to reassure investors and the financial markets. In Tesla’s <a href="http://files.shareholder.com/downloads/ABEA-4CW8X0/6028361566x0xS1564590-17-3118/1318605/filing.pdf">2016 annual report</a>, Musk stated that the company would produce 500,000 vehicles in 2018. In November 2017, he unveiled the Semi Tesla, a fully electric semitrailer that generated <a href="https://www.forbes.com/sites/alanohnsman/2017/12/28/orders-pile-up-for-tesla-semi-that-doesnt-yet-exist-as-rival-electric-trucks-get-rolling/">significant interest and orders</a>. And on February 6, 2018, he sent a car into space.</p>
<p>Behind Musk’s magic tricks, what is the reality? Is the marketing genius as effective in production? And where are the fundamentals of the Tesla group?</p>
<h2>Far-reaching communication</h2>
<p>The president and founder of Tesla and SpaceX, Elon Musk completed a master stroke by using the February launch of SpaceX’s Falcon Heavy to put a red Tesla Roadster in space. It even had a driver, a mannequin called “Starman”. It was a beautifully orchestrated operation, and the video shows images of the Earth below, with <a href="https://www.theguardian.com/science/2018/feb/07/space-oddity-elon-musk-spacex-car-mars-falcon-heavy">David Bowie’s “Space Oddity”</a> playing in the background.</p>
<p>The stunt made headlines around the world, and was one of the most far-reaching advertising messages ever – and was enough to distract investors from the fact that Tesla’s financial situation is far from idyllic.</p>
<p>An undisputed champion of marketing and a mythical character, Elon Musk is making people believe their dreams can become true. Not only does he make the company’s current and potential customers dream, but he also makes the financial markets dream. By taking the analysts and investors with him, Musk has been able to propel Tesla’s share price to great heights. Introduced to the stock market in June 2010 at $17, Tesla’s shares reached $352.05 on February 23, 2018, an increase of 1,970%.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/wbSwFU6tY1c?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Falcon Heavy test flight (SpaceX).</span></figcaption>
</figure>
<h2>Tesla’s capitalisation exceeds that of Ford and GM</h2>
<p>With a price of around $299 per share at the beginning of April 2017, Tesla Motors’ market capitalisation reached $48.2 billion and was ahead of <a href="https://bloom.bg/2nwDlLi&xid=17259,15700022,15700105,15700124,15700149,15700168,15700173,15700201">Ford Motor Company on April 3, 2017</a>. In early May 2017, Tesla’s market capitalisation reached $52.6 billion, surpassing General Motors’ by $1 billion.</p>
<p>Since then, the stock price (judged at the highest point) has continued to rise, reaching a market capitalisation of $59.4 billion on February 23, 2018, more than double that of Renault-Nissan (25.4 billion euros, and the <a href="http://www.thedrive.com/sheetmetal/17791/renault-nissan-declares-itself-worlds-largest-automaker">world’s largest automaker by sales volume</a> and more than General Motors ($57.4 billion) and Ford Motor Company ($41.7 billion) as of February 23, 2018.</p>
<p>Yet Tesla has so far sold far fewer cars than Ford, General Motors and Renault-Nissan, and has accumulated losses since its inception. So what elements justify such enthusiasm on the part of investors? While the company’s tremendous growth prospects and position as the sole builder of 100% electric vehicles in the world undoubtedly contribute to the appetite of investors, emotional factors seems to be the key drivers. It’s Elon Musk who leads the dance – charismatic, iconoclastic, innovative and driven by his wildest dreams.</p>
<h2>A new concept of transport</h2>
<p>The California-based automaker Tesla was founded in 2003 by Martin Eberhard and Marc Tarpenning, and has been successful in attracting customers to the concept of a high-performance, fully electric car with that’s simple to use despite being extremely complex. The company initially focused on luxury models with the Model S and Model X, costing nearly $100,000 each. Since then Elon Musk has worked to expand its offerings with the more affordable Model 3, with a starting price of $35,000.</p>
<p>Musk’s marketing genius lies above all in his ability to unite clients around a new concept: driving differently, being eco-responsible and participating in the fight against pollution. Despite the hype, however, <a href="https://www.wired.com/2016/03/teslas-electric-cars-might-not-green-think/">Teslas may not be as green as you might think</a>. The question of the vehicles’ limited range also remains to be solved.</p>
<p>Beyond dreams, myths, what about reality?</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/207305/original/file-20180221-132642-opros4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/207305/original/file-20180221-132642-opros4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/207305/original/file-20180221-132642-opros4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/207305/original/file-20180221-132642-opros4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/207305/original/file-20180221-132642-opros4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/207305/original/file-20180221-132642-opros4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/207305/original/file-20180221-132642-opros4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/207305/original/file-20180221-132642-opros4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Elon Musk at the Kennedy Space Center on February 6, 2018.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/nasakennedy/26251733208/">NASA Kennedy/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<h2>Production difficulties</h2>
<p>Despite Musk’s announcements and the promises of record numbers, Tesla is facing serious production problems that are causing delivery delays and pushing up inventories. In a June 3, 2017 article titled <a href="http://www.businessinsider.fr/us/elon-musk-tesla-factory-injuries-e-mail-2017-6">“Elon Musk: Tesla factory injuries ‘break my heart’ ”</a>, <em>Business Insider</em> revealed that the workplace accident rate at Tesla’s Fremont production site were higher than the industry average in 2014 and 2015. In a January 4, 2018, article in the _Washington Post, <a href="http://wapo.st/2sIMFUn">“Why are you even reading that Tesla announcement?</a>, Bloomberg’s Liam Denning laid out how Tesla has not kept its promises in terms of production.</p>
<p>Production figures are constantly being revised downward and fewer than 25,000 vehicles were produced in the last quarter of 2017. The level of vehicle production has remained virtually stable between the last quarter of 2016 and the last quarter of 2017. Musk announced in early November 2017 a weekly production of 5,000 units of Model 3, this was revised down to 2,500 units per week for the 1st quarter of 2018. And in the last quarter of 2017 only 2,425 units were produced, according to Denning.</p>
<p>In a press release issued on February 7, 2018, Tesla’s management acknowledges the production difficulties and delays, especially with the Model 3. However, it indicated that Tesla wants to use state-of-the-art robots to become "the best automaker”.</p>
<h2>Fragile fundamentals</h2>
<p>Tesla’s financial statements reveal that the company’s fundamentals are far from solid. The group’s debt (total financial debts/shareholders’ equity) reached 200% in 2016 (including resale value guarantees) and its net debt – (total financial debt less cash and cash equivalents)/shareholders’ equity – rose to 129%.</p>
<p>In other words, Tesla had more debt than funds. However, there was a debt reduction in 2016 following two share capital increases: one to finance additional investments for the launch of its Model 3 electric sedan and another for the <a href="http://bit.ly/2CAemhQ">acquisition of SolarCity in November 2016</a>.</p>
<p>Total debt (total debt/equity) is a staggering 352%, meaning that Tesla’s debts represented more than 3.5 times its equity in 2016. Add to that, Tesla has only posted losses since its inception. At the end of 2016, cumulative losses were close to $3 billion, despite a turnover of $7 billion in 2016, up 73% from 2015.</p>
<p>Beyond the losses, another worrying issue concerns the company’s operating cash flow. Although the situation improved significantly between 2015 and 2016, from a negative operating cash flow of $524 million to a negative operating cash flow of $124 million, Tesla has yet to post a positive operating cash flow at year end.</p>
<p>Admittedly, the group had a positive cash position on its balance sheet of $3.4 billion at the end of 2016, but when we analyse this balance in detail, it is clear that Tesla’s liquidity comes only from external financing (debts or issuance of shares). This is a crucial point to follow, as Tesla needs significant amounts of cash to cover investments in its <a href="https://www.sfchronicle.com/business/article/New-Tesla-plan-could-double-size-of-Fremont-9936003.php">Fremont plant</a> and <a href="http://uk.businessinsider.com/tesla-stock-price-giga-factory-nevada-elon-musk-2017-9?IR=T">Gigafactory 1 and 2</a>, continue with <a href="https://electrek.co/2018/03/01/tesla-supercharger-fremont-factory/">Supercharger installations</a>, support its R&D efforts (around 11.7% of total revenues) and accelerate production (in particular the Model 3).</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/207306/original/file-20180221-132667-i0zsa6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/207306/original/file-20180221-132667-i0zsa6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/207306/original/file-20180221-132667-i0zsa6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/207306/original/file-20180221-132667-i0zsa6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/207306/original/file-20180221-132667-i0zsa6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/207306/original/file-20180221-132667-i0zsa6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/207306/original/file-20180221-132667-i0zsa6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/207306/original/file-20180221-132667-i0zsa6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Manufacture of the Tesla Model 3.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/140768947@N06/38196889386/">Digital Spy/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
</figcaption>
</figure>
<h2>Cash flow that isn’t</h2>
<p>In a <em>Fortune</em> article <a href="http://fortune.com/2016/09/02/elon-musk-tesla-cash-crunch-worse-than-you-think/">“Why Tesla’s cash crunch may be worse than you think”</a>, Shawn Tully warns that starting in the fourth quarter of 2015, Tesla would have added cash received from banks for leased vehicles with a <em>resale value guarantee</em> to its operating cash flow. This practice would have improved Tesla’s operating cash flow when in fact cash was not generated from operations but from a bank loan, distorting its true operating cash position.</p>
<p>The final results for 2017 have been filed and the group announced on <a href="http://bit.ly/2EGI5eQ">February 7, 2018</a> that despite the increase in total revenue of 55% (organic growth) from 2016 to $11.8 billion to the end of 2017, Tesla experienced a net loss of $1.96 billion (compared to a loss of $675 million in 2016).</p>
<p>This loss was caused by production difficulties on the Model 3, unexpected start-up and other operating costs, and financial expenses of almost $500 million. Indebtedness jumped again with a total debt-to-equity ratio of 543%. In other words, Tesla’s debts now represent more than five times its funds.</p>
<p>Despite fragile fundamentals and significant cash requirements, it seems that the dream of Tesla and its growth prospects continue to attract investors. They certainly see Tesla’s massive efforts in R&D and large-scale projects are a clear path to becoming the car manufacturer of the future.</p>
<p>Musk, who reacted to the launch of Falcon Heavy by saying <a href="https://www.space.com/39618-elon-musk-falcon-heavy-spacex-reaction.html">“Crazy things can come true”</a>, embodies this vision. While he can seduce the crowds with conviction, let’s not forget that he owns almost 20% of Tesla’s share capital and that it’s crucial for him to maintain the support of the financial markets. It remains to be seen if his announcements will continue to persuade those who finance his company – and in so doing, maintain its share price above $300 and keep the “Tesla bubble” from bursting.</p><img src="https://counter.theconversation.com/content/92541/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Isabelle Chaboud ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>Elon Musk is a master of keeping investors believing in the dream of Tesla, but analysis of the company’s output and financials reveal a darker picture.Isabelle Chaboud, Professeur associé d’analyse financière, d’audit et de risk management, Grenoble École de Management (GEM)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/919492018-02-22T13:00:09Z2018-02-22T13:00:09ZSilicon Valley is winning the race to build the first driverless cars<figure><img src="https://images.theconversation.com/files/207500/original/file-20180222-152348-n7t8rw.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Waymo</span></span></figcaption></figure><p>Henry Ford didn’t invent the motor car. The late 1800s saw a flurry of innovation by hundreds of companies battling to deliver on the promise of fast, efficient and reasonably-priced mechanical transportation. Ford later came to dominate the industry thanks to the development of the moving assembly line.</p>
<p>Today the sector is poised for another breakthrough with the advent of cars that drive themselves. But unlike the original wave of automobile innovation, the race for supremacy in autonomous vehicles is concentrated among a few corporate giants. So who is set to dominate this time? </p>
<p><a href="https://indd.adobe.com/view/a0bd4358-a51c-4a90-b300-e727272a6bba">I’ve analysed</a> six companies we think are leading the race to build the first truly driverless car. Three of these – General Motors, Ford and Volkswagen – come from the existing car industry and need to integrate self-driving technology into their existing fleet of mass-produced vehicles. The other three – Tesla, Uber and Waymo (owned by the same company as Google) – are newcomers from the digital technology world of Silicon Valley and have to build a mass manufacturing capability.</p>
<p>While it’s impossible to know all the developments at any given time, we have tracked investments, strategic partnerships and official press releases to learn more about what’s happening behind the scenes. The car industry typically rates self-driving technology <a href="https://autoalliance.org/connected-cars/automated-driving-systems/levels-of-automation/">on a scale</a> from Level 0 (no automation) to Level 5 (full automation). We’ve assessed where each company is now and estimated how far they are from reaching the top level. Here’s how we think each player is performing.</p>
<h1>Volkswagen</h1>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/207502/original/file-20180222-152375-15m1e12.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/207502/original/file-20180222-152375-15m1e12.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=225&fit=crop&dpr=1 600w, https://images.theconversation.com/files/207502/original/file-20180222-152375-15m1e12.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=225&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/207502/original/file-20180222-152375-15m1e12.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=225&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/207502/original/file-20180222-152375-15m1e12.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=283&fit=crop&dpr=1 754w, https://images.theconversation.com/files/207502/original/file-20180222-152375-15m1e12.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=283&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/207502/original/file-20180222-152375-15m1e12.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=283&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Audi A8 traffic jam pilot.</span>
<span class="attribution"><span class="source">Audi</span></span>
</figcaption>
</figure>
<p>Volkswagen <a href="https://www.ft.com/content/b09e7396-21c5-11e6-9d4d-c11776a5124d">has invested</a> in taxi-hailing app Gett and partnered with chip-maker Nvidia to develop an artificial intelligence co-pilot for its cars. In 2018, the VW Group is set to release <a href="https://www.forbes.com/sites/michaeltaylor/2017/09/10/tthe-level-3-audi-a8-will-almost-be-the-most-important-car-in-the-world/">the Audi A8</a>, the first production vehicle that reaches Level 3 on the scale, “conditional driving automation”. This means the car’s computer will handle all driving functions but a human has to be ready to take over if necessary.</p>
<h2>Ford</h2>
<p>Ford already sells cars with a Level 2 autopilot, “partial driving automation”. This means one or more aspects of driving are controlled by a computer based on information about the environment, for example combined cruise control and lane centring. Alongside <a href="https://www.forbes.com/sites/samabuelsamid/2016/08/16/ford-and-baidu-lead-new-150-million-investment-in-lidar-maker-velodyne/#2203481b1de7">other investments</a>, the company has put US$1 billion into Argo AI, an artificial intelligence company for self-driving vehicles. Following a trial to <a href="https://www.wired.com/story/ford-self-driving-pizza-delivery-dominos/">test pizza delivery</a> using autonomous vehicles, Ford is now testing Level 4 cars on <a href="https://www.forbes.com/sites/samabuelsamid/2017/08/29/dominos-takes-high-tech-pizza-delivery-to-level-4-with-ford/">public roads</a>. These feature “high automation”, where the car can drive entirely on its own but not in certain conditions such as when the road surface is poor or the weather is bad.</p>
