Updated: Mar 6
The Company Dives Deep into the Challenges and Offers a Compelling Future
Elon Musk is a genius, most will admit. His propensity to generate seismic shifts in the way we work and play by applying cutting-edge technology is legendary. How he accomplishes such feats as SpaceX, HyperLoop, The Boring Company, Tesla and others takes the collective brains and efforts of brilliant engineers and technologists – Elon attracts the best.
Mission: Accelerate the World’s Transition to Sustainable Energy
I discovered the depth of thinking and vision Elon and his band of superstars demonstrate when I reviewed the YouTube video entitled, “Battery Day is Coming.”
I highly recommend you spend the 40 minutes going through the video in its entirety. For those readers who prefer the Cole’s notes version, I’ve encapsulated what the hosts of the show “Now You Know” believe Elon & Co. are up to at Tesla to accelerate the world’s transition to sustainable energy. What they reveal is nothing short of revolutionary.
Tesla will soon be announcing its battery breakthrough – the Million Mile Battery or MMB. Collaborating with Panasonic in its development, Tesla plans to install the MMB into its electric vehicles (EVs), reducing costs and making the world’s most popular family of EVs that much more attractive.
Tesla plans to ramp up MMB production within its massive Gigafactories. MMBs use a new dry electrode technology that dramatically reduces the space, time, toxicity and cost required to produce batteries by eliminating the drying process involved with traditional wet electrolyte batteries. Further, MMBs do not suffer cycling degradation (the loss of battery life over many cycles of charge/discharge), so they last much longer – hence the moniker Million Mile Battery. Wow! By the way, they also cost less and offer significantly higher energy density than their predecessors.
Enticing Options Arise
The MMB offers up tempting options for Tesla to develop. Consider the idea of V2G or Vehicle-to-Grid. When you plug in a Tesla vehicle equipped with an MMB, the battery can absorb power from the electrical utility grid OR supply power to the grid. The MMB transforms the Tesla EV into a Virtual Power Plant.
If you’re a Tesla EV owner, solar panels (or perhaps Tesla’s electricity-generating solar roof tiles) on your home generate electricity to recharge your EV’s MMB. As long as your EV remains plugged in, the battery is available to provide power to the electrical grid (with your permission, of course). This stored energy, when multiplied by hundreds, thousands or millions of Tesla EVs, can provide widespread peaking power to full-sized electrical utility grids during peak demand. Battery-sourced peaking power from EVs, derived from renewable sources, could replace fossil-fuel-burning and GHG-spewing peaking generators that are commonly used by your friendly electrical utility.
Controlling the Shift Requires the Right Software
Tesla is developing the software to control charging and discharging the battery energy in a V2G system. Known as Autobidder, this program consists of sophisticated algorithms that account for load forecasting, predicting the price and generation of electricity, optimizing the dispatch of power, and handling the process of ‘smart’ bidding to ensure the costs of electricity to all users is always the most favorable.
Autobidder does all the work of identifying your EV as part of an aggregated Virtual Power Plant system. The program allows your EV to supply power as required within the parameters you set. For example, you control the hours your battery is available to the grid and how far to discharge your battery’s capacity. Autobidder will recharge your battery when demand and electrical prices are low, ideally from sustainable solar-generated power sources if available. Similarly, it will discharge your battery when demand and electrical prices are high during peak events. Autobidder will meter and calculate net payments for the energy supplied and consumed by your EV whenever it’s connected to the grid.
Tesla as an Electrical Utility
Traditional electrical utilities have no way to store the electrical energy they generate, resulting in plenty of wasted costs due to oversized and underutilized assets. Tesla’s Virtual Power Plant and V2G concept solve this problem across the board. So… (surprise!), Tesla recently applied for a power utility license in the UK. The company has all the pieces it needs to become a power utility.
It enjoys the advanced battery technology to enable vehicle-to-grid energy swapping – every Tesla vehicle is a battery on wheels that can supply energy.
It is developing the Autobidder software capable of transforming Tesla EVs into rolling Virtual Power Plants.
Aggregating the multitude of Virtual Power Plants, the company offers a renewable electrical source utility-wide that it created and controls.
