Tesla Motors vs. Fossil Fuels: An electrifying showdown

Tesla Motors [NASDAQ: TSLA] has a stated mission — to accelerate the advent of sustainable energy — that flies directly in the face of carbon-emitting fossil fuels. To achieve this mission, Tesla has expanded its business model beyond just electric vehicles. Last year, it introduced Tesla Energy, a stationary storage division that offers backup power with its lithium-ion battery technology employed at home (Powerwall) and/or via commercial or grid (Powerpack) applications. Stationary battery storage provides the missing piece enabling solar panels to use backup storage at night to provide power 24/7.

Source: Tesla

In addition, Tesla recently announced it's combining with SolarCity. In all, electric cars, battery storage, and solar power could be a potent combination in the fight to replace fossil fuels. That said, Bloomberg* now reports that the world is nearing, "peak fossil fuels for electricity [as] coal and gas will begin their terminal decline in less than a decade, according to a new BNEF analysis... we're [now] finding cheaper alternatives. Demand is peaking ahead of schedule because electric cars and affordable battery storage for renewable power are arriving faster than expected."

Source: Bloomberg*

And, renewable energy sources are gaining ground fast: "even rock-bottom [gas] prices won't be enough to derail a rapid global transition toward renewable energy. 'You can't fight the future,' said Seb Henbest, the report's lead author. 'The economics are increasingly locked in.' The peak year for coal, gas, and oil: 2025. Humanity's demand for electricity is still rising, and investments in fossil fuels will add up to $2.1 trillion through 2040. But that will be dwarfed by $7.8 trillion invested in renewables, including $3.4 trillion for solar."

Source: Bloomberg*

And take note of battery storage: "The pink stuff on the top of this chart is new this year. It represents flexible capacity—technology, primarily large batteries for the home and grid, that smooths out the peaks and valleys inherent in wind and solar power. By 2028, batteries will be as ubiquitous as rooftop solar is today."

Source: Tesla

However, can solar power compete on price with fossil fuels? "The chart below is arguably the most important chart in energy markets. It describes a pattern so consistent, and so powerful, that industries set their clocks by it. It's the beautiful math of declining solar costs. The chart is on a logarithmic scale, so the declines are even more profound than at first glance. For every doubling in the world's solar panels, costs fall by 26 percent, a number known as solar's 'learning rate.' Solar is a technology, not a fuel, and as such it gets cheaper and more efficient over time. This is the formula that's driving the energy revolution. "

Source: Bloomberg*

In addition, electric vehicles will further threaten fossil fuels: "the sudden rise of electric cars is on the verge of disrupting oil markets as well, and that has profound implications... The charts below show the soaring demand for battery capacity for cars and the difference that EVs will make to power demand worldwide. The adoption of electric cars will vary by country and continent, but overall they'll add 8 percent to humanity's total electricity use by 2040, BNEF found."

Source: Bloomberg*

Furthermore, "Renewable energy and electric cars create a virtuous cycle of demand growth... The scale-up of electric cars increases demand for renewable energy and drives down the cost of batteries. And as those costs fall, batteries can increasingly be used to store solar power."

Source: Bloomberg*

Looking at Bloomberg's analysis it appears Tesla's triple threat of electric cars, battery storage, and solar power all have the ability to put enormous pressure on fossil fuels in the coming decade. Add in the potential for autonomous vehicles coupled with car sharing, as described in Elon Musk's recent Tesla Master Plan sequel, and it's clear that change is coming. Still need convincing? Watch this fascinating, jaw-dropping video on the potential of these catalysts, all part of Tesla's latest Master Plan, to disrupt fossil fuels as the dominant energy source in the (very) near future. 

Youtube: Tony Seba

After reviewing the findings from Bloomberg New Energy Finance and predictions made in the video above, it's clear that Tesla is poised to deliver a knock-out punch to fossil fuels in the next decade.


*Source: Bloomberg / Bloomberg New Energy Finance (BNEF)