<h2>General Motors</h2>
<p>GM also sells vehicles with Level 2 automation but, after buying Silicon Valley startup Cruise Automation in 2016, <a href="http://uk.businessinsider.com/gm-cruise-fully-autonomous-electric-car-no-steering-wheel-2018-1">now plans</a> to launch the first mass production-ready Level 5 autonomy vehicle that drives completely on its own by 2019. The Cruise AV will have no steering wheel or pedals to allow a human to take over and be part of a large fleet of <a href="https://www.ft.com/content/cc88fc96-d620-11e7-8c9a-d9c0a5c8d5c9">driverless taxis</a> the company plans to operate in big cities. But crucially the company hasn’t yet <a href="https://www.recode.net/2018/1/12/16880570/general-motors-self-driving-cars-cruise-steering-wheel-nhtsa-fmvss">secured permission</a> to test the car on public roads.</p>
<h2>Waymo (Google)</h2>
<figure> <img src="https://storage.googleapis.com/sdc-prod/v1/press/waymo_first_ride.gif"><figcaption>Level 5 testing.</figcaption></figure>
<p>Founded as a special project in 2009, Waymo separated from Google (though they’re both owned by the same parent firm, Alphabet) in 2016. Though it has never made, sold or operated a car on a commercial basis, Waymo has created test vehicles that have clocked more than <a href="https://waymo.com/ontheroad/">4m miles</a> without human drivers as of November 2017. Waymo tested its Level 5 car, “Firefly”, between 2015 and 2017 but then decided to focus on hardware that could be installed in other manufacturers’ vehicles, starting with the <a href="https://www.cnbc.com/2018/01/29/waymo-orders-thousands-of-pacifica-minivans-in-push-to-open-ride-hailing-service.html">Chrysler Pacifica</a>. </p>
<h2>Uber</h2>
<p>The taxi-hailing app maker Uber has been testing autonomous cars on the streets of Pittsburgh <a href="http://uk.businessinsider.com/uber-self-driving-car-testing-in-pittsburgh-2016-2?r=US&IR=T">since 2016</a>, always with an employee behind the wheel ready to take over in case of a malfunction. After buying the self-driving truck company Otto in 2016 for a <a href="https://www.reuters.com/article/us-uber-tech-volvo-otto-idUSKCN10T1TR">reported US$680m</a>, Uber is now expanding its AI capabilities and plans to test NVDIA’s latest chips in Otto’s vehicles. It has also partnered with Volvo to create a <a href="https://www.ft.com/content/36f071b0-cd64-11e7-b781-794ce08b24dc">self-driving fleet</a> of cars, and with Toyota to co-create a <a href="https://www.recode.net/2018/1/8/16864916/uber-partnership-toyota-ces-volvo-daimler">ride-sharing autonomous vehicle</a>.</p>
<h2>Tesla</h2>
<p>The first major car manufacturer to come from Silicon Valley, Tesla was also the first to introduce Level 2 autopilot <a href="http://www.bbc.co.uk/news/technology-34535604">back in 2015</a>. The following year, it announced that all new Teslas would have the hardware for <a href="https://www.tesla.com/blog/all-tesla-cars-being-produced-now-have-full-self-driving-hardware">full autonomy</a>, meaning once the software is finished it can be deployed on existing cars with an instant upgrade. Some experts have challenged this approach, arguing that the company has merely added surround cameras to its production cars that aren’t as capable as the <a href="https://www.theverge.com/2017/10/24/16504038/tesla-autopilot-self-driving-update-elon-musk">laser-based sensing systems</a> that most other carmakers are using.</p>
<p>But the company has collected data from hundreds of thousands of cars, driving millions of miles across all terrains. So we shouldn’t dismiss the firm’s founder, Elon Musk, when he claims a Level 4 Tesla will drive from <a href="https://www.teslarati.com/tesla-autonomous-coast-to-coast-self-driving-trip/">LA to New York</a> without any human interference within the first half of 2018.</p>
<h2>Winners</h2>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/206746/original/file-20180216-131000-1tlem5l.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/206746/original/file-20180216-131000-1tlem5l.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/206746/original/file-20180216-131000-1tlem5l.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=376&fit=crop&dpr=1 600w, https://images.theconversation.com/files/206746/original/file-20180216-131000-1tlem5l.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=376&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/206746/original/file-20180216-131000-1tlem5l.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=376&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/206746/original/file-20180216-131000-1tlem5l.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=472&fit=crop&dpr=1 754w, https://images.theconversation.com/files/206746/original/file-20180216-131000-1tlem5l.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=472&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/206746/original/file-20180216-131000-1tlem5l.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=472&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Who’s leading the race?</span>
<span class="attribution"><a class="source" href="https://indd.adobe.com/view/a0bd4358-a51c-4a90-b300-e727272a6bba">IMD</a></span>
</figcaption>
</figure>
<p>At the moment, the disruptors like Tesla, Waymo and Uber seem to have the upper hand. While the traditional automakers are focusing on bringing Level 3 and 4 partial automation to market, the new companies are leapfrogging them by moving more directly towards Level 5 full automation. Waymo may have the least experience of dealing with consumers in this sector but it has already clocked up a huge amount of time testing some of the most advanced technology on public roads.</p>
<p>The incumbent carmakers are also focused on the difficult process of integrating new technology and business models into their existing manufacturing operations by buying up small companies. The challengers, on the other hand, are easily partnering with other big players including manufacturers to get the scale and expertise they need more quickly. </p>
<p>Tesla is building its own manufacturing capability but also collecting vast amounts of critical data that will enable it to more easily upgrade its cars when ready for full automation. In particular, Waymo’s experience, technology capability and ability to secure solid partnerships puts it at the head of the pack.</p><img src="https://counter.theconversation.com/content/91949/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Wade does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Uber, Tesla and Waymo (Google) are leapfrogging traditional car makers like Ford, VW and General Motors when it comes to self-driving cars.Michael Wade, Professor of Innovation and Strategy, Cisco Chair in Digital Business Transformation, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/668962017-03-07T03:15:09Z2017-03-07T03:15:09ZWhat fax machines can teach us about electric cars<figure><img src="https://images.theconversation.com/files/158130/original/image-20170223-32714-jo6vy9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">No common standard: CHAdeMO, CCS and Tesla Supercharger plugs.</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:CHAdeMO_Plug_VacavilleDavisStDC2.jpg">CHAdeMO: C-CarTom; CCS: Hadhuey; Tesla: Paul Sladen</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>Imagine if you could gas up your GM car only at GM gas stations. Or if you had to find a gas station servicing cars made from 2005 to 2012 to fill up your 2011 vehicle. It would be inconvenient and frustrating, right? This is the problem electric vehicle owners face every day when trying to recharge their cars. The industry’s failure, so far, to create a universal charging system demonstrates why setting standards is so important – and so difficult.</p>
<p>When done right, standards can both be invisible and make our lives immeasurably easier and simpler. Any brand of toaster can plug into any electric outlet. Pulling up to a gas station, you can be confident that the pump’s filler gun will fit into your car’s fuel tank opening. When there are competing standards, users become afraid of choosing an obsolete or “losing” technology.</p>
<p>Most standards, like electrical plugs, are so simple we don’t even really notice them. And yet the stakes are high: Poor standards won’t be widely adopted, defeating the purpose of standardization in the first place. Good standards, by contrast, will ensure compatibility among competing firms and evolve as technology advances.</p>
<p><a href="https://jhupbooks.press.jhu.edu/content/faxed">My own research into the history of fax machines</a> illustrates this well, and provides a useful analogy for today’s development of electric cars. In the 1960s and 1970s, two poor standards for faxing resulted in a small market filled with machines that could not communicate with each other. In 1980, however, a new standard sparked two decades of rapid growth grounded in compatible machines built by competing manufacturers who battled for a share of an increasing market. Consumers benefited from better fax machines that seamlessly worked with each other, vastly expanding their utility.</p>
<p>At present, there is not a single standard for plugs to recharge electric vehicles. That means that people who drive electric cars can’t rely on refueling at any of a wide range of nearly ubiquitous stations on street corners the way gas-vehicle drivers can. This creates an additional barrier, slowing the adoption of electric cars unnecessarily. Several potential standards are competing in the marketplace now; as we saw with fax systems, the sooner one standard becomes dominant, the sooner the electric vehicle market will take off.</p>
<h2>Making a new standard</h2>
<p>The two basic approaches to creating standards involve letting the market decide or forging a consensus among participants. Both have benefits and risks. A free-market approach often splits a young market into several competing and incompatible systems. Believing in their technical or commercial superiority, firms gamble that they will create de facto standards by dominating the market.</p>
<p>In reality, as my research into the first two attempts at standards for fax machines in the 1960s and 1970s showed, competing incompatible equipment can slow the growth of an entire market. In the case of the fax, poorly written standards attempted to codify into common use certain fax machine manufacturers’ methods for connecting two machines and sending information between them. As a result, many firms sold machines that could not work with other companies’ devices. Some manufacturers even deliberately made their machines incompatible to lock their customers into their equipment.</p>
<p>No single firm dominated the marketplace, and nobody agreed to use a single common standard. As a result, the fax world consisted of several smaller self-contained markets, not one larger market. And many potential users didn’t use faxes at all, preferring to wait until an obvious winning standard emerged.</p>
<h2>Third time’s the charm</h2>
<p>Crowning that winner can take many years. So can creating standards by consensus. In the meantime, the spread of fax technology stagnated.</p>
<p>But then a force outside the marketplace began to call for a real fax standard. In 1977, the Japanese government <a href="http://ethw.org/Milestones:International_Standardization_of_G3_Facsimile,_1980">pushed competing Japanese firms and telephone corporations to cooperate</a> and create one standard. The government then convinced the International Telecommunications Union to adopt this as the <a href="https://www.britannica.com/technology/fax">worldwide standard</a> in 1980. What ensued was the fax boom of the 1980s and 1990s.</p>
<p>This standard found two keys to its success. First, it was royalty-free, meaning any company could adhere to the standard without paying a fee to its creators. (A similar approach decades earlier proved essential for the adoption of <a href="https://www.iso.org/obp/ui/#!iso:std:59673:en">standard dimensions for shipping containers</a>.) The Japanese officials and companies calculated that the profits from a larger market would more than compensate for any lost income from the lack of licensing fees.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/157957/original/image-20170222-6406-1llb7v3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/157957/original/image-20170222-6406-1llb7v3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/157957/original/image-20170222-6406-1llb7v3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/157957/original/image-20170222-6406-1llb7v3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/157957/original/image-20170222-6406-1llb7v3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/157957/original/image-20170222-6406-1llb7v3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/157957/original/image-20170222-6406-1llb7v3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/157957/original/image-20170222-6406-1llb7v3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A modern fax machine.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File%3ASamfax.jpg">Johnnyt</a></span>
</figcaption>
</figure>
<p>Second, the standard was not so restrictive as to prevent fax machine manufacturers from introducing other features – such as faster transmission. That allowed companies to compete on more than just price. The result was a continued flow of new, more capable and cheaper machines that attracted new users.</p>
<h2>The need for a standard for electric cars</h2>
<p>Successfully commercializing electric vehicles will similarly depend on the development, acceptance and implementation of standards. So far, just as happened with fax machines, incompatible chargers have slowed the spread of electric cars. </p>
<p>Depending on the type of car and its age, it may have <a href="https://www.scientificamerican.com/article/fast-charge-plugs-do-not-fit-all-electric-cars/">one of four incompatible chargers</a>. If the charging station you pull up to lacks the appropriate charger for your car, you are out of luck.</p>
<p>People considering buying electric cars already worry about <a href="https://theconversation.com/range-anxiety-todays-electric-cars-can-cover-vast-majority-of-daily-u-s-driving-needs-63909">how far they could travel between recharge stops</a>. Then they realize that they can’t use just any charging station – the way a gasoline-powered vehicle can use any gas station. That doesn’t relieve their concerns and <a href="https://doi.org/10.1177/0018720814546372">dampens sales of electric vehicles</a>.</p>
<h2>Developing a standard</h2>
<p>Like fax machines, <a href="https://www.scientificamerican.com/article/will-incompatible-standards-slow-down-electric-cars/">electric vehicles’ incompatibility</a> reflected both evolving technology and groups of manufacturers promoting their own systems in hopes of dominating the marketplace. Already, the <a href="http://www.evelectricity.com/charging/">first generation</a> of chargers is essentially obsolete because they take so long to recharge a car battery.</p>
<p>The real battle is among the three <a href="https://longtailpipe.com/ebooks/green-transportation-guide-buying-owning-charging-plug-in-vehicles-of-all-kinds/electric-car-charging-advice-systems/ev-dc-fast-charging-standards-chademo-ccs-sae-combo-tesla-supercharger-etc/">incompatible</a> <a href="http://www.electriccarpledge.com/electric-vehicle-resources/electric-car-plug-types/">fast charging systems</a> available in the United States: the Japanese <a href="http://www.chademo.com/wp/wp-content/uploads/2016/04/brochure_04.2016.compressed.pdf">CHAdeMO</a>, the <a href="http://www.charinev.org/about-us/mission/">European-American CCS</a> and <a href="https://www.tesla.com/supercharger">Tesla Supercharger</a>. (China is developing its <a href="https://longtailpipe.com/2014/02/13/chinas-electric-car-fast-charging-gb/">own standard</a>.) </p>
<p>CHAdeMO works only with Japanese and Korean vehicles like the Nissan LEAF and Kia Soul. CCS works only with European and American cars like the BMW i3 and Chevy Spark. The third system, Tesla’s Supercharger, works only with Tesla’s own cars. Tesla sells its customers a US$450 <a href="https://greentransportation.info/ev-charging/range-confidence/chap8-tech/fast-charge-adapters.html">adapter to use a CHAdeMO</a> charger but does not offer adapters that would let CHAdeMO or CCS vehicles use Tesla charging stations.</p>
<h2>The end of the battle?</h2>
<p>This three-way split is changing. In the last few years, Tesla has veered from its initial exclusivity to cooperation. In 2014, Tesla announced it would <a href="https://www.tesla.com/blog/all-our-patent-are-belong-you">share its patents royalty-free</a> – including its charger and plug designs – to encourage the spread of electric vehicle technology. In 2015, the company agreed to make its cars and charging stations compatible with <a href="http://www.wsj.com/articles/tesla-to-modify-cars-to-meet-china-charging-standards-1431412891">China’s new standard</a>, possibly by using adapters at charging stations. </p>
<p>And in 2016, Tesla <a href="https://chargedevs.com/newswire/tesla-joins-charging-interface-initiative-what-does-it-mean/">joined CharIN</a>, an industry group promoting the CCS standard. That raised the tempting possibility that the company might allow CCS charging at Tesla stations, probably by providing adapters. It also threw Tesla’s significant support behind an effort to create a new standard for even faster charging. This could lead CCS to market dominance, effectively establishing a standard by out-competing CHAdeMO.</p>
