Will Tesla be the catalyst for an electric vehicle revolution?
Massive transformations of human society begin with decisions made by individual humans, and particular companies sometimes play outsize roles. A century ago, Henry Ford’s manufacturing innovations launched the modern auto industry, which ended up changing the map of the world and affecting almost every aspect of society. A couple of decades ago, software products dreamed up by geeks in dorm rooms led to the founding of startups that evolved into massive near-monopolies that control more and more of the global economy.
Above: Tesla's Model 3 (Source: EVANNEX; Photo by Casey Murphy)
In 2003, two gifted entrepreneurs met for a casual lunch (as recounted in my newly-revised history of Tesla). JB Straubel told Elon Musk about a prototype electric car that boasted Porsche-like performance. This fateful meeting led to the founding of Tesla Motors, which ended up single-handedly dragging the auto industry into the electric age.
Single-handedly? Isn’t that laying it on a little too thick? After all, a constellation of companies around the world are involved in the EV revolution, and thousands of scientists, engineers and businesspeople have made important contributions. That’s undeniable, but looking back at history, we see that Tesla has been the driving force behind the most important advances in the EV industry, not just once, but several times.
Now that every major automaker is working on (or at least talking about) electric vehicles, it may be easy to forget what was going on back in 2003. After the auto industry lobbyists succeeded in killing California’s first round of zero-emission vehicle mandates, the major automakers unanimously and unequivocally declared that they would no longer pursue electrification. As Tesla co-founder Marc Tarpenning told me, he and his partners saw this as Tesla’s competitive advantage. “The auto companies had all said that there was no future in electric cars and they had no interest in it. It wasn’t like we were out there doing battle with Ford on a daily basis because they weren’t in the game. They had specifically said they were never going to be in the game.” Tarpenning foresaw that Tesla would have the EV field to itself for “some number of years.” He surely didn’t foresee that the company would hold onto its lead for two decades.
Yes, Big Auto is talking the electric talk now, and cautiously beginning to walk the walk, but the industry did not embrace electrons willingly—it was forced. Government regulations have been a big part of the impetus to electrify, but the example of Tesla has arguably been even more important. The legacy automakers’ argument against EVs has always been that consumers didn’t want them, and that it wouldn’t be profitable to build them. They’ve trotted out this argument again and again, to lobby against the emissions and fuel economy standards that forced them to build EVs—and every time, Tesla has been there to show that it isn’t true.
Tesla’s early investors took a big risk, and they’ve been richly rewarded. However, as Tesla convert Matthew DeBord recently wrote in Business Insider, other automakers (and suppliers) are now reaping the benefits as well. Without Tesla, “We’d still be asking the circa-2006 question, ‘Who killed the electric car?’” he writes.
As DeBord relates, Tesla has lit an electric fire under the major automakers again and again. In 2016, GM launched the Chevy Bolt EV, which it touted as its first mass-market EV. Savvy observers expected it to become just another “compliance car,” sold in just enough volume to satisfy fuel economy regulations, and that’s pretty much what happened.
The Bolt is a great vehicle, but the fact that many of its key components were made by supplier LG didn’t reflect well on GM’s commitment to electrification. “I think GM was lacking that [electrification knowledge] in a very complete way for many years, I’ll just be frank about that,” said GM Executive VP Mark Reuss in 2015.
Since then, GM has gotten much more interested in developing EV technology in-house. In September, it announced a new family of integrated electric drive units and an innovative wireless battery management system (something even Tesla doesn’t have!). Is it government regulation that’s driving GM’s latest power surge? Not likely: the current US administration has gutted federal emissions standards, a policy that GM enthusiastically supports; in Europe, regulation is driving a boom in EV production, but GM pretty much pulled out of the European market in 2017. The catalyst for GM’s increasing interest in EVs is the spectacular success of Tesla’s Model 3.
Other automakers are turning up the voltage too, and it’s not hard to connect the dots between their efforts and the growing domination of Models 3 and Y, and the looming threat of Cybertruck. When Ford unveiled its Mustang Mach-E electric SUV at a site next door to Tesla’s design studio in Hawthorne, California, was that really “a coincidence,” as a smiling Bill Ford claimed? Is it a coincidence that the most promising of the new wave of EV startups, including Rivian and Lucid, all have Tesla alumni in key executive positions?
Tesla’s technical advances might seem to benefit only Tesla, but in fact they advance the entire EV industry both directly and indirectly. Tesla’s adding LG Chem and CATL to its roster of cell suppliers, and that will mean more economies of scale for these companies and their suppliers. Auto brands that have long boasted about their cars’ 0-60 times are now having to put asterisks in their ads, and admit that Tesla has them beat. The upcoming Plaid Mode Model S may seem like a frivolous toy, but its development will have an impact on the entire auto industry. As David Havasi recently wrote in CleanTechnica, the super-Tesla “shows, unequivocally, that an all-electric powertrain is better than a gasoline powertrain could ever possibly be. And this technology will undoubtedly trickle down to more affordable vehicles via economies of scale.”
The world’s transportation system must, and will, be electrified. Tesla can’t pull off this enormous transformation alone, and that was never the plan. The electrical efforts of Big Auto (and trucking, shipping and aviation) are slowly but steadily gathering speed, and that’s good news for today’s consumers, and for the future of humanity. Make no mistake—Tesla has been, and continues to be, the catalyst for this revolution.