On March 1, Tesla held an investor day. Musk and Tesla executives made a collective appearance and explained the underlying logic of Tesla's business and products from various angles. This article begins with Musk and Drew Baglino, senior vice president of powertrain and energy engineering, jointly describing the third chapter of Tesla's grand plan.
The video is about 27 minutes long, and the number of texts is about 7,000.
Source video: Tesla / Translation and subtitles: Rubble Villager
The rubble is focused
* The most important message we want to convey today is that there is a clear path to a sustainable energy planet that does not require the destruction of natural habitats, the return to simple living, the cessation of electricity, and the return to cold.
* The number of people who can sustainably support the world is well over eight billion.
* The planet can and will move towards a sustainable energy economy in your lifetime.
Only one-third of global energy (from fossil fuels) actually ends up doing meaningful work or providing heat.
* An electrified economy requires only half the energy of the internal combustion engine.
* An electrified economy requires less mining than the current economy.
* In terms of annual investment, building a sustainable energy economy costs less than maintaining a fossil fuel economy.
* Wind and solar power, which require less than 0.2% of the Earth's land area.
* All cars will be fully electrically electric and autonomous. Riding in a gasoline car without self-driving features will be similar to riding a horse and using a flip phone in the future.
* From a utility perspective, the more autonomous driving a fleet has, the smaller the fleet size required.
* At the peak of the day, when electricity is generated more than demand, then you generate a lot of heat. Then you use the heat generated and stored when you are active with solar or wind energy, and constantly transfer it to industrial processes.
* Hydrogen will not, and should not be, widely used in transportation.
* Lithium is common, and the limiting factor is the refining of lithium into battery-grade lithium hydroxide or lithium carbonate, which is the real limiting factor.
* Only airplanes, long-range vessels, ultra-high endurance cars or trucks need nickel. The main burden of electrification will fall on iron-based batteries. Iron is actually the most common element on earth.
* Our rough estimate suggests that [Sustainable Energy Earth] would require about 240 terawatt hours, or 240,000 GWh of batteries.
* Our goal is to produce 20 million electric vehicles and 1 terawatt-hour of stationary energy storage per year
Full text of the speech
Elon Musk:
Okay, Tesla's ambition chapter three.
As Zach mentioned, the most important message we want to convey today is that there is a clear path to a sustainable energy planet, without destroying natural habitats, without us returning to simple life, without stopping using electricity, and without going back to cold.
For this full story, we publish a detailed white paper with all our assumptions and calculations. We say there is a clear path to a fully sustainable, rich planet.
In fact, we can support a civilization much larger than the planet, sustainably supporting well over eight billion people worldwide.
And very few people realize this, and I am often shocked and surprised by this. Most smart people I know don't see this clear path, and they think that there is no path to a sustainable energy future, or at least with our current population, there is no sustainable path, or that we have to take extreme measures to do so.
None of these ideas are right.
Through calculations, we will understand how to create a sustainable energy civilization.
Drew Baglino：
Frankly, the status quo is that our current energy economy is dirty and wasteful.
More than 80% of global energy, primary energy, comes from fossil fuels. And only one-third of these global energy sources actually end up doing meaningful work or providing heat.
This is a statement about the problem, and what we are going to talk about today is the solution.
Elon Musk:
I'll elaborate on some of these points, as the technical backgrounds of the audience range from professional ninth-level magicians to people who don't work in engineering at all.
If you have a gasoline car and less than one-third of the energy in the gasoline, it may usually only be converted to the operation of the car, and the rest is turned into waste heat, which does not actually help at all.
Even just extracting oil out of the ground and refining it requires a lot of energy, including transporting gasoline to gas stations.
Considering all this, for a typical gasoline car, all things combined, the operation from oil to vehicle actually uses less than 20% of the energy.
We see that when people calculate what it takes to create a sustainable energy planet, they assume that electrified civilizations and internal combustion engine civilizations require the same amount of energy.
This is not true, because most of the energy of the internal combustion engine is converted into waste heat.
Drew Baglino：
From the initial combustion of the fuel to its conversion to the end use, there are significant losses in the process.