<p>Fax machines needed three generations of standards before real compatibility emerged, thanks to Japanese government pressure to cooperate. For electric vehicles, Telsa’s embrace of CharIN may provide that needed pressure. The real winner would be the cause of electric vehicles.</p><img src="https://counter.theconversation.com/content/66896/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathan Coopersmith received funding from National Science Foundation in 1994 for fax research.</span></em></p>Standards, like electrical plugs, are usually so simple we don’t even really notice them. But they’re extremely important: Good ones can drive innovation; bad ones can stifle growth.Jonathan Coopersmith, Professor of History, Texas A&M UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/719362017-01-30T03:51:39Z2017-01-30T03:51:39ZIt’s pedal to the metal for driverless cars<figure><img src="https://images.theconversation.com/files/154451/original/image-20170126-30413-1x3mtq3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An NVIDIA-powered Audi needs no driver.</span> <span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Gadget-Show-Nvidia/7681a54ff1a04bf88569a74fea1eafd2/35/0">AP Photo/John Locher</a></span></figcaption></figure><p>When a May 2016 crash <a href="https://www.theguardian.com/technology/2016/jun/30/tesla-autopilot-death-self-driving-car-elon-musk">killed the person operating</a> a Tesla Model S driving in <a href="https://www.tesla.com/autopilot">Autopilot mode</a>, advocates of autonomous vehicles feared a slowdown in development of self-driving cars.</p>
<p>Instead <a href="https://theconversation.com/after-fatality-autonomous-car-development-may-speed-up-63488">the opposite has occurred</a>. In August, <a href="http://www.npr.org/sections/thetwo-way/2016/08/17/490406911/ford-looks-to-a-fleet-of-driverless-cars">Ford publicly committed to field self-driving cars</a> by 2021. In September, <a href="https://techcrunch.com/2016/09/14/1386711/">Uber began picking up passengers with self-driving cars</a> in Pittsburgh, albeit with safety drivers ready to take over.</p>
<p>October saw Tesla itself undeterred by the fatality. The company began producing cars it said had all the <a href="http://www.roadandtrack.com/new-cars/future-cars/news/a31237/tesla-autopilot-hardware-standard/">hardware needed for autonomous operation</a>; the software will be written and added later. In December, days after Michigan established regulations for testing autonomous vehicles in December, General Motors started doing just that with <a href="http://fortune.com/2016/12/15/gm-self-driving-cars-michigan/">self-driving Chevy Bolts</a>. And just one day before the end of his term, U.S. Secretary of Transportation Anthony Foxx designated 10 research centers as <a href="http://www.govtech.com/fs/transportation/U-S-DOT-Names-10-Proving-Ground-Sites-Testing-Autonomous-Vehicles.html/">official test sites for automated vehicle systems</a>.</p>
<p>Three of the most significant developments in the industry happened earlier this month. The <a href="http://www.ces.tech/Show-Floor/Marketplaces/Self-Driving-Technology.aspx">2017 Consumer Electronics Show (CES)</a> in Las Vegas and the <a href="http://naias.com/">North American International Auto Show</a> in Detroit saw automakers new and old (and their suppliers) show off their <a href="http://www.npr.org/2017/01/11/509265974/auto-show-lesson-the-difference-between-driverless-and-self-driving-cars">plans and innovations</a> in this arena. And the <a href="https://static.nhtsa.gov/odi/inv/2016/INCLA-PE16007-7876.PDF">National Highway Traffic Safety Administration (NHTSA) issued its report</a> on the Tesla fatality. Together, they suggest a future filled with driverless cars that are both safer than today’s vehicles and radically different in appearance and comfort.</p>
<h2>Confirmation of safety</h2>
<p>The NHTSA report contained a key finding that will no doubt further fuel the autonomous vehicle movement. Beyond finding no safety defect in the Tesla vehicle, and even aside from its decision not to order a recall of the car, the official government report declared that <a href="http://www.latimes.com/business/autos/la-fi-hy-tesla-autopilot-20170119-story.html">autonomous cars are safer than human-driven ones</a>.</p>
<p>To make its finding, the agency analyzed data <a href="https://www.bloomberg.com/news/articles/2016-12-20/the-tesla-advantage-1-3-billion-miles-of-data">Tesla collects remotely</a> from all its cars. It compared the number of times airbags deployed in Tesla cars that have Autopilot and earlier models without it. That’s one way of determining how many serious accidents the cars were involved in. </p>
<p>The data revealed that the accident rate was much lower in Tesla cars equipped with Autopilot. Cars with Autopilot had airbags deploy once in every 1.3 million miles of driving; those without Autopilot deployed their airbags once every 800,000 miles. (The <a href="https://static.nhtsa.gov/odi/inv/2016/INCLA-PE16007-7876.PDF">NHTSA cautioned</a> that Tesla’s Autopilot requires the full attention of the driver, and noted that driver inattention contributed to the fatal crash.) Paradoxically, the Tesla accident, tragic though it was, may ultimately increase confidence in autonomous vehicle technologies, thanks to the NHTSA investigation.</p>
<h2>Manufacturers join the fray</h2>
<p>Those safer cars of the future will not all be Teslas, though. While Google’s seven-year-long effort to develop an autonomous car <a href="https://www.bloomberg.com/news/articles/2016-09-12/google-car-project-loses-leaders-and-advantage-as-rivals-gain">has hit a few bumps</a>, CES exhibits from major existing car companies showed strong progress. </p>
<p><a href="https://www.cnet.com/roadshow/news/riding-in-cars-with-computers-how-tech-at-ces-changes-driving-ces-2017/">Audi, BMW, Chrysler, Ford, GM, Honda, Hyundai, Nissan and Toyota</a> all highlighted their efforts to catch up with upstart Tesla. Some of these traditional car companies displayed radical ideas, such as <a href="https://www.cnet.com/roadshow/news/chrysler-focuses-on-a-future-generation-with-a-minivan-at-ces-2017/">retractable steering wheels</a>, <a href="https://techcrunch.com/video/toyota-debuts-its-concept-i-at-ces/586d5d71509549648405fe7c/">scissor doors</a> and on-board AI assistants like <a href="http://www.geekwire.com/2017/ford-turning-cars-amazon-alexa-devices-starting-month/">Amazon’s Alexa</a>.</p>
<p>Industry suppliers are also joining the game. Auto parts giant Delphi demonstrated a <a href="https://www.cnet.com/roadshow/news/delphis-self-driving-car-deals-with-rude-drivers-in-vegas-ces-2017/">self-driving Audi SQ5 SUV</a> on the streets of Las Vegas, the result of a partnership with <a href="http://www.theverge.com/2016/12/1/13791848/delphi-mobileye-self-driving-car-pittsburgh-intel-maps">collision detection innovator Mobileye</a>. And French supplier Navya showed off an all-electric <a href="http://navya.tech/?lang=en">self-driving minibus</a>. </p>
<h2>New developments arise</h2>
<p>A new player on the scene is <a href="http://www.nvidia.com">microprocessor innovator NVIDIA</a>, whose <a href="http://dx.doi.org/10.1016/j.jpdc.2012.04.003">graphics processing units</a> are much better at handling large amounts of data quickly than conventional computer chips have been. The company has developed extremely power-efficient processors that are supporting <a href="https://techcrunch.com/video/nvidias-self-driving-test-cars-at-ces/58733bfa869ea92c996de75e/">deep learning for autonomous driving on an Audi Q7</a>. Deep learning allows the vehicle to learn from examples and from experience, improving its performance in varying conditions over time. These systems can <a href="https://techcrunch.com/2017/01/04/nvidia-builds-a-co-pilot-into-its-autonomous-drive-computer/">support drivers</a> who are personally operating their vehicles: for instance, noticing the driver is looking to the left and might not see a cyclist approaching on the right. <a href="https://techcrunch.com/2017/01/09/take-a-ride-with-us-in-a-self-driving-audi-q7-using-nvidia-autonomous-tech/">Tesla is already using NVIDIA supercomputers</a> in its vehicles, and Mercedes is working on <a href="https://techcrunch.com/2017/01/06/nvidia-and-mercedes-benz-to-bring-an-ai-car-to-market-within-a-year/">integrating NVIDIA artificial intelligence</a> into its products.</p>
<p>In addition, sensor technologies are both <a href="http://www.consumerreports.org/autonomous-driving/autonomous-vehicles-ces-2017/">getting better and far more economical</a>. This is true most notably of <a href="http://oceanservice.noaa.gov/facts/lidar.html">LIDAR</a>, a laser-based sensing method widely used in driverless cars. </p>
<p>With confidence in their safety boosts, and the enormous advances in technology, the future for driverless cars is as bright as the Las Vegas strip.</p>
<p><em>Updated February 10, 2017, to correct the name of the federal agency that issued a report on the Tesla crash.</em></p><img src="https://counter.theconversation.com/content/71936/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>William Messner is affiliated with the Democratic Party. </span></em></p>Together, three recent events mark a crucial turning point in the development of autonomous cars: They are both safer and more advanced than ever before.William C. Messner, John R. Beaver Professor of Mechanical Engineering, Tufts UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/647652016-09-06T09:05:02Z2016-09-06T09:05:02ZTesla’s batteries have reached their limit – here’s how they could go further<figure><img src="https://images.theconversation.com/files/136585/original/image-20160905-15457-1fpj7es.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Tesla</span></span></figcaption></figure><p>“For the first time, the world’s fastest production car is electric,” said Tesla boss Elon Musk when <a href="http://qz.com/764723/tesla-has-maxed-out-what-its-current-batteries-can-do/">he recently launched</a> the company’s latest battery. The new 100kwh device can propel Tesla’s cars to about 97kph in just 2.5 seconds and allow them to drive 20% further before recharging, compared to previous batteries. </p>
<p>But Musk also admitted that the current design and chemistry of the battery means this is quite close to the theoretical limits that it can achieve. From here it will become exponentially harder to increase the amount of energy a battery of the same size can store. So where could Tesla and other electric vehicle manufacturers go next?</p>
<p>Tesla’s current P90D design uses a battery pack that <a href="https://cleantechnica.com/2016/01/06/a-tale-of-3-battery-packs/">sits underneath the floor</a> of its “skateboard” chassis. This allows the car to carry a large volume of battery cells while maximising the interior space of the vehicle, although it also leaves the battery vulnerable to damage in an accident.</p>
<p>The new P100D battery pack looks the same from the outside and appears to use the same two rows of lithium ion cells. Yet, remarkably, it packs 100kwh of energy density into the same battery model that previously stored 90kwh and weighed just 4% less. That’s over 11 times the amount of electricity that a medium British house <a href="https://www.ukpower.co.uk/home_energy/average-energy-bill">uses on an average day</a>.</p>
<h2>Solid-state batteries</h2>
<p>The difference is in the way the pack is put together, the cooling system and the electronics. For example, a significant improvement in the way the batteries are cooled could have created enough room to fit <a href="https://forums.tesla.com/forum/forums/model-s-going-use-new-version-panasonic-18650-series-battery">56 extra cells</a> to provide the additional 10kwh energy. The 4% increase in weight suggests more components have been added and that perhaps the cell arrangement has been reworked to allow for this extra weight in the same volume. </p>
<p>For Tesla to go much further, however, it may need to consider a completely different way of storing energy. One early-stage technology being studied by companies including <a href="https://cleantechnica.com/2014/06/19/toyota-researching-solid-state-batteries-next-step-evs/">Toyota</a>, <a href="https://cleantechnica.com/2014/11/15/volkswagen-eyeing-400-mile-solid-state-batteries/">Volkswagen</a>, <a href="https://cleantechnica.com/2015/09/21/bosch-solid-state-lithium-ion-batteries-could-hit-ev-market-within-5-years/">Bosch</a> and <a href="http://www.gizmodo.co.uk/2016/05/dysons-electric-car-could-take-on-tesla-thanks-to-solid-state-batteries/">Dyson</a> is solid-state batteries. These are potentially safer, store more energy for their size and could lead to low-cost battery module developments.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/136586/original/image-20160905-15466-22w0it.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/136586/original/image-20160905-15466-22w0it.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/136586/original/image-20160905-15466-22w0it.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/136586/original/image-20160905-15466-22w0it.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/136586/original/image-20160905-15466-22w0it.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/136586/original/image-20160905-15466-22w0it.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/136586/original/image-20160905-15466-22w0it.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Battery ‘skateboard’.</span>
<span class="attribution"><a class="source" href="https://en.wikipedia.org/wiki/Tesla_Model_S#/media/File:Tesla_Motors_Model_S_base.JPG">Oleg Alexandrov/Wikimedia</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Typical lithium ion batteries such as the one Tesla uses contain a flammable liquid electrolyte, while solid-state batteries use a solid electrolyte that is comparatively safer. This also opens up <a href="http://onlinelibrary.wiley.com/wol1/doi/10.1002/aenm.201300654/abstract">the possibility</a> of using <a href="http://onlinelibrary.wiley.com/doi/10.1002/advs.201500213/full">lithium metal</a> instead of a graphite electrode, as this has a higher energy density and longer cycle life. <a href="http://www.nature.com/ncomms/2015/151204/ncomms10101/full/ncomms10101.html">Recent improvements</a> in electrolyte additives and ceramic shields could solve the problem of lithium electrodes sprouting fibres or “dendrites” that eventually <a href="http://newscenter.lbl.gov/2013/12/17/roots-of-the-lithium-battery/">short-circuit the battery</a>.</p>
<p>Autolib, a Paris-based electric car-sharing service has <a href="https://www.autolib.eu/en/our-commitment/bluecar-menu-en/100-electric/">already started</a> using these solid-state batteries in its 3,000 or so cars. Bosch’s battery company, Seeo, claims to have developed prototype batteries with <a href="http://www.seeo.com/news/seeo-closes-funding-round-and-adds-samsung-ventures/">an energy density of 350 Wh/kg</a> (watt-hour per kilogram). In comparison, the <a href="http://www.orbtronic.com/batteries-chargers/panasonic-3100mah-ncr18650a-li-ion-rechargeable-18650-battery-cell-made-in-japan">Panasonic 18650 cells</a> that Tesla uses have an energy density of just 254 Wh/kg. Simply replacing Tesla’s current cells with these solid-state batteries (once they are ready for production) would help the firm go from a 100kwh battery pack to a 118kwh model – almost twice the improvement Tesla’s new P100D has made on its previous design.</p>
<p>Some believe such strategies could help produce safe batteries that can carry enough charge to really compete with petrol engines. Donald Sadoway, a materials chemist at MIT, says that achieving such high energy densities is key to widespread adoption of electric vehicles. “If we had batteries with 350 Wh/kg we’d have EVs [electric vehicles] with 350 miles of range, and that’s the end of petroleum,” <a href="https://www.theguardian.com/environment/2016/may/11/dysons-electric-car-development-could-become-the-next-tesla">he said</a>.</p>
<h2>Sodium alternative</h2>
<p>However, continuing to use solid-state batteries with lithium electrodes may not be possible because the metal’s rarity means it comes with high financial and environmental costs, especially compared to carbon-based electrodes. Two potential alternatives are sodium ion-based and possibly sodium metal-based batteries, which have higher energy densities than lithium ion batteries. One such prototype battery has <a href="http://onlinelibrary.wiley.com/doi/10.1002/adfm.201403241/abstract">demonstrated 650Wh/kg</a> of energy density, which means 650 miles of range for an electric vehicle in a single charge – more than twice what current lithium ion batteries offer.</p>
<p>Sodium is much more abundant than lithium and its salt (sodium carbonate) is ten times cheaper than the equivalent lithium salt. As the costs of the electrodes and electrolyte take up more than 50% of the cost of a typical cell, batteries using sodium-based reactions will have a key advantage in that respect. Sodium ion batteries can also be completely discharged without damaging the active materials and without creating a hazard – unlike lithium ion batteries, which <a href="http://cen.acs.org/articles/93/i29/Challenging-Lithium-Ion-Batteries-New.html">can catch fire</a> if stored without charge in them.</p>