For a Virtual Power Plant program to work, Tesla needs to assume control of a vehicle’s battery to operate the charge/discharge feature demanded by the electrical grid. Until the advent of the MMB, it made no sense for EV owners to participate in such a deal. Why? Because allowing Tesla to cycle your vehicle’s conventional battery when it’s plugged in would degrade the battery’s life.
However, cycling is no problem for an MMB-equipped Tesla EV. By joining the Virtual Power Plant program, Tesla EV owners will be paid for the times their batteries supply power to the grid. Since cars are generally parked 95% of the time, it only makes sense to use them as revenue generators in this manner, as otherwise, they merely remain depreciating assets.
And another point worth mentioning – the batteries on a Tesla EV store a lot of juice. The Model 3, for instance, stores 75 kilowatt-hours of energy – enough to supply the average North American household for two days or more. That’s a handy Plan B to manage through an extended power outage.
Why Bother, Tesla?
Why would Tesla want to go to all the trouble and complexity to create Virtual Power Plants of its vehicles? The quick answer is that such a move is a great way to increase revenues. Presently, there are about a million Tesla EVs on the road that could be retrofitted with the MMB and used in a Virtual Power Plant network. That’s not only a lot of batteries to manufacture and cars to retrofit, but a huge source of renewable electricity that can be tapped and sold.
But Tesla Vehicles are Expensive! Or, Perhaps Not…
Since Tesla controls the battery in the EV when connected to the Virtual Power Plant network, the company may as well own the battery and simply lease its use to the EV owner. Since the battery represents a significant chunk of an EV’s cost, leasing that component reduces the sticker price dramatically. Yes, Tesla would now profit from energy sales to the network. Still, it remains on the hook for battery repair, maintenance, and replacement for the duration of your vehicle ownership.
There’s Value in Them Thar Ol’ Batteries
Tesla has a plan for replacing and managing all the conventional batteries found in their current vehicles. They will be recycled and turned into new MMBs much more economically than mining the materials and manufacturing new MMBs from scratch. Also, individual cells of the old batteries that remain in good condition can be redeployed in large grid-scale batteries for energy storage on the Virtual Power Plant grid, incurring minimal manufacturing costs.
By retrofitting your Tesla EV with a less expensive and more powerful MMB, its value jumps significantly. It now boasts an extended range and charges more quickly – key performance enhancements. If you decide to own the battery, you could generate cash by selling power to the grid. Should you choose to lease the battery from Tesla, your EV purchase price plummets, and Tesla pays for battery care for as long as you own the vehicle. Plus, your car doubles as a powerful mobile generator that can power your home in the case of power outages.
A Classic Win-Win
Tesla stands to make a lot of money by creating its aggregated Virtual Power Plant network. But the concept requires a critical mass of its MMB-equipped EVs on the road and participating. It stands to reason the company is motivated to sell more of its new EVs by dramatically reducing the cost of EV ownership, improving EV performance, and making it convenient for EV owners to plug into the grid. The MMB makes all this possible.
Think of the possibilities! Tesla solves the whopping challenge of ensuring electrical utility capacity can support the wholesale shift from fossil-fuel-powered vehicles to electric vehicles by using the vehicles (equipped with MMBs and supported by the right software and infrastructure) to contribute the needed power. GHG emissions plummet. We breathe easier. People enjoy the quiet, economical, and sustainable power and mechanical simplicity of EVs.
Everybody goes away happy. Well, almost…
Is This the End of the Big Three?
Who should be sweating Tesla’s efforts? Surely the fossil fuel supply industry must be worried. How about those companies manufacturing fossil-fuel-powered peaking generators presently supporting electrical utilities? And, of course, every other vehicle manufacturer on the planet...
Tesla appears to have such an overwhelming edge over its competitors that we can reasonably conclude there will be several famous legacy companies succumbing to consolidation and irrelevance.
Time to buy TSLA?
Incredible – Tesla seems to have thought through every angle to make this a no-brainer decision for consumers and investors alike. The company appears to be well-positioned to deliver on its mission of transitioning the world to sustainable energy.
Perhaps it’s time to buy a few shares of Tesla. Maybe with the funds generated by shedding shares of long-standing car manufacturers and oil and gas companies.
Whatever the outcome, expect significant changes. These are fascinating times we live in, are they not?