This is primary energy consumption, 165 watt-hours per year. A beat of watt-hours is a trillion kWh, which is a large energy consumption.
The benefit of an electrified economy is that the total energy use is halved through the ultimate efficiency and efficiency gains at each step.
This is one of the most beneficial aspects of electrifying everything, and a sustainable energy economy is actually easier to achieve. Its problem statement is half the size of a fossil fuel economy.
Elon Musk:
And we're conservative, maybe less than half, but we try to make reasonable assumptions and not be overly optimistic, and in fact we're slightly pessimistic.
It may be less than half, but it's easy to argue that an electrified economy requires only half the energy of the internal combustion engine.
Drew Baglino：
So, what does the grand plan look like, do you want to talk about it?
Elon Musk:
Yes, it is not yet possible, but what is needed on a very large scale is a lot of battery storage. Our rough estimate suggests that about 240 terawatt-hours, or 240,000 GWh of batteries. That's a lot of batteries, but it's actually a fairly likely quantity, which we'll cover later.
The above is a combination of electric vehicles and stationary energy storage.
If you have solar or wind energy, you have to store energy when the wind is not blowing and the sun is not shining. Let's assume that the ratio of stored energy to electricity power is 8 to 1, so that is 30 terawatts of electricity.
Capital expenditures for production investment are estimated to be close to $6 trillion, but we raise that figure to $10 trillion.
Drew Baglino：
And that involves mining, refining, battery plants, recycling, car plants, all the things that need to be invested in order to build a sustainable energy economy, which we'll talk about next.
Elon Musk:
If you look at the world economy, it's probably less than $100 trillion. If this total investment is spread over 10 years, it is 1% of the global economy; In 20 years, that's 0.5 percent of the global economy. Yes, this is not a big number relative to the global economy.
As Drew mentioned, an electrified economy requires only about half the energy compared to the internal combustion engine economy.
And in terms of wind and solar, how much land is needed?
Less than 0.2% of the Earth's land area.
In general, people don't realize how much energy reaches us from the sun, which is about one gigawatt per square kilometer. And the sun is not always shining, if you multiply the area by four or five to get continuous power, then you get the land area required for solar energy.
And you can usually put wind and solar in the same place. A lot of places that currently have wind energy, where you can install solar energy and double your energy.
Drew Baglino：
You can also put wind energy at sea, it doesn't need to be on land, wind energy is more flexible.
Elon Musk:
You can also put solar energy on the sea, 70% of the Earth is water.
In short, the point is that with very little land area on Earth, we can achieve fully sustainable energy.
Drew Baglino：
So, are there resources and raw materials to support this transition?
We will discuss this in detail, but we simply do not see any insurmountable resource challenges. In fact, we can eventually accomplish this by extracting less ore than the current fossil fuel economy. We will elaborate on this.
Elon Musk:
Yes, again, the electrified economy requires less mining than the current one.
Less than, not more than.
Drew Baglino：
That's the big picture, so let's talk about the details. Basically, there are five areas of work:
First, renewable energy generation and existing power grids.
Second, switch to electric vehicles.
Third, shift home, business and industrial heating to heat pumps.
Fourth, transport and store high-temperature heat for high-temperature industrial and chemical processes, and provide some hydrogen energy for chemical processes that require hydrogen.
Finally, aircraft and boats that use sustainable fuels.
It is these five areas, all of which we will cover in detail.
Elon Musk:
My personal opinion is that as we improve the energy density of batteries, you'll see all vehicles become all-electric, with the exception of rockets.
But you can make fuel from carbon dioxide and water, and you can make methane from carbon dioxide and water.
Drew Baglino：
This can be done with electricity alone.
Elon Musk:
Yes.
In fact, if we have any hope of reaching Mars at some point, where the atmosphere is carbon dioxide and there is water ice all over Mars. You can turn carbon dioxide and water into CH4, which is methane, and oxygen. Eventually, even rockets can be electrified.
Drew Baglino：
First, powering the existing grid with renewable energy will be an ongoing theme.