<p>With these developments in solid-state lithium and sodium technology, we can expect to see electric vehicle batteries with higher energy densities and lower costs than the ones recently revealed by Tesla. But that doesn’t mean we’ll necessarily see them in all electric cars. An alternative strategy would be to put more effort into <a href="http://jalopnik.com/bmw-just-kicked-everybodys-ass-with-its-carbon-fiber-7-1698960901">reducing the body weight</a> of the vehicles by <a href="http://www.digitaltrends.com/cars/lamborghini-forged-carbon-fiber-manufacturing-process/%5D">using carbon composites</a> so they can carry more batteries. This could potentially get us to the range of more than 350 miles in a single charge without the need for a new type of battery. But whatever the innovation is, Tesla and other manufacturers still need a final advance to put electric vehicles within reach of ordinary drivers.</p><img src="https://counter.theconversation.com/content/64765/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Vivek Nair does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Alternative technologies are already leaving Tesla’s batteries in the slow lane.Vivek Nair, Senior research associate, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/641012016-08-26T18:27:54Z2016-08-26T18:27:54ZWill a merged Tesla-SolarCity put a solar-powered battery in every home?<figure><img src="https://images.theconversation.com/files/135560/original/image-20160825-6630-3crnxe.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The linchpin to Tesla's proposed merger with SolarCity is the Gigafactory and whether it can lower costs and improve battery performance.</span> <span class="attribution"><span class="source">Tesla Motors</span></span></figcaption></figure><p>One year ago Tesla Motors announced plans to build its <a href="https://www.tesla.com/gigafactory">Gigafactory</a> to produce huge numbers of batteries, giving life to the old saying, “if you want something done right, do it yourself.” </p>
<p>By making electric car batteries that Tesla used to buy from others, CEO Elon Musk <a href="http://time.com/4005107/elon-musk-tesla-henry-ford/">adopted a strategy made famous by Henry Ford</a> – 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. </p>
<p>Now, Musk wants <a href="https://www.tesla.com/blog/tesla-makes-offer-to-acquire-solarcity">Tesla to acquire SolarCity</a> for similar reasons, but with a slightly different twist. </p>
<p>SolarCity is one of the largest installers of solar photovoltaic panels, with some 300,000 residential, commercial and industrial <a href="http://www.greentechmedia.com/articles/read/if-tesla-acquires-solarcity-success-will-depend-on-storage">customers in 27 states</a>. 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. </p>
<p>This latest move would bring Tesla one step closer to being the fully integrated provider of sustainable energy solutions for the masses that <a href="https://www.tesla.com/blog/master-plan-part-deux">Elon Musk envisions</a>. But does it make business sense? </p>
<p>The real issue in my mind comes down to batteries and innovation. </p>
<h2>Creating demand and scale</h2>
<p>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 <a href="https://theconversation.com/has-tesla-cracked-the-grid-energy-storage-problem-41131">Powerwall batteries for homes and larger Powerpack systems</a> for commercial and industrial customers. </p>
<p>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 gained from building a key component of its electric vehicles as well as Tesla’s energy storage systems. As the company manufactures more batteries, it will find ways to innovate around battery design and production.</p>
<p>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. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"729287253894254592"}"></div></p>
<p>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. </p>
<p>Some analysts <a href="http://www.nytimes.com/2016/08/05/business/everyone-despises-solarcity-deal-except-tesla-shareholders.html">claim</a> the proposed merger is a bailout of SolarCity, where Musk sits on the board along with several friends and relatives. </p>
<p>But all of these issues of scale and cost are relevant reasons to argue for the merger in the near term. The most important question, though, could be further down the road at the Gigafactory in Nevada. </p>
<h2>Manufacturing feeds innovation</h2>
<p>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. </p>
<p>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.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=279&fit=crop&dpr=1 600w, https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=279&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=279&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=351&fit=crop&dpr=1 754w, https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=351&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/135561/original/image-20160825-6604-14vk1mt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=351&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Lithium ion batteries made at the Gigafactory will go into Tesla’s vehicles, including the Model S and forthcoming Model 3, as well as Powerwall home batteries (on left).</span>
<span class="attribution"><span class="source">Tesla Motors</span></span>
</figcaption>
</figure>
<p>Historically we have seen this in <a href="http://www.businessdictionary.com/definition/learning-curve.html">many industries</a>. Examples include Ford and the Model T 100 years ago, Texas Instruments and others making hand-held calculators in the 1970s, as well as personal computers since the 1980s. </p>
<p>Maybe the best example would be home video recorders. When home recorders were first introduced in the 1970s, Sony sold them for <a href="http://www.wipo.int/wipo_magazine/en/2006/06/article_0003.html">US$1,300, which would be about $4,600 in today’s dollars</a>. As the demand for home recording increased, and an industry standard emerged to consolidate demand on one format, scale accumulated and both design and cost innovations resulted in vastly improved functionality at prices well below $100 by the early 2000s. </p>
<p>This was all made moot by the introduction of the DVD, which made the VCR obsolete. DVD players later took the same cost reduction trajectory. While there is no guarantee the results will be the same with battery design and cost, increased scale is the key to exercising that potential.</p>
<h2>Will consumers buy it?</h2>
<p>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 <a href="https://www.jstor.org/stable/41322373?seq=1#page_scan_tab_contents">shift demand to nonpeak hours or simply reduce peak consumption</a> to lower their electricity bills.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=358&fit=crop&dpr=1 600w, https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=358&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=358&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=450&fit=crop&dpr=1 754w, https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=450&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/135562/original/image-20160825-6622-wb6ic0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=450&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Tesla’s Powerpack is aimed at commercial customers, who pay typically pay higher power costs during peak hours and could be willing to pay for some backup energy.</span>
<span class="attribution"><span class="source">Tesla Motors</span></span>
</figcaption>
</figure>
<p>With <a href="https://www.hks.harvard.edu/fs/whogan/Hogan_TOU_RTP_Newark_082314.pdf">time-of-use plans</a>, Powerwall batteries can be used as a means to store grid power drawn during off-peak periods and use it to supplement peak-time consumption. For example, a Powerwall system capable of <a href="http://www.forbes.com/sites/christopherhelman/2015/05/11/ok-so-maybe-teslas-powerwall-isnt-only-for-rich-green-people/#2eec37559aed">storing 10 kilowatt-hours (kWh) of electricity costs about US$3,500</a>. </p>
<p>By my calculations, using $0.25 per kWh off-peak rates to charge a battery and then using it to <a href="https://support.greenconvergence.com/customer/portal/articles/2238983-what-is-the-time-of-use-rate-plan-">supplement $0.34 kWh peak rates</a> would save 3,650 kWh of peak demand rates. That translates into saving $324 per year or a 9 percent return on investment on the system. Powerwall batteries can also be used as back-up in case of disruptions to the power grid.</p>
<p>But pairing a Powerwall with a solar panel installation could be where the biggest advantages can be found. The typical U.S. household uses about <a href="https://www.eia.gov/tools/faqs/faq.cfm?id=97&t=3">1,000 kWh per month</a>. A homeowner can have a five kilowatt solar system installed for about <a href="https://www.solarpowerauthority.com/how-much-does-it-cost-to-install-solar-on-an-average-us-house/">$10,000 (after tax credits) and depending on the climate, generate most of their monthly grid needs</a>.</p>
<p>With many climates in the U.S. getting between <a href="https://www.solarpowerauthority.com/how-much-does-it-cost-to-install-solar-on-an-average-us-house/">four to seven hours</a> of sun per day, a five kilowatt solar system could generate as much as 1,000 kWh per month. 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. </p>
<p>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. This, depending on local rates and climate, could easily generate a return of 20 percent or higher.</p>
<h2>Focus on innovation</h2>
<p>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 <a href="http://www.greentechmedia.com/articles/read/if-tesla-acquires-solarcity-success-will-depend-on-storage">industrial users who tend to value sourcing both from the same vendor</a>? Again, logical. </p>
<p>But the real game-changing question I see is: Will the increase in accumulated demand for batteries generate the opportunities for innovation? </p>
<p>By ramping up production at the Gigafactory, will Tesla find ways to lower battery cost and improve battery performance with better energy density (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? </p>
<p>If you can extrapolate from Henry Ford, calculators, personal computers and even VCRs, you would also say this is very likely. As battery design improves and cost falls, the Powerwall battery should become more attractive economically and the the forthcoming <a href="https://theconversation.com/will-the-tesla-model-3-recharge-the-u-s-electric-vehicle-market-57171">Tesla Model 3 electric car</a> should be affordable for an ever wider demographic. I signed up for a Model 3, along with about <a href="http://fortune.com/2016/04/15/tesla-model-3-reservations-400000/">400,000</a> other people.</p>
<p>Is this the synergy that Musk is really banking on? I think so.</p><img src="https://counter.theconversation.com/content/64101/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>W. Rocky Newman does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Critics don’t think Tesla can sell enough home batteries to justify its acquisition of SolarCity, but what they’re underestimating is the potential for innovation the Gigafactory brings.W. Rocky Newman, Professor of Management, Farmer School of Business, Miami UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/634882016-08-07T23:48:16Z2016-08-07T23:48:16ZAfter fatality, autonomous car development may speed up<figure><img src="https://images.theconversation.com/files/133259/original/image-20160805-481-1hz4q38.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">As problems occur, rapid design adjustment will advance autonomous cars' abilities.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-359474672/stock-vector-remote-sensing-system-of-vehicle-front-view-smart-car-safety-car-autonomous-car-vector.html">Image of car with sensors via shutterstock.com</a></span></figcaption></figure><p>The world has witnessed enormous advances in autonomous passenger vehicle technologies over the last dozen years. The performance of microprocessors, memory chips and sensors needed for autonomous driving has greatly increased, while the cost of these components has <a href="http://www.economist.com/technology-quarterly/2016-03-12/after-moores-law">decreased substantially</a>. Software for controlling and navigating these systems has similarly improved. Buoyed by notable milestones and relentless progress in autonomous technologies, a self-reinforcing cycle emerged – optimism by industry, academia and the public leading to more effort to develop autonomous technologies, with consequent successes generating even more optimism.</p>
<p>The successes are real. In 2004, <a href="http://www.cnn.com/2004/TECH/ptech/03/14/darpa.race/">not a single vehicle</a> completed even 10 miles of the Defense Advanced Research Projects Agency (DARPA) Grand Challenge for autonomous navigation across 150 miles of the Mojave Desert. Nineteen months later <a href="http://archive.darpa.mil/grandchallenge05/GC05winnerv2.pdf">five vehicles</a> were up to the task. In 2007, <a href="http://archive.darpa.mil/grandchallenge/">six teams completed</a> the far more difficult DARPA Urban Challenge, which involved navigating through a city-type environment with other autonomous and human-driven vehicles obeying California driving laws. </p>
<p>Subsequently, Google recruited several of the technical leads from the Grand Challenge teams to develop autonomous cars. All the major car manufacturers in the United States, Europe and Japan now have <a href="https://www.cbinsights.com/blog/autonomous-driverless-vehicles-corporations-list/">serious efforts to develop autonomous passenger vehicles</a>. Most notably, upstart Tesla boldly sells vehicles equipped with sensors and software that allow operators to <a href="http://www.wired.com/2015/10/tesla-self-driving-over-air-update-live/">run the cars in autonomous mode</a> in various situations including highway driving. Cars operating autonomously already have <a href="http://cleantechnica.com/2016/03/15/tesla-autopilot-outdistances-google-cars/">logged millions of miles</a> on U.S. roads.</p>
<p>However, the recent <a href="http://www.nytimes.com/2016/07/01/business/self-driving-tesla-fatal-crash-investigation.html">fatal crash of a Tesla Model S</a> operating in “autopilot” mode suggests that some people may be too confident in this new technology in its current state. As we have seen with other innovations, sometimes a user’s death causes development to slow down – but other times, progress speeds up to address the newly uncovered problems.</p>
<h2>Death can slow technological progress</h2>
<p>The effects of tragedies involving new technology vary greatly. The public’s optimism about civilian space tourism increased dramatically with the <a href="http://ansari.xprize.org/">successful flights of Scaled Composites’ SpaceShipOne</a> in June 2004. But that optimism faded quickly after the <a href="http://www.nytimes.com/2014/11/01/science/virgin-galactics-spaceshiptwo-crashes-during-test-flight.html">crash of the Virgin Galactic SpaceShipTwo</a> in October 2014, in which the copilot was killed. </p>
<p>The response to the Tesla accident differs from the Virgin Galactic fatality at least in part because of the distinct difference in potential societal benefit of the technology. Civilian space tourism promises expensive thrill rides to a very tiny number of wealthy customers. So, when its safety was called into question, it is not surprising that interest declined. (In late July, the company received a <a href="http://www.space.com/33629-virgin-galactic-spaceshiptwo-unity-tests-faa-license.html">license to resume test flights</a>, but does not expect to fly passengers <a href="http://www.ibtimes.com/richard-bransons-virgin-galactic-granted-unprecedented-space-tourism-license-2397020">until at least 2017</a>.)</p>
<p>On the other hand, autonomous vehicles have the potential to help hundreds of millions of people and to save tens of thousand of lives per year in the US alone. The National Highway Transportation Safety Administration (NHTSA) estimates that 94 percent of the more than 35,000 U.S. traffic deaths in 2015 were <a href="http://www.nhtsa.gov/About+NHTSA/Speeches,+Press+Events+&+Testimonies/mr-2016-av-symposium-07202016">due to the driver</a>. These brutal numbers mean that the recent Tesla autopilot fatality will not slow the push to automate passenger vehicles.</p>
<h2>The potential for learning can spark improvement</h2>
<p>In fact, the Tesla driver’s death may actually accelerate progress on autonomous vehicles. As <a href="http://www.nhtsa.gov/About+NHTSA/Speeches,+Press+Events+&+Testimonies/mr-2016-av-symposium-07202016">NHTSA Administrator Mark Rosekind remarked in July</a> at the Automated Vehicles Symposium 2016, </p>
<blockquote>
<p>“When something goes wrong, or a highly automated vehicle encounters an edge case – something it hasn’t been programmed to deal with – that data can be taken, analyzed and then the lessons can be shared with … all automated vehicles. [By contrast,] new drivers must learn on the road and make the same mistakes as thousands before them.”</p>
</blockquote>
<p>The initial deployment of airbags in automobiles in the 1990s provides an apt comparison. <a href="http://www.nytimes.com/1992/06/26/us/study-shows-air-bags-save-lives-but-says-seat-belts-are-needed-too.html?pagewanted=all">Airbags saved many lives from the outset</a>. However, there were instances in which the <a href="http://www.nytimes.com/1996/09/18/us/more-children-are-killed-by-air-bags-and-parents-are-blamed.html">passenger side airbag killed children</a>, especially infants secured in rear-facing child safety seats – the so-called “edge cases” for this technology. </p>
<p>In response, regulators and car manufacturers quickly <a href="http://www.nhtsa.gov/cars/rules/regrev/evaluate/809689.html">introduced sensors</a> to detect the weight of any passenger, and systems that deactivated the airbag if the passenger was too light. <a href="http://query.nytimes.com/gst/fullpage.html?res=980DE1DF103EF93AA2575BC0A9639C8B63">Public service announcements warned drivers</a> to ensure children rode only in the rear seats, either buckled up or in child safety seats. These actions resulted in an astonishing 96 percent reduction in children killed by airbags at between 1996 and 2001 even though the number of airbag-equipped vehicles <a href="http://www.nhtsa.gov/people/injury/research/6thAnnualBUAReport/pages/Status.htm">increased by a factor of five</a>.</p>
<figure class="align-left ">
<img alt="" src="https://images.theconversation.com/files/133261/original/image-20160805-466-18px85y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/133261/original/image-20160805-466-18px85y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/133261/original/image-20160805-466-18px85y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/133261/original/image-20160805-466-18px85y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/133261/original/image-20160805-466-18px85y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=565&fit=crop&dpr=1 754w, https://images.theconversation.com/files/133261/original/image-20160805-466-18px85y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=565&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/133261/original/image-20160805-466-18px85y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=565&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">A Tesla Model S, like the one pictured, was involved in the first fatal crash of a vehicle with autonomous-driving technology.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/pasa/8646684783/">Paul Sableman/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<p>The effect of the Tesla crash is likely to be similar. The apparent cause of the accident was the vehicle’s <a href="https://www.tesla.com/blog/tragic-loss">failure to detect a white truck</a> against a bright sky background, and the failure of both car and driver to react in time. Like the injuries caused by some early airbags, the crash was an unintended consequence of a system designed to improve safety. </p>
<p>As <a href="http://www.ccjdigital.com/ntsb-says-tesla-in-fatal-crash-involving-tractor-trailer-was-speeding/">additional details</a> <a href="http://www.upi.com/Business_News/2016/07/31/Tesla-brakes-not-autopilot-at-fault-in-fatal-crash-company-says/8911469969412/">about the crash</a> emerge, the manufacturer can redesign the system to essentially eliminate the problems. And users of the technologies will become less complacent and more informed about their capabilities and limitations.</p>
<h2>The effect on trust</h2>
<p>The most lasting effect of the Tesla crash will be its damage to the trust people put in these systems. Kristin Kolodge, who heads human-machine interface work at market research firm J.D. Power, remarked at the Automated Vehicles Symposium, “<a href="http://time.com/4413686/automated-vehicle-symposium-2016-tesla/">It’s extremely unfortunate the Tesla incident that happened</a>. This element of trust is extremely fragile.”</p>
<p>Counting whose specific lives airbags have saved in crashes is relatively easy. But it is much more difficult to measure the benefits of autonomous vehicles replacing reckless, drunk or otherwise impaired drivers and reducing crashes as a result.</p>
<p>Nonetheless, the prospect of greatly reducing accidents, injuries and deaths due to reckless driving, drunk driving, distracted driving, impaired driving, speeding and road rage means that increasingly automated cars will be a fact of life in the years ahead. As U.S. Transportation Secretary Anthony Foxx recently said, “Automated vehicles are coming. <a href="http://www.auvsi.org/blogs/auvsi-news/2016/07/19/foxx-self-driving-cars">Ready or not, they are coming</a>.”</p><img src="https://counter.theconversation.com/content/63488/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>William Messner received funding from the National Science Foundation and from the Department of Agriculture relevant to robotics. </span></em></p>Sometimes a user’s death causes technology development to slow down – but other times, progress speeds up to address the newly uncovered problems.William C. Messner, John R. Beaver Professor of Mechanical Engineering, Tufts UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/627212016-07-22T13:21:09Z2016-07-22T13:21:09ZWhy driverless cars still need driving tests<p>Joshua Brown was reportedly <a href="https://www.theguardian.com/technology/2016/jul/01/tesla-driver-killed-autopilot-self-driving-car-harry-potter">watching a Harry Potter film</a> when the “autopilot” function of his Tesla Model S drove the car into a truck, instantly killing him. This incident, the first time someone died from an accident involving self-driving car technology, doesn’t prove autonomous vehicles are inherently unsafe. But it does serve as a reminder that the technology isn’t yet at the stage where we can take our eyes off the road.</p>
<p>Prior to Tesla’s crash a few weeks ago, I interviewed 12 experts from across the driverless car world as part of my <a href="http://www.nottingham.ac.uk/%7Epsxgcf/">PhD research project</a> looking at issues of trust in automated vehicles. The experts included academics and industry professionals, all with vast experience in automated vehicle technology and design. They said, as research suggests, that until the autopilot can fully take over, we need to treat self-driving cars with a certain amount of distrust, otherwise we could be putting ourselves in serious danger. The issue was so serious that drivers shouldn’t be allowed to use this technology without specific training. </p>
<h2>Moving up the gears</h2>
<p>Although it’s on the horizon, a future where humans have no interaction with a car’s driving system (known as level 5 automation) is still far away. To get there, we need to get through <a href="http://www.sae.org/misc/pdfs/automated_driving.pdf">several transitional stages of technology</a> (levels 2, 3 and 4) that can take increasing but not complete control of a vehicle. Tesla’s autopilot, for example, is typically seen as level 2 to 3 automation because it can take control of at least two functions such as steering and acceleration, but still needs the driver to monitor the car and its environment. </p>
<p>These levels of transition actually pose many of the biggest challenges for the technology. More and more vehicles come out of the production lines with combined automated features, bringing them to levels 2 and 3 of automation. Most of the car manufacturers are offering either as a standard or as a premium functionalities such as <a href="http://www.bmw.com/com/en/insights/technology/connecteddrive/2013/driver_assistance/intelligent_parking.html">parking assist</a>, <a href="http://www.volkswagen.co.uk/technology/adaptive-cruise-control-acc">Adaptive Cruise Control</a>, <a href="http://www.autoexpress.co.uk/car-news/95312/what-is-aeb-autonomous-emergency-braking-systems-explained">Autonomous Emergency Braking systems</a>, and so on – automated features that added and combined year-after-year create an incremental path towards driverless vehicles. </p>
<p>Self-driving cars require a suite of technologies such as radar, <a href="https://theconversation.com/meet-lidar-the-amazing-laser-technology-thats-helping-archaeologists-discover-lost-cities-60915">LIDAR</a> (like radar but works with light waves instead of radio waves), video cameras, GPS and inertial navigation systems, among others, which build awareness of the car’s surroundings. Drivers need to be able to trust that these systems can reliably work together in the potentially dangerous or unpredictable situations created by driving. Otherwise, they won’t use them properly and miss out on the benefits they can provide.</p>
<h2>Trust your car – but not too much</h2>
<p>Despite some <a href="http://spectrum.ieee.org/cars-that-think/transportation/self-driving/driverless-cars-inspire-both-fear-and-hope">public fears</a> about the safety of self-driving cars, a survey we conducted with 239 <a href="https://www.researchgate.net/publication/292657211_Trust_and_Acceptance_A_priori_perceptions_of_trust_in_Autonomous_Vehicles">respondents last year</a> found that people may actually be more willing to trust an automated system than other drivers. This is because humans are more unpredictable and susceptible to emotions. A self-driving car would never be guilty of road rage, aggressive driving or day dreaming.</p>
<p>But there’s also a danger that people are already putting too much trust in self-driving technologies. The recent crash aside, the apparent reliability of Tesla’s autopilot and similar systems could lead people to believe they can stop paying attention to the road and let the car drive itself – leaving them to do other things. But these technologies are not designed to take full control of the car and the driver is supposed to be ready to take over at any time.</p>
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<p>As one of the experts we spoke to put it:</p>
<blockquote>
<p>People will start trusting it, things will start going wrong, the drivers will not be able to resume control because they will have jumped into a false sense of security.</p>
</blockquote>
<p>When a driver has even partly been relying on an autonomous system, they lose their awareness of what is going on on the road around them. To safely take back full control of the vehicle in a potentially dangerous situation, they need to regain their situational awareness and this takes time. For example, research using a driving simulator test <a href="http://www.sciencedirect.com/science/article/pii/S1369847814001284">has shown</a> that it takes drivers using <a href="http://www.sae.org/misc/pdfs/automated_driving.pdf">level 3 driving automation</a> (where the car controls steering and acceleration and monitors the environment) around 15 seconds to resume control of the car.</p>
<p>According to another robotics expert we spoke to, the loss of situational awareness is made worse the longer the driver has been using the automated technology. They suggested that using a basic adaptive cruise control function, which simply adjusts the car’s speed to keep a safe distance from other vehicles, for an hour or more would effectively lower the driver’s awareness as much as if they were using a fully self-driving car.</p>
<h2>Read the manual, take the test</h2>
<p>So how can we make sure drivers don’t overtrust partially automated vehicle technology in a way that puts themselves and others in danger? For one thing, it’s well-known that people <a href="http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.482.6162&rep=rep1&type=pdf">rarely read instruction manuals</a> or the information screens that feature in new software.</p>
<p>Most of the experts we spoke to thought drivers should be given specific training before using these systems. This could involve changing the current standard test for new drivers, retraining classes, obliging manufacturers to provide demonstrations of new technologies before they sell them, or even the use of driving simulators. These could be provided in either dedicated centres or even car dealerships.</p>
<p>As automated vehicle technologies become more popular, it is vital that people learn when it is safe to trust them and when it is not. If they don’t, we could imagine a situation where a spate of accidents could make people lose faith in the safety of these systems and force the industry to take a step backwards.</p><img src="https://counter.theconversation.com/content/62721/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>George Filip is supported by the Horizon Centre for Doctoral Training at the University of Nottingham (RCUK Grant No. EP/G037574/1) and by the RCUK’s Horizon Digital Economy Research Institute (RCUK Grant No. EP/G065802/1).</span></em></p>The likes of Tesla’s autopilot technology isn’t meant for you to take your eyes off the road – there could be fatal consequences if you do.George Filip, PhD Researcher, Horizon CDT, University of NottinghamLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/624952016-07-15T00:40:45Z2016-07-15T00:40:45ZShould Tesla’s autopilot cars be allowed on public roads following accidents?<p>Humans are terrible at driving. The US Department of Transport estimates that <a href="http://www.nhtsa.gov/About+NHTSA/Press+Releases/2015/2014-traffic-deaths-drop-but-2015-trending-higher">94% of crashes</a> are due to the driver. </p>
<p>We drive too fast. We get distracted. We make poor decisions.</p>
<p>If <a href="https://bitre.gov.au/statistics/safety/fatal_road_crash_database.aspx">history is anything to go by</a>, more than 1,000 people are likely to die on Australian roads in the next year. Each death is a tragedy for the families and friends of those killed. </p>
<p>And it’s also a big drain on our economy. Each fatal accident costs <a href="https://bitre.gov.au/publications/2010/report_118.aspx">around $2 million</a>. The total cost on our economy from all car accidents is more than $17 billion per year.</p>
<p>Autonomous cars are going to be <a href="https://www.technologyreview.com/s/520746/data-shows-googles-robot-cars-are-smoother-safer-drivers-than-you-or-i/">far better drivers</a>. There is therefore a moral imperative to get them onto our roads as soon as possible.</p>
<p>They will also bring many other benefits such as reducing congestion, lowering transport costs and bringing personal mobility to the elderly, disabled and young.</p>
<p>Tesla, more than any car company, has been <a href="http://www.wired.com/2015/10/tesla-self-driving-over-air-update-live/">pushing the field</a>. Its technology is impressive and improving rapidly.</p>
<h2>Accidents</h2>
<p>Accidents are, however, happening at an increasing rate as autonomous cars become more common.</p>
<p>On Valentine’s Day this year, one of Google’s autonomous cars <a href="http://www.wired.com/2015/10/tesla-self-driving-over-air-update-live/">caused its first crash</a> when it pulled out in front of a bus. Fortunately, no one was hurt.</p>
<p>Just three months later, on May 7, a Tesla S driving autonomously on a 65mph (about 105kmh) limit road <a href="https://www.theguardian.com/technology/2016/jun/30/tesla-autopilot-death-self-driving-car-elon-musk">drove into a truck</a> turning across the highway. The driver, Joshua Brown, who was sitting in the driving seat of the Tesla was killed. <a href="http://bigstory.ap.org/article/ee71bd075fb948308727b4bbff7b3ad8/self-driving-car-driver-died-after-crash-florida-first">According to reports</a>, he was watching a Harry Potter movie. </p>
<p>What actually happened in the lead up to the accident is currently under investigation.</p>
<p>Tesla <a href="https://www.teslamotors.com/blog/tragic-loss">issued a statement</a>, acknowledging the tragic loss, and saying their instructions require drivers who engage the autopilot mode to monitor the road and be ready to take back control at short notice. </p>
<p>And last Sunday in the US, <a href="http://www.bbc.co.uk/news/technology-36783345">a second Tesla car crashed</a> while being used autonomously. No one was injured. But how long before a Tesla car kills an innocent member of the public, a pedestrian or person in another vehicle?</p>
<h2>Public safety</h2>
<p>Silicon Valley’s <a href="https://www.theguardian.com/technology/2014/jun/28/silicon-valley-startup-failure-culture-success-myth">“fail fast” culture</a> may work for Facebook. No one is likely to be seriously hurt when their news feed is messed up. But fail fast is too risky for public safety.</p>
<p>Is it responsible for Tesla to release this technology into the wild when serious questions surround its safety?</p>
<p>Will the human driver monitor the road adequately? Will a human driver be able to take back control quickly enough? </p>
<p>It is not sufficient that the human driver gave consent; the rest of us using the roads have not given our consent. </p>
<p>Since human lives are at stake, drug companies do not get to test their new products on the general population. Should car companies be allowed to do so? </p>
<p>Tesla plans to put out a <a href="https://www.theguardian.com/technology/2016/jul/12/tesla-car-crash-montana-elon-musk-self-driving-cars">blog post to educate Tesla owners</a> on how to use the autonomous features of their cars safely. I doubt this is enough. </p>
<p>The US Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) has defined <a href="http://www.nhtsa.gov/About+NHTSA/Press+Releases/U.S.+Department+of+Transportation+Releases+Policy+on+Automated+Vehicle+Development">five different levels of autonomous driving</a>, ranging from zero to four (level zero is where the driver remains in control at all times). </p>
<p>Should level three autonomy be allowed where a human driver may be required to take back control at any moment? Or should we only allow level four where the system will work safely even if the human driver fails to take back control promptly.</p>
<p>Should Tesla be allowed to push updates out without extensive testing?</p>
<p>On average, one person dies for every 100 million miles (160 million kilometres) driven. According to Tesla, this was the <a href="https://www.teslamotors.com/blog/tragic-loss">first fatality in 130 million miles</a> (210 million kilometres) of use of its autopilot software driving autonomously. </p>
<p>This would suggest that Tesla’s autonomy is about the level of a human driver. This is probably not good enough to be giving it control. Remember that humans are still having to take over when the driving gets more difficult. I would want autonomous cars to be much safer before we give them control. </p>
<h2>Safety review</h2>