You'll see our estimated terawatt-hours and trillions of investment amounts at the bottom of the page.
This is happening before our eyes. In 2022, 60% of the new generation generated on the US grid will be solar. In fact, solar deployment is up strongly by 50% year-on-year through 2022. If we continue this trend, it will all come before we realize it.
Second, switch to electric vehicles. Again, this alone could reduce fossil fuel use by 21%.
It's clear that Tesla, like many other companies, is deeply involved in this change.
Overall, EV production in 2022 will increase by 59% year-on-year, and the market share of EVs will reach a staggering 10%. It's an amazing milestone and I'm super excited about it.
Elon Musk:
This is obviously happening very quickly, and I think all cars will be fully electric and self-driving. Riding in a gasoline car without self-driving features will be similar to riding a horse and using a flip phone in the future. That's basically going to be it.
Drew Baglino：
We actually take a slightly conservative assumption when it comes to how many batteries are needed. Because from a utility perspective, the more autonomous a fleet is, the smaller the fleet size required.
We didn't take all of these extra advantages into account, or not too many extra advantages in this number.
What will the size of the fleet look like?
Our rough view, of course we may be wrong, but you can see the types of vehicle breakdown in millions.
Our goal is to produce 20 million electric vehicles per year.
Elon Musk:
Yes, with the realization of autonomous driving, fewer vehicles will be required, especially passenger cars.
There is some debate about this number, but it is a little less than the total number of vehicles needed today. Today, there are about 2 billion cars and trucks in operation in the world.
Drew Baglino：
We're showing only about 1.4 million here. That's about 1.4 billion, and the fleet size has become smaller.
The figure used in this presentation is that 85 million cars are produced each year. All of this just gives you a sense of how we think about this.
Again, we're going to put all of these assumptions online and encourage you to think about it.
Elon Musk:
Yes, we are basically rapidly moving towards an electrified or autonomous future.
Drew Baglino：
It's exciting, and one of the reasons electric vehicles are so competitive is the ultimate efficiency.
The Tesla Model 3, from the well to the wheels, is four times more efficient than the Toyota Corolla. It's all about how efficiently electricity is delivered to cars in a sustainable energy economy, and cars convert stored energy into efficiency to run on the road.
Compared to Toyota Corolla's engine, and extracting, refining, and delivering distributed gasoline to Toyota Corolla, an interesting reference, the Model 3 can travel more than a mile with the energy to boil a pot of water for cooking pasta. It can then drive another mile with the energy from cooking the pasta.
Spaghetti weighs a pound, while the Model 3 weighs 4,000 pounds. It doesn't take a lot of energy to start the Model 3, a 4,000-pound object.
Elon Musk:
In addition, the heat is much greater than the energy required for the vehicle to operate.
Drew Baglino：
However, people can casually boil a jug of water. It's interesting how efficient these cars are.
Next, switch to heat pumps in homes, businesses, and industries.
Currently, heat pumps cover 10% of a building's heating needs. The installation rate is increasing by 10% year on year, which really needs to be accelerated. In business and industry, heat pumps can serve thermal applications up to 200 degrees Celsius.
From an investment perspective, as you can see on this page, this is actually the easiest to achieve in terms of replacing fossil fuels.
You might ask, then, what exactly is a heat pump?
Heat pumps do not create heat, they transfer heat. For example, the natural gas in your home is generating heat itself. But what heat pumps do is transfer heat from outside your house to your house. They're air conditioners, or refrigerators in reverse.
We are surrounded by heat pumps, they are all over this factory, and you have them in your home. We need to replace fossil fuel-fueled heating in all homes, businesses and industries wherever possible.
From an energy efficiency perspective, the total energy required to heat these buildings can be reduced by three times. Clearly, this is the right thing to do.
Elon Musk:
Yes, heat pumps. Now our cars are equipped with heat pumps by default, and at some point, maybe we will produce heat pumps for families.
Drew Baglino：
Yes, maybe, maybe.