<p>Regulatory authorities are waking up to these concerns. StaySafe, the joint standing committee of the NSW parliament focused on road safety, is in the middle of an inquiry into driverless vehicles and road safety.</p>
<p>We need to act swiftly to update the rules and the regulatory environment. For instance, none of the legislation introduced to permit driverless cars onto the roads of California, Nevada, South Australia and elsewhere require autonomous cars to be distinguishable from human-driven cars. </p>
<p><a href="http://thefutureofai.blogspot.com/2016/06/motherboard-ai-professor-proposes.html?q=Turing">In my testimony</a> to the StaySafe committee, I argued that we need to put special plates on such cars or even a magenta flashing light.</p>
<p>A friend who owns a Tesla told me of a situation they encountered recently where this was needed.</p>
<p>The driver of a car in a lane being merged expected his Tesla to speed up or slow down to create a suitable gap. But Tesla’s software is not programmed for courtesy. It continued to drive at a constant speed. My friend had to take back control to prevent a high speed collision. </p>
<p>When we started to build aeroplanes 100 years ago, anything went. But we quickly constructed a strong regulatory framework to ensure public safety. We need to build similar safeguards into the emerging industry for driverless cars.</p>
<p>Until this has happened, we need to question whether Tesla’s autopilot should be allowed on our roads.</p><img src="https://counter.theconversation.com/content/62495/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Toby Walsh does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Two Tesla cars running on autopilot have crashed this year, and one driver was killed. It raises the question of whether the company’s autonomous driving system is safe for our roads.Toby Walsh, Professor of AI at UNSW, Research Group Leader, Data61Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/572382016-04-06T12:43:43Z2016-04-06T12:43:43ZThe success of Tesla’s Model 3 goes far beyond its affordability<figure><img src="https://images.theconversation.com/files/117483/original/image-20160405-29010-iapjy1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Tesla</span></span></figcaption></figure><p>Tesla Motors has already established its electric cars as fast, well-sized and capable of competing with petrol cars in how far they can go without needing a recharge. Now, the US firm run by Elon Musk appears to have countered the final remaining negative perception of electric vehicles: price.</p>
<p>Following its April launch, Tesla’s new Model 3 generated over 250,000 orders in <a href="http://www.bbc.co.uk/news/business-35953817">just a few days</a>, meaning it is likely to become the bestselling electric vehicle in the world. By comparison, the previous annual bestseller – the luxury Tesla Model S – sold <a href="http://inhabitat.com/tesla-model-s-was-the-best-selling-electric-car-in-the-world-last-year/">just 50,000 units</a> last year.</p>
<p>While the $35,000 (£25,000) minimum purchase price of the car may not sound particularly affordable to most people, many governments are offering to cut the price of electric vehicles with subsidies. Many people pay for their cars using monthly repayment plans, and the running costs of an electric car tend to be so low that a higher purchase price is easily offset by almost non-existent fuel costs and exemptions from vehicle emissions taxes. </p>
<p>But, as Apple did with smartphones and tablets, Tesla has successfully made expensive technology more affordable, not by inventing a cheaper device, but by creating enough demand to make cost-saving mass production possible.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"716510703000100865"}"></div></p>
<h2>Design and technology</h2>
<p>Tesla cars are beautifully designed vehicles with surprisingly good build quality and <a href="http://www.euroncap.com/en/results/tesla/model-s/7897">safety standards</a>. They are sexy vehicles of respectable heft and <a href="https://www.teslamotors.com/en_GB/models">head-spinning performance</a> that can hold the interest of luxury car buyers and petrol heads alike. Competitors such as the Renault Zoe, Nissan Leaf or BMW i3 seem rather puny in comparison, thrown together gingerly as a token nod to changing times.</p>
<p>Teslas also have a stylistic maturity that is all the more surprising, considering the company seems to have materialised almost out of nowhere. They look like the product of a longstanding brand, not a relatively recent start-up. This is in stark contrast to the conservative, established auto makers that highlight their long <a href="http://www.campaignlive.co.uk/article/volkswagen-then-now-always-ddb-berlin/1382567">histories and heritage</a>.</p>
<p>On the technology side of things, Tesla has done more than any other manufacturer to tackle the issue of range anxiety – that is, the fear of running out of charge before completing your journey. Musk has been determined to use more advanced and more expensive lithium ion batteries, hoping to bring down their cost through mass production made possible by increased demand. This is a risk other manufacturers have not been willing to take and gives Tesla <a href="http://uk.businessinsider.com/elon-musk-on-teslas-battery-advantage-2015-11">a definite advantage</a>. </p>
<p>Tesla has also taken an alternative approach by developing the infrastructure to support its cars. Traditional firms have been relying on the <a href="https://www.gov.uk/government/organisations/office-for-low-emission-vehicles">public sector</a> in one form or another to make public charging points available and build up the market. Tesla, however, has <a href="https://www.teslamotors.com/en_GB/supercharger">built its own network</a> of rapid charging stations so its customers feel confident that they will be able to charge their cars on long trips.</p>
<h2>Personal brand</h2>
<p>But the company’s success has come not only from a product that’s design and technology stands out from the competition, but because Musk has built a personal following through well-modulated PR efforts and visionary promises, much as Steve Jobs used to do. This has brought him more public attention and sympathy than the parallel efforts of established car makers, and of other companies currently trying to enter the electric vehicle game such as <a href="http://fortune.com/2015/11/23/google-apple-virtual-reality-autonomous/">Google or Apple</a>.</p>
<p>In fact, this approach seems to have elevated Tesla to a status above “car maker” in the public eye. It is now the car company that’s trying to save the world, complete with a figurehead who’s been <a href="http://www.telegraph.co.uk/technology/news/10544247/Meet-tech-billionaire-and-real-life-Iron-Man-Elon-Musk.html">compared to a superhero</a>. Musk’s status as the face of the company makes the company easier to like than the anonymous, corporate behemoths seen to be fiddling about with cables in mysterious seclusion.</p>
<p>So far, Tesla’s success in the electric vehicle market is unparalleled. Its initial order numbers for the Model 3 were the equivalent of a single car factory’s annual output capacity. If it wants to keep its customers happy, however, the firm will certainly need to continue expanding its charging network. </p>
<p>But if it helps to reduce the fear of running out of juice, the company may also find itself tailgated by the competitors that Elon Musk has so <a href="http://www.ibtimes.com/tesla-ceo-elon-musk-nissan-leaf-chevy-volt-not-great-products-bmw-i3-looks-bit-funny-1443714">consistently mocked</a>. We’ll have to see whether Musk remains visionary enough to find new pathways to stay ahead then.</p><img src="https://counter.theconversation.com/content/57238/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Elon Musk hasn’t made a cheap electric car, but one that’s attractive enough to create a mass market.Chris Ebbert, Senior Lecturer in Product Design, Nottingham Trent UniversityAlexandre Rodrigues, PhD candidate, , Nottingham Trent UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/571712016-04-06T09:46:55Z2016-04-06T09:46:55ZWill the Tesla Model 3 recharge the U.S. electric vehicle market?<figure><img src="https://images.theconversation.com/files/117537/original/image-20160405-29010-12p4qqz.png?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Tesla Model 3: cheaper than its predecessors, but is $35,000 really within reach of 'mainstream' buyers?</span> <span class="attribution"><span class="source">Tesla Motors</span></span></figcaption></figure><p>Few product launches in recent memory have captured as much attention as last week’s unveiling of the Tesla Model 3 electric vehicle (EV), Tesla’s first vehicle pitched at the mass market. </p>
<p>Orders were flooding in even before Tesla CEO Elon Musk revealed the car to a giddy audience last Thursday evening, with prospective buyers queuing at Tesla stores throughout the day to place a deposit on a vehicle they might not even receive for two years or more. </p>
<p>Musk made the case for EVs being “<a href="https://vimeo.com/161138986">really important for the future of the world</a>,” combating rising greenhouse gas emissions and air pollution. </p>
<p>The Model 3 is really important for the future of Tesla and the future of EVs. It promises the sales growth that automotive wunderkind Tesla needs to survive and renews interest in a technology that is yet to have significant real-world impact. Yet even with the introduction of Tesla’s flashy new sedan, more pieces need to be in place before the EV market goes truly mainstream. </p>
<h2>Battery prices dropping</h2>
<p>When the Chevrolet Volt plug-in hybrid and Nissan Leaf battery-electric vehicle hit U.S. showrooms in December 2010, the price of gasoline was rising, and so were expectations for the future of EVs. </p>
<p>Shortly after, President Obama articulated the goal of <a href="https://www.whitehouse.gov/sites/default/files/other/fact-sheet-one-million-advanced-technology-vehicles.pdf">having one million EVs on U.S. roads</a> by 2015, and committed billions of investment in EV manufacturing capacity, recharging infrastructure deployment and vehicle purchase incentives. </p>
<p>Five years later, the reality is somewhat different, with the market for hybrid and electric vehicles stagnating (see figure below). Only 415,000 plug-in hybrid and battery-electric vehicles have been sold to date, achieving no more than one percent of new vehicle sales, and conventional hybrid vehicles have fared little better, following the price of gasoline down over the past two years. </p>
<p>With gas cheap, sales of <a href="https://theconversation.com/what-should-america-do-with-its-2-per-gallon-gas-windfall-52258">SUVs and pickups are booming</a>, and all evidence suggests that mainstream car buyers simply do not want the green vehicles that are available currently.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/117529/original/image-20160405-28940-1yp0566.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/117529/original/image-20160405-28940-1yp0566.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/117529/original/image-20160405-28940-1yp0566.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=409&fit=crop&dpr=1 600w, https://images.theconversation.com/files/117529/original/image-20160405-28940-1yp0566.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=409&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/117529/original/image-20160405-28940-1yp0566.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=409&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/117529/original/image-20160405-28940-1yp0566.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=514&fit=crop&dpr=1 754w, https://images.theconversation.com/files/117529/original/image-20160405-28940-1yp0566.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=514&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/117529/original/image-20160405-28940-1yp0566.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=514&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">After rising during a period of high gas prices, sales of hybrids and electric cars have started to plateau and fall.</span>
<span class="attribution"><span class="source">HybridCars.com, U.S. Energy Information Administration</span>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>Why then might prospects for EVs be different looking forward? The answer lies in the rapid reductions in lithium-ion battery prices that are being achieved, falling 70 percent since 2007 to <a href="http://www.nature.com/nclimate/journal/v5/n4/full/nclimate2564.html?WT.ec_id=NCLIMATE-201504">US$300 per kWh</a>. </p>
<p>These battery improvements have the potential to significantly affect EV performance compared to gasoline-powered cars. The next wave of electric vehicles, led by the Tesla Model 3 and Chevrolet Bolt, promise more than 200 miles of electric range for $35,000, which advocates hope will be a sweet spot for consumers. </p>
<p>To say that $35,000 for a midsize car is affordable for mass-market consumers, as some have suggested, is optimistic to say the least. However, continued development of these second-generation EVs could soon challenge (again) the gasoline/internal-combustion regime that has dominated global automotive markets for the past 100 years.</p>
<h2>Not just for techies and treehuggers</h2>
<p>But when a mass-market transition to EVs may occur remains uncertain even with falling battery prices. </p>
<p>A recent report by <a href="http://about.bnef.com/press-releases/electric-vehicles-to-be-35-of-global-new-car-sales-by-2040/">Bloomberg New Energy Finance</a> received widespread attention for suggesting that EVs would be cost-competitive with gasoline vehicles by 2025. Significant further advances with batteries would be needed for that to occur. </p>
<p>Even so, building a market for EVs that is ecologically and economically sustainable requires more than just cheap batteries. EVs will go mainstream only when everyday car buyers understand the technology, have a wide range of EV makes, models and body styles to choose from, and have access to a ubiquitous network of fast charging stations for long trips. </p>
<p>Only Tesla can claim to offer significant charging infrastructure coverage today with their growing network of proprietary Supercharger stations, and Tesla faces other challenges internally as they learn to manufacture vehicles at scale with high quality.</p>
<p>The greatest impact of the Model 3, then, to the benefit of the entire EV industry, may be in convincing consumers that EVs are no longer just for treehuggers and techies. </p>
<p>In launching presales far in advance of production, Tesla has empowered 275,000 people (and counting) to tell everyone they know that their next car will be electric, long before the first Model 3 hits the road. For the struggling field of electric cars, that’s a real vote of confidence.</p><img src="https://counter.theconversation.com/content/57171/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Keith receives funding from the MIT Energy Initiative, whose financial partners and advisory board members include energy, automotive, technology and consulting companies, utilities and non-profit organizations.</span></em></p>Tesla Motors again struck a chord with the sleek Model 3 electric car but it’s still not enough to compete on price and convenience with mass market gas-powered cars, says auto tech researcher.David Keith, Assistant Professor of System Dynamics, Massachusetts Institute of Technology (MIT)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/570462016-04-04T07:11:24Z2016-04-04T07:11:24ZTesla’s gamble on its ‘affordable’ electric car<p>Tesla announced what it calls its “most affordable” electric vehicle in the <a href="https://www.teslamotors.com/model3">Model 3</a> last week. The car can now be ordered with a <a href="https://www.teslamotors.com/support/model-3-reservation-deposit">deposit of A$1,500</a> in Australia (US$1,000 in the United States) but won’t be delivered until late 2017.</p>
<p>Within hours, the company’s founder and CEO Elon Musk said <a href="https://twitter.com/elonmusk/status/716693951260938241">around 276,000 orders</a> had been placed, and he was already considering a <a href="https://twitter.com/elonmusk/status/715955186175459332">rethink of production plans</a> following such high demand.</p>
<p>The estimated retail price of the car is US$35,000, but what will this equate to in Australia? Early estimates suggest it could be <a href="http://www.gizmodo.com.au/2016/03/heres-the-aussie-queue-for-teslas-model-3/">upwards of A$60,000</a>. Is that really an “affordable” vehicle?</p>
<p>Some of this cost relates to import duties and the Australian government is currently reviewing these and <a href="http://minister.infrastructure.gov.au/pf/releases/2016/february/pf018_2016.aspx">considering reduced taxes</a> for low-carbon vehicles.</p>
<h2>If Elon builds it, will you drive one?</h2>
<p>Electric vehicles may well be the way of future road transport, but the real question is this: what do we need to do to promote electric vehicle deployment?</p>
<p>Australia has abundant energy sources, except for oil. There are many sources for electricity generation (both fossil and renewable), so the promotion of electric vehicles makes logical sense. But the question of affordability remains, as it poses a barrier to adoption.</p>
<p>While we are seeing more electric vehicles on the road, most people have bought them because they are environmentally friendly; cost has not been an issue.</p>
<p>The majority of motor vehicle manufacturers are now introducing electric vehicles into their range, such as Tesla’s Model S (<a href="http://www.whichcar.com.au/search/make-tesla/model-model+s/">from about A$128,000</a>), BMW’s i3 (<a href="http://www.whichcar.com.au/search/make-bmw/model-i3">from about A$63,000</a>) and Nissan’s Leaf (<a href="http://www.whichcar.com.au/search/make-nissan/model-leaf">from about A$51,000</a>). But their price still places them at the high end of the market, although, in most cases, they are not luxury vehicles.</p>
<h2>The other charge</h2>
<p>There are a number of limitations affecting the roll-out of electric vehicles within Australia, particularly the distances they can travel between recharging and the lack of publicly available recharging infrastructure.</p>
<p>While there are plans to address these issues, the timeframe for implementation is unknown.</p>
<p>Countries such as <a href="http://www.stuff.co.nz/motoring/news/78247217/fast-electric-car-chargers-arrive-in-wellington-and-petone.html">New Zealand are already rolling out</a> a fast-charging electric vehicle network and will probably have a larger number of electric vehicles than Australia in the short term. But in terms of distances to be travelled, it is a much smaller country.</p>
<p>Charging sites are <a href="https://theconversation.com/where-to-put-the-first-electric-car-charge-station-in-the-sunshine-state-45236">being developed in Australia</a> though not at the same pace as New Zealand.</p>
<p>Problems with rolling out infrastructure will slow the uptake, particularly of larger models. In the short term, will this mean the electric vehicle is destined to be the second car?</p>
<p>The majority of households in Australia have two cars, so the electric vehicle is ideally placed to become the second vehicle, to be used for short trips, such as dropping kids to school or visiting the supermarket. For such use, they can be charged at home and not require any external infrastructure.</p>
<h2>Slow uptake</h2>
<p>Another issue that may <a href="http://www.carsguide.com.au/car-news/electric-car-sales-still-a-trickle-in-australia-32848">slow uptake in Australia</a> is the capacity to service the vehicles. It is well known that the motor vehicle industry within Australia has seen considerable downscaling in recent years.</p>
<p>Electric vehicles will provide a new challenge due to the little current knowledge of the existing industry. With deployment of any new technology, technicians need to be trained and without sufficient technology deployment, companies will be reluctant to make that investment (as we have seen with the roll-out of battery storage within the Australian market). </p>
<p>Based on the normal innovation curve, there needs to be a significant number of vehicles on the road to create demand from people before they will be provided with recharging infrastructure.</p>
<p>And where do we place this infrastructure? Will charging stations be adopted by the current service station model? Will there be a need to establish new charging stations? Or will shopping centres and fast food chains adopt charging stations as part of their drive to attract customers (no pun intended)?</p>
<p>Given the potential limitations to powering and driving an electric vehicle in Australia, <a href="http://www.businessinsider.com.au/over-120-australians-have-lined-up-to-pre-order-teslas-unseen-model-3-2016-3">the high demand</a> for Tesla’s Model 3 is interesting.</p>
<p>But given its long roll-out time of “late 2017”, will other manufacturers be able to introduce their own “most affordable” electric vehicles earlier? </p>
<p>If so, Tesla’s latest move may be just the nudge the industry needs to make electric vehicles really more attractive, and more affordable to new car buyers.</p><img src="https://counter.theconversation.com/content/57046/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Craig Froome does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Tesla’s new Model 3 may be the kick the electric car industry needs to expand, with pre-orders exceeding expectations.Craig Froome, Global Change Institute – Clean Energy Program Manager , The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/491922015-11-17T11:02:30Z2015-11-17T11:02:30ZCan Tesla’s enthusiast customers help it sell the electric car for the everyperson?<figure><img src="https://images.theconversation.com/files/101877/original/image-20151113-10407-phwe8r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Tesla owners with clever license plates: W/O GAS, TSLA 101, SUN ENRG, and SIN CO2.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/jurvetson/4452080641/in/photolist-8kjqBn-7Mq5t4-pvQ648-o1A9EC-sKEW5L-7vL8jB-5t76MG-oeHXc1-apxGhG-apxGrQ-apxG7G-o1wME7-oEUkJo-du1Saj-foi7QN-9Q4w1B-7LQ9kh">jurvetson/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>I’m in a parking lot in Menlo Park, California, with Tesla owner Darrell, part of my recent sojourn to the Bay Area to research the culture of electric vehicles. </p>
<p>His bright orange Roadster convertible draws admiring glances from passersby. Moments later, we are on Highway 280 winding into the Santa Cruz mountains of the San Francisco peninsula. I am startled by how quiet the car is at cruising speed, even with canvas roof panels removed. </p>
<p>Darrell remarks that every now and then, his wife tells him to “punch it.” “So I have to punch it!” With that, he mashes the accelerator and the Roadster rocks us back hard in its low-slung seats. </p>
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<a href="https://images.theconversation.com/files/101943/original/image-20151115-10401-135ryp2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/101943/original/image-20151115-10401-135ryp2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/101943/original/image-20151115-10401-135ryp2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/101943/original/image-20151115-10401-135ryp2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/101943/original/image-20151115-10401-135ryp2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/101943/original/image-20151115-10401-135ryp2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/101943/original/image-20151115-10401-135ryp2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/101943/original/image-20151115-10401-135ryp2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="attribution"><a class="source" href="https://www.flickr.com/photos/webmonk/14056242417/in/photolist-nq6Vac-ezVXua-5ubGnz-5eDv32-P5AzF-DiGYb-7W1cYh-v4xqbH-nWXsmN-nUs5Yi-6Ma1p7-nq6MYS-6aqomT-kLTEAx-pxumdr-fcmyry-ccdkPb-5eTnPX-3gV3mY-uQVN-eZMCMT-5MsJqJ-26mSuz-oA6hKg-edVr6K-sSNrRo-gmadck-dzWzpb-ruSyfz-fApb78-NpAri-KEDV-95mx6t-5ywswU-qeZBvn-fc7eY2-qJ1uyV-8NFnMJ-pvsLf-p2BXLy-oW8JCc-7Teekt-wLtkS-idrDu-7PYNBG-gEQ4Bj-rdqdcL-chEjh3-68GVhT-s5b5Xe">webmonk/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-sa/4.0/">CC BY-NC-SA</a></span>
</figcaption>
</figure>
<p>In Darrell, we may see an idealized Tesla Motors owner, a “first user,” in sociological parlance. He met me wearing a Tesla-brand baseball cap. And his is a two-Tesla household. When not bombing around in their Roadster on weekends, he and his wife commute in their Model S. </p>
<p>Darrell spent his career working in IT administration, while enjoying the natural beauty, privilege and sense of wonder that can come with life in Silicon Valley.</p>
<p>“My life has been Disney. Disney and Tesla Motors are my two passions.”</p>
<p>In some ways, Tesla Motors is as much a dream factory as Disney. Its business model is built on the premise of the electric supercar, an automobile designed to lay to rest the perceived shortcomings of electric vehicle (EV) technology, especially unattractive styling and short range. </p>
<p>But current CEO Elon Musk has a bigger objective in mind: use sales of premium EVs to fund development of a battery electric vehicle for the everyperson. And first users like Darrell are key to this enterprise. </p>
<p>As in the case of Apple Inc, devotees of Tesla Motors strongly identify with the technology, so much so that they willingly advertise and proselytize on behalf of the company. But as Tesla expands its reach, early adopter enthusiasm may only take it so far. </p>
<h2>Betting on the Model 3</h2>
<p>In its efforts to establish itself as a contender in the highly competitive auto sector, Tesla Motors has courted the ardor of customers like Darrell, people of means with a sense of adventure and a willingness to ignore some of the bumps and scrapes that inevitably come with pioneering new technologies. </p>
<p>A key element of the company’s mystique is its ability to impart agency to the customer, a feeling of actively participating in the reshaping of history. First users bond, share information and gain a sense of empowerment through the <a href="http://my.teslamotors.com/forums">Tesla Motors Forums</a>, a semi-official sounding board.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/OR7c2fb_dps?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Tesla has a mission – to make transportation sustainable – that fosters admiration for CEO Elon Musk and the company.</span></figcaption>
</figure>
<p>To be sure, there have been more than a few blips on the road to the <a href="http://www.scientificamerican.com/article/tesla-s-elon-musk-unveils-solar-batteries-for-homes-and-small-businesses/">auto-utopian landscapes</a> sketched by Musk. In 2014, Consumer Reports breathlessly rated the Model S “<a href="http://blogs.wsj.com/corporate-intelligence/2014/02/25/consumer-reports-judges-tesla-best-in-show/">best in show</a>,” brashly awarding it 103 of 100 possible points in a <a href="http://www.consumerreports.org/cro/tesla-model-s-p85d.htm">review</a> of August 2015. </p>
<p>Less than two months later, the consumer guidebook issued <a href="http://www.consumerreports.org/cars/tesla-reliability-doesnt-match-its-high-performance">a mea culpa of sorts</a>, giving the car a <a href="http://www.consumerreports.org/cars/tesla-reliability-doesnt-match-its-high-performance">below-average reliability</a> rating. Owners reported a host of problems, ranging from annoyances like poor fit and finish to more serious incidents like leaking battery cooling pumps and warped brake rotors that would be costly to fix out of warranty. </p>
<p>Yet it is no surprise that consumer satisfaction remains high. Tesla Motors offers a very generous eight-year unlimited mileage warranty for battery and drivetrain on the Model S and the new Model X SUV. And its customer service is legendary and central to the company’s construction of brand loyalty. Darrell recounted an incident in which, after blowing out two tires on his Model S on a monster pothole, Tesla technicians recovered the vehicle on a flatbed truck and repaired it within an hour.</p>
<p>Much less clear is the role of users and the sustainability of the supercar business model as Tesla Motors attempts to transition to the mass market. The company’s current inflated <a href="http://www.ibtimes.com/tesla-motors-inc-tsla-has-lost-35b-value-model-x-debut-2135349">stock valuation</a> is based largely on Musk’s promise to deliver the US$35,000 200-mile <a href="http://my.teslamotors.com/it_IT/forum/forums/elon-musk-says-tesla-model-3-will-cost-35000-incentives">Model 3</a>, an ostensible entry-level supercar, in 2017-2018. </p>
<p>With the Model 3 the company is targeting non-true believers, users who are socialized to the very high standards of cost effectiveness, comfort and convenience of contemporary gasoline engine technology. Such consumers are less likely to tolerate the high cost and teething troubles of EV technology that first users now accept as part of the price of owning a piece of the future. </p>
<h2>Elephant in the room</h2>
<p>The biggest question mark around affordability and the Model 3, of course, is the power plant. Battery pack cost per kilowatt-hour is the most frequently cited issue, and the effort to drive it below $200 per kilowatt-hour (kWh) from its current price of upwards of <a href="http://mitei.mit.edu/news/whats-cost-got-do-it">$400/kWh</a> is <a href="http://www.wsj.com/articles/SB10001424052702304709904579407473494212500">often seen</a> as the most important technological objective in the project to commercialize electric automobiles. </p>
<p>But battery aging is the real elephant in the room. Because batteries have much shorter lifespans than electric motors, which can last for decades, so-called pure battery electric vehicles have hidden replacement costs that consumers may or may not be willing to shoulder. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/101913/original/image-20151114-10420-19dqpxa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/101913/original/image-20151114-10420-19dqpxa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/101913/original/image-20151114-10420-19dqpxa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/101913/original/image-20151114-10420-19dqpxa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/101913/original/image-20151114-10420-19dqpxa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/101913/original/image-20151114-10420-19dqpxa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/101913/original/image-20151114-10420-19dqpxa.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/101913/original/image-20151114-10420-19dqpxa.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Tesla battery packs include thousands of commodity battery cells (in green). But as all laptop users know, batteries degrade over time – a potential problem for Tesla and its customers down the road.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/arnolddeleon/6251178477/in/photolist-ANeZP-5WtNRc-AN4Lz-AN5TX-65faKN-rwpd6o-bsNQ4L-rhenZi-rwoS9j-hokLfQ-6kAHnJ-aLTqbe-epNpsd-5WtLMt-epN2qG-nDMTXN-eS5XFN-nDUtaC-aHkWiZ-8EHJQ3-9ap8eq-awoVzg">arnolddeleon/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Although some automakers build their own battery packs, none produce the battery cells that make up such packs except Nissan, and then only in <a href="http://europe.autonews.com/article/20141212/BLOG15/141209825/nissan-offers-rare-peek-into-battery-making">collaboration</a> with electronics giant NEC. And Nissan is currently <a href="http://www.wsj.com/articles/nissan-to-consider-lg-batteries-for-electric-cars-1437052009">debating</a> whether to purchase cheaper cells from LG Chem as sales of its Leaf EV wane. Parts suppliers get paid first and stand to capture a significant proportion of battery replacement revenue over the lifetime of an electric vehicle. </p>
<p>Accordingly, most established automakers have <a href="http://www.iea.org/evi/Global-EV-Outlook-2015-Update_1page.pdf">more of an incentive to develop hybrid electrics</a>, which require smaller and less costly powerpacks than battery-only EVs and are, hence, a less risky financial proposition. </p>
<h2>Aura of infallibility</h2>
<p>But price isn’t the only thing Tesla needs to get right with the Model 3. Even if Tesla Motors successfully produces the automobile at scale, it is questionable whether the company will be able to sustain its high standard of customer service, which is costly. </p>
<p>By some estimates, Tesla is already losing more than <a href="http://www.reuters.com/article/2015/08/10/us-teslamotors-cash-insight-idUSKCN0QE0DC20150810">$4,000 per car</a>. A $7,500 federal tax credit for purchases of new plug-in EVs is available only for <a href="http://www.fueleconomy.gov/feg/taxevb.shtml">200,000</a> units per manufacturer, and Tesla has produced around 90,000 copies of the Model S to date. </p>
<p>In fostering the mythos of a super electric vehicle, Musk generated the hype and investment needed to sustain his company in its fledgling years. And yet, in pursuing automobile perfection, Tesla Motors has made itself a hostage to the fortunes of entropy. The optics of aging and deteriorating supercars will doubtless detract from the aura of infallibility that the company has so carefully cultivated.</p>
<p>The Model S incarnated the goal of reconciling environmental sustainability with comfort, style and convenience, becoming a potent symbol of liberal lifestyle values. For the romantic, well-heeled idealist, much could be forgiven with a goal so laudable. </p>
<p>But for average, non-first users, the unknowns of electric automobiles – and of aging batteries above all – will test their willingness to march in the vanguard of the revolution in sustainable automobility.</p><img src="https://counter.theconversation.com/content/49192/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Matthew N Eisler does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>As electric vehicle fans, Tesla’s customers are a key cog in the company’s marketing machine. How much pull will they have as Tesla makes the Model 3 for a broader – and tougher – crowd?Matthew N Eisler, Visiting Assistant Professor of Integrated Science and Technology, James Madison University Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/487252015-10-14T08:52:20Z2015-10-14T08:52:20ZWill the Supreme Court kill the smart grid?<figure><img src="https://images.theconversation.com/files/97659/original/image-20151007-7335-13lkmc4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Supreme Court will decide a case that will have a big effect on distributed energy technology, including batteries. </span> <span class="attribution"><a class="source" href="http://www.teslamotors.com/sites/default/files/images/presskit/teslaenergy_utility2.jpg?617">Tesla</a></span></figcaption></figure><p>On April 30, Tesla’s Elon Musk took the stage in California to introduce the company’s Powerwall <a href="https://theconversation.com/has-tesla-cracked-the-grid-energy-storage-problem-41131">battery energy storage system</a>, which he hopes will revolutionize the dormant market for household and utility-scale batteries. </p>