Next, we will introduce the electrification of high-temperature industrial chemical processes. More than 50% of industrial heat is greater than 400 degrees Celsius. Cement, steel, fertilizer, chemicals, plastics, metal refining, all need about 1500 degrees Celsius. We need a solution.
At the end of the day, it's purpose-built equipment that can be electrified. Carbon, graphite is stable below 2800 degrees Celsius. There are other options in the 1500 degree Celsius range, such as silicon carbide and some other materials.
The idea here is that when renewable energy is available, you create and store heat. If it's a sustainable energy economy, and renewables are intermittent, generating more electricity than demand during peak times of the day, then you're generating a lot of heat. Then you use the heat generated and stored when you are active with solar or wind energy, and constantly transfer it to industrial processes. That's the concept.
Then on the hydrogen side, we also need green hydrogen for metal decarburization and chemical refining processes, including the use of synthetic ammonia for steel manufacturing.
Today, about 120 million tons of hydrogen from fossil fuels are used for this purpose. Hydrogen can also directly replace coal. Coal is currently used in steel production in a process called direct reduced iron. You can replace the blast furnace with a hydrogen shaft furnace direct reduction.
Doing so removes fossil fuels and the carbon dioxide associated with them from this part of the economic activity.
Elon Musk:
There's some room for discussion here, but I think in industrial processes, a certain amount of hydrogen is needed.
My personal view is that hydrogen will not, and should not be, widely used in transportation. If you're going to use some kind of chemical fuel, you should use methane, not hydrogen. Nevertheless, hydrogen is needed in industrial production processes, and hydrogen can be produced by splitting water.
Drew Baglino：
This has been going on for decades, and this is not rocket technology.
Finally, a small but necessary piece of the puzzle is airplanes and boats that use sustainable energy.
Shipping accounts for 3% of global CO2 emissions and is ripe for electrification. Even with lithium iron phosphate, long-haul ships can be powered entirely by batteries, which is an opportunity well suited for electrification.
Energy density is a bit difficult for aircraft, but today short-haul flights are achievable with some improvements, and long-haul flights need to be solved. Even in the meantime, we can use surplus renewable electricity to produce and store sustainable aviation fuel. In this area, there is a lot of work going on.
Elon Musk:
To really get lithium batteries for long-haul flights and long-haul shipping, you need to redesign ships, not just ...
And planes. In order to take advantage of new energy sources, a different architecture is required.
It's like you wouldn't take a gasoline car and stuff a battery into it to make an electric car, which is very unreasonable.
It is much more efficient to make the battery part of the car's structure, which also makes it more mass-efficient and optimized for the battery.
If desired, I think you can achieve a long-range aircraft with a battery of about 0.45 kWh per kilogram. In fact, you can buy these batteries right now. It's expensive, but I think the price will come down.
Drew Baglino：
We added all of these efforts together and ended up with the numbers we shared at the beginning of the talk: 30 terawatts, 240 terawatt hours, $10 trillion.
And you might say, I need some background information, is it all feasible?
Spoiler alert, this is totally doable.
From a growth rate perspective alone, how many resources do we need to scale up the deployment of these technologies?
The deployment of solar and wind energy has only achieved a threefold growth rate. Solar energy is already growing at an alarming rate, and so is wind energy. This gap will soon be closed.
If we look at electric vehicles, they have to grow 11x, compared to 60% year-over-year last year. This gap will also close very quickly.
Finally, there is storage. Tesla's energy storage business, since 2016, has grown at a compound annual growth rate of 65%, and the global energy storage business is also accelerating. All of these gaps will close, especially as the transition to sustainable energy accelerates.
Of course, our goal on this page is to produce 20 million electric vehicles and 1 terawatt-hour of stationary energy storage per year, and we want to achieve these goals as soon as possible.
And what about this investment amount? What is the reference for this investment amount?
Elon mentioned that it is 10% of the world's annual GDP. Another way of thinking about it, how does it compare to our investment in fossil fuel infrastructure last year? It is 60% of this investment.
In fact, in terms of annual investment, building a sustainable energy economy is less expensive and feasible than maintaining a fossil fuel economy.
Can the Earth adapt to this change?
Absolutely, less than 0.2% land. For reference, the total area of land intensively cultivated today is 12.5% of all land. You drive around and you'll see some cultivated land, but they're not available everywhere. The difference between arable land and the land we are talking about for sustainable energy is more than an order of magnitude.
Elon Musk:
And it doesn't need to occupy farmland, or forests, or jungles, or any kind of ecological reserve. It can be used in desert areas with very sparsely populated populations.
Drew Baglino：
Land areas that are not suitable for development or other uses. 0.2% of the area, can be applied to many places.
Elon Musk:
Yes, there is basically no significant ecological impact. In fact, the transition to a sustainable energy economy could significantly reduce the current ecological impact.
Drew Baglino：
That's a good statement.
So, what about mineral extraction?
This is a cartoon that gives you a sense of all the ores and minerals mined from the earth every year, which is about 68 billion tons, and each truck represents 1 billion tons.
What would all this look like in a sustainable energy economy?
It will be like this, the extraction of fossil fuels is gone. Instead, materials needed to achieve a sustainable energy economy. The amount required is actually reduced.
That's not to say that we don't need to continue to explore, mine and refine the specific materials needed for a sustainable energy economy, we do.
But, looking at what has happened on the planet, investment in large-scale material transfers is quite achievable. This is no different from what we have done and are doing.
Then, we calculate it element by element.
Resources are used to support the transition. This is relative to the U.S. Geological Survey's resources today as cumulative demand until 2050 in order to transition to a sustainable energy economy. We are not breaking the resource limits of any one material.
Then, see what really happens as we move forward. History tells us that the more we explore, the more we discover.
The idea is, oh, there's only so many resources, and it's going to be reduced next year because we're going to mine them. And the reality is that when we extract resources, we find more.
On the right, you can see the reality of the key materials needed for a sustainable energy economy. Since 2000, with the development of a sustainable energy economy, the development of Tesla, and the development of all the surrounding industries, the actual supply of resources has increased, not decreased.
Elon Musk:
Yes, there seems to be quite a bit of confusion about lithium.
Lithium is very common and it is one of the most common elements on Earth. No country can monopolize, or even come close to, lithium. The U.S. has enough lithium to electrify the entire planet. Even if only the U.S. produces lithium, domestic materials would be enough to electrify the entire planet.
Lithium is common, and the limiting factor is the refining of lithium into battery-grade lithium hydroxide or lithium carbonate, which is the real limiting factor.
Drew Baglino：
The same is true for other materials.
Again, these aren't crazy technologies, they just need to be invested. And these investments, the scale is not huge, they just need to exist.
Elon Musk:
Of all these problems, nickel is probably the most difficult one to solve. But as we show in the chart, maybe we need 30% of the world's known nickel reserves.
Drew Baglino：
And nickel reserves have actually increased since 2000.
Elon Musk:
Yes.
And only airplanes, long-range ships, ultra-high-endurance cars or trucks need nickel. The main burden of electrification will fall on iron-based batteries. Iron is actually the most common element on earth.
A little fact, if you ask, what is the Earth made of? In terms of mass, it is mainly composed of iron, followed by oxygen, and then other elements. Basically, the Earth is a muddy ball of rust.
Iron is definitely inexhaustible because there is too much and too much iron. Yes.
Drew Baglino：
And at the end of the day, we mine, we produce these batteries, and then we recycle those batteries. We do this ultimately to build a sustainable energy economy.
And because of battery recycling, the amount of ore maintenance we need is reduced by an order of magnitude.
Ultimately, a sustainable energy economy is within our reach. We should hasten its arrival.
Elon Musk:
Yes, that is indeed the main message we are going to deliver today.
I sincerely hope that today's event is not just for Tesla investors who own stocks, but for any investor on the planet.
What we strive to convey is a message of hope and optimism. Optimism is based on real physics and actual calculations, not wishful thinking.
The planet can and will move towards a sustainable energy economy, and that will happen in your lifetimes.
Thank you!
Drew Baglino：
Thank you!
I want to welcome Lars and Franz to the stage.
(above)
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