<p>A few days later, the Supreme Court <a href="http://www.supremecourt.gov/orders/courtorders/050415zor_7648.pdf">announced</a> that it would hear a case during its fall term that could very well determine whether Tesla’s technology gamble succeeds or fails. Justices will hear arguments on October 14 to address <a href="http://www.utilitydive.com/news/supreme-court-to-hear-ferc-order-745-case-over-demand-response-rules/393722/">questions</a> having to do with federal jurisdiction over the fast-changing electricity business.</p>
<p>At issue is an obscure federal policy known in the dry language of the electricity business as “Order 745,” which a lower court <a href="http://www.greentechmedia.com/articles/read/what-us-appeals-court-decision-on-ferc-order-745-means-for-demand-response">vacated last year</a>. </p>
<p>Order 745 allowed electricity customers to be paid for reducing electricity usage from the grid – a practice known as “demand response.” It also stipulated that demand response customers would be paid the market price for not using the grid – like the power industry’s version of paying farmers not to grow corn. </p>
<p>Paying people not to use electricity may sound preposterous – one <a href="https://www.epsa.org/forms/uploadFiles/33552000003CA.filename.SCOTUS_Amicus_Utility_Law_Project_of_NY_09082015.pdf">critique</a> of Order 745 was that it permitted overly generous prices and lax performance standards, basically making demand response a license for electricity consumers to print money. </p>
<p>But research, including <a href="http://www.sciencedirect.com/science/article/pii/S0301421508003364">some of my own</a>, has shown that demand response can make markets operate more efficiently, temper the market power held by power generating companies and reduce the risk of blackouts. </p>
<p>In other words, as long as the prices and rules are right, paying people to use less electricity isn’t such a crazy idea. Indeed, it’s just one way that <a href="https://theconversation.com/tesla-batteries-just-the-beginning-of-how-technology-will-transform-the-electric-grid-40142">new technologies</a>, including rooftop solar and batteries, could make the grid cleaner and lower prices.</p>
<h2>Smart grid on trial</h2>
<p>The Order 745 case has already proven to be a major disruption in the US electricity market. It has thrown uncertainty into business models, market prices, and in some cases even the <a href="http://www.powermag.com/ferc-order-745-and-the-epic-battle-between-electricity-supply-and-demand/?pagenum=2">planning of the power grid</a> to ensure reliability in the coming years. </p>
<p>The case, however, ultimately goes far beyond demand response. </p>
<p>The issue at hand is all about the ability of the federal government to set market rules for local power systems – that is, the portion of the grid that reaches individual homes and businesses – versus the regional grid that transports power over long distances across the US. It therefore has implications for the value of rooftop solar systems, backup generators, and even Tesla’s Powerwall battery – basically anything that would allow individual customers to supply energy to the power grid or reduce demands on an already strained infrastructure. </p>
<p>In fact, Order 745 could very well be the biggest energy-related Supreme Court case in decades.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=398&fit=crop&dpr=1 600w, https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=398&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=398&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/97666/original/image-20151007-7352-wzplos.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Historically, federal authorities, notably the Federal Energy Regulatory Commission (FERC), had jurisdiction only over long-distance transmission lines.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/dukeenergy/4587281064/in/photolist-7Zn1QQ-oDJ5bb-oUbeDG-bJ4FQ4-7kNZb7-dxpuKP-dxpvfH-9HHHED-aXfW9R-8tA43A-dVNJWj-qKHFM5-qHvdEu-qKHFrq-qKN2o4-qKCvzv-dxpuVB-er3jAo-eq75JT-dCfstr-dCkTmG-dCftkg-dCfuf4-dCkV7Q-dCkUhJ-dCkUwL-fvRZZ5-9Fb6pT-74ptHF-eeqPaJ-e2B2ny-doQojt-bR4VJM-pG8gby-ykK4yM-yBiahu-ra1HTr-r7SCtG-raaqWM-qSArS9-fvBJ8P-xFepaU-qBzwSV-rbRmVK-eFGCvA-eFAwJH-eFAwNZ-eFGCss-bR4VHp-epUVo6">Duke Energy</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>The significance of this particular case is rooted in the two different and opposing directions in which technology, policy and good old consumer behavior are pushing and pulling the business of electricity. </p>
<p>On the one hand is a federal policy of playing a greater role in the business of managing the regional power grid, supplanting the traditional electric utility. Regional organizations now manage portions of the national grid for more than 70% of all electricity consumed in the US. </p>
<p>The other trend is the increasing democratization of electric power production through rooftop solar photovoltaics, small-scale energy storage devices (like Tesla’s Powerwall) and increased interest in “micro-grids” to produce, distribute and manage electricity on a localized scale. Local energy is rapidly becoming the new local food. (There has even been a buzzword – “loca-volt” – coined to capture this movement.)</p>
<p>The simultaneous trends of regional grid management and democratized electricity supply are now in tension with one another, not for any technological reason, but primarily for reasons of policy and economics. </p>
<p>The Federal Power Act, which was passed in 1935, attempts to draw a “bright line” between those elements of the electricity system that are under federal versus state jurisdiction. </p>
<p>The federal role is to regulate the regional transmission grid – including the power lines that transport electricity long distances and across state lines – and wholesale markets for buying and selling power. The role of the states is limited to the local grid that delivers electricity to homes and businesses and to retail sales.</p>
<p>Market rules like Order 745 provided a pathway for these two trends to be complementary, rather than in opposition, without a patchwork of individual state regulations. </p>
<p>Want solar panels on your house? Sure thing – and those solar panels could also provide power to the grid at a price, perhaps avoiding the need to build some new power plants. Or you could provide demand response by using less electricity from the grid during certain days, and more from your solar panels. Order 745 created rules to compensate people and businesses on the wholesale energy markets to lower power use, whether it was from a bank of giant batteries or highrise buildings in New York City. </p>
<h2>Distributed energy technologies</h2>
<p>Demand response and Order 745 are so significant because they have blurred the bright line between federal and state control over the electricity sector. This bright line is increasingly becoming an artifact of our federalist legal structure. </p>
<p>A regional grid operator’s primary function is to ensure the lights stay on by having enough power to match the demand. But there is no technological reason that demand response, backup generators or energy storage banks, electric vehicles, and other emerging technologies that are all part of the “smart grid” could not serve the same function for regional power grids that large power plants do today. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=371&fit=crop&dpr=1 600w, https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=371&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=371&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=466&fit=crop&dpr=1 754w, https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=466&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/97662/original/image-20151007-7371-15wjuen.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=466&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Supply power to the grid through solar panels and other distributed energy products and services, including demand response, can be more cost-effective and cleaner than building new power plants.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/cocreatr/5417867928/in/photolist-9fKZo1-9fKYkJ-eMzno9-gts9JW-gts9u7-9dxZcs-6gjgXt-9duTLn-9duUrx-9dy1cf-dp55iH-dp55eP-9d5vQ3-8T8fEQ-9d2qwD-c3bZ9d-9dxXX7-6aLfiu-ceWmTs-aXSp6v-g9Yao2-2dRUst-9d5vVG-9dxZzJ-9dxXHG-9dxYkj-9duUcv-9dxZ4U-9dxYZY-9duVAZ-79uvHv-9duWjg-9dxXPQ-9dxZ97-9duVwt-4tmVnd-uKkP6h-c2REkS-9duUM2-9dxZJG-gtsqPt-6Jb6DT-eZg3Ps-abmSEb-6GWtzJ-amp4zo-6sji9e-abmTDj-9dxXvy-9duTWv">cocreatr/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>And there are good reasons to believe that harnessing <a href="http://www.greentechmedia.com/articles/read/dueling-charts-of-the-day-peaker-plants-vs.-green-power">loca-volt energy and energy efficiency</a> will actually be cheaper than building new power plants for times when large-scale wind and solar plants aren’t available (France and some places in the US already do this, through controllable hot water heaters).</p>
<p>Striking down Order 745 would make the bright line ever so brighter, but it would also complicate the economic environment for one of the most innovative segments of the electricity sector. </p>
<p>This case, ultimately, is far more significant than getting paid for not using electricity. It’s about who gets to set the rules of the road for emerging technology in the electricity sector – the states or the federal government – and whether the US will be able to modernize its energy policy the same way that it would like to modernize its power grid. (Full disclosure: My university employer, Penn State, has been involved in a <a href="https://smartenergyacademy.psu.edu/gridstar/about-gridstar">demonstration project</a> that uses battery energy storage to balance fluctuations on the power grid in Pennsylvania and I am an advisor to the <a href="http://microgridsystemslab.com/">Microgrid Systems Laboratory</a> in New Mexico.) </p>
<p>Before launching Tesla’s wall-mounted batteries, perhaps Mr Musk should have sat on his hands for a bit longer.</p>
<p><em>This article has been updated with more detail on the author’s involvement in microgrid projects.</em></p><img src="https://counter.theconversation.com/content/48725/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Seth Blumsack receives funding from the US National Science Foundation, US Department of Energy and the Pennsylvania Department of Environmental Protection.</span></em></p>The Supreme Court hears a case that will decide whether homes and businesses can earn money from distributed energy technologies, including demand response and home battery systems.Seth Blumsack, Associate Professor, Penn StateLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/484522015-10-12T05:24:12Z2015-10-12T05:24:12ZCould Tesla’s Model X drive us towards electric cars for all?<figure><img src="https://images.theconversation.com/files/97281/original/image-20151005-28744-dqtq9u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Back to the future?</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/jurvetson/10302812166/">jurvetson</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>The launch of Tesla’s <a href="http://www.wired.com/2015/09/tesla-model-x-suv-reveal-specs-price/">long-awaited Model X electric car</a> has received the sort of adulation that we’ve come to expect of new products from Apple. The Model X is a SUV with gull-wing doors – as made famous by the <a href="http://www.delorean.com/">DeLorean</a> from the film “Back to the Future” – giving it the appearance of a supercar, to go with its hefty pricetag. But filter out the hype, and the question is whether this will make the slightest difference to encouraging a broader shift away from fossil fuel-powered cars to electric vehicles. </p>
<p>Let’s take a look at this question from the perspective of China, <a href="http://www.ibtimes.com/china-extends-lead-worlds-largest-car-market-sales-gm-ford-china-deliveries-double-digits-1621254">the world’s largest car market</a> and one officially committed to <a href="http://fortune.com/2015/02/19/chinas-electric-car-boom-should-tesla-motors-worry/">leading the world</a> when it comes to electric cars. At around US$130,000 each, and likely more including import duties, it’s obvious that this is a car that will only be affordable in China to a tiny elite. Tesla’s cars seem like rich men’s toys with no significance to the problem of popularising electric cars. Yet in fact that’s exactly what the Model X could do.</p>
<p>Rather than judging the extent of a shift to electric vehicles only by the slowly growing sales of electric cars, consider instead what’s needed to transform our entire approach to urban mobility. This will require considerable change in a number of areas, most of which are not technological, but social, cultural and political.</p>
<p>So the “success” of electric vehicles revolves in large part around changing “common-sense” in these areas – a big and complex challenge, where so far change is slow in coming. But one strategy that does seem to be effective in disrupting the dominance of the fossil-fuelled internal combustion engine is designing and selling glamorous, elite, branded electric cars – a niche in which Tesla leads, including in China.</p>
<p>Sales of electric cars sold as “conventional” cars remain stubbornly dependent on government subsidies. This is chiefly because of the cost of the batteries, which leads to the car’s price rising unfavourably in comparison to combustion engine vehicles, while bringing little additional consumer appeal and many unfamiliar risks. Conversely, sales of Tesla’s cars do not rely on subsidy – the company is self-sustaining in terms of the cycle of revenue and investment in R&D.</p>
<p>So a key factor that works massively in favour of Tesla’s strategy and against the conventional electric car is consumer demand. Teslas are bought for the car itself and its image, not primarily because they are electric or environmentally friendly. In this case, then, the more elite and exclusive the better. This particularly matters in China, where display of social status through consumption, and especially through cars, is a <a href="http://www.polity.co.uk/book.asp?ref=9780745669700">national obsession</a>. </p>
<p>With this in mind, the new deluxe Tesla sports SUV may actually contribute towards bringing an electric vehicle future closer in several ways. It cements Tesla’s reputation as a top-class luxury brand, alongside Ferrari or Maserati – an object of intense aspirational consumer desire. And as a highly visible car (normal electric cars are both so few in number and look so much like any other that they go unnoticed) seeing them on the streets also shapes what electric cars mean to people. In other words not a milk float or golf buggy, but the epitome of what a 21st century car could be. This shift could drive demand which, moving steadily down the income scale, increases demand for similar, less flashy electric vehicles.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/97282/original/image-20151005-28744-m3833d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/97282/original/image-20151005-28744-m3833d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/97282/original/image-20151005-28744-m3833d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/97282/original/image-20151005-28744-m3833d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/97282/original/image-20151005-28744-m3833d.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/97282/original/image-20151005-28744-m3833d.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/97282/original/image-20151005-28744-m3833d.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">X marks the spot.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/69214385@N04/16227951365">Don McCullough</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
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<p>Tesla’s distinctive approach to home-charging combined with long-range batteries is also stimulating greater efforts from government to put charging infrastructure in place. This is vital as a more widespread charging infrastructure is key to mitigating one of the main hurdles preventing drivers buying electric vehicles: the fear of running out of power. Sales also support Tesla’s efforts to transform the economics of lithium batteries, where cheaper, more powerful batteries would begin to shift the cost-competitiveness to the buyer away from conventional towards electric vehicles.</p>
<p>And there are other systemic effects that growing sales of electric vehicles may bring about, especially in China. Larger sales of Teslas in China add to the intense pressure felt by Chinese car companies regarding Tesla as a foreign interloper that threatens to grasp the lead in the electric vehicle market. This may shake things up further in a country that is ostensibly committed to leading the way in developing the electric vehicle, driving further innovation and investment.</p>
<p>So while we can safely say that the Tesla Model X will not sell in sufficient numbers to transform our roads and cities single-handedly, it may yet inspire a step-change in manufacturer competition and innovation, government support and consumer demand for electric vehicles more generally, not least in China.</p><img src="https://counter.theconversation.com/content/48452/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Tyfield receives funding from the UK Economic and Social Research Council for his ongoing research into e-mobility transition in China. </span></em></p>Tesla’s sports SUV may be for the wealthy elite, but it will start in motion a process that will see electric vehicles reach the masses.David Tyfield, Reader in Environmental Innovation & Sociology, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.