Tesla’s “Flywheel” Approach Is The Secret To Its Success
In physics, a flywheel is a rotating disk that stores kinetic energy in its momentum and then spins that energy out to a nearby engine. In the context of business, as the flywheel rotates, it increases output or revenue without increasing input or cost.
Tesla, best known for being an all-electric car company, is, well, much more than just a car company. It has disrupted a legacy industry with a new business model and consumer approach. But Tesla didn’t stop there. It expanded to new industries, grabbed a stake in key infrastructure sectors, worked to decentralize power distribution, and now offers a new alternative to today’s utility industry. Tesla’s end products are state-of-the-technological-art — all of which interconnect in a flywheel that incites consumer allegiance across multiple sectors and keeps those consumers coming back to Tesla for more — in a flywheel effect, essentially.
Tesla’s mission statement is: “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” Today, Tesla builds not only all-electric vehicles, but also scalable clean energy generation and storage products, all part of a business model that prods the world to stop relying on fossil fuels and move towards a zero-emission future.
The intersecting notions of a flywheel in this article were inspired by Post Corona — From Crisis to Opportunity, by Scott Galloway (2020). The book draws upon the metaphor to suggest that, when today’s consumers are introduced to one product within a brand, they are more likely to purchase other products within that same brand. Companies today, Galloway explains, should be focusing on the reciprocal nature of consumerism so that the lure of one product leads consumers to other, different products made by the same company.
In the book, the author, an NYU Stern School of Business professor, unpacks how “tech” used to be a “narrowly defined industry consisting of companies that made computer hardware and software, which companies in ‘other’ industries bought for their business.” No longer is tech so specifically grounded. As an example, Galloway explains that combined tech/auto company Tesla appeals “through every aspect of its strategy: pricing, production, marketing, and even its leadership.”
In a February regulatory filing, Tesla acknowledged CEO Elon Musk’s numerous commitments. “Although Mr. Musk spends significant time with Tesla and is highly active in our management, he does not devote his full time and attention to Tesla,” the filing indicated. It described Musk’s leadership in SpaceX and “other emerging technology ventures.” Musk’s influence extends beyond Tesla to a company that merges the human brain with computers, Neuralink, along with a tunnel-building firm, The Boring Company.
In essence, the Tesla flywheel concept suggests that a person who purchases a Tesla Model 3 is more likely to add range at a Tesla Supercharger and eat at a Tesla restaurant. Later, when growing into other renewable energy options, that same consumer is more likely to choose Tesla Solar and Powerwalls over a competitor’s offerings. And who knows what else?
The Tesla flywheel concept makes the company very appealing to some investors. In fact, Canaccord Genuity estimates that Tesla will reach $8 billion in revenue by 2025.
Tesla Energy Storage alongside Use
The Tesla company website acknowledges that “electric cars, batteries, and renewable energy generation and storage already exist independently, but when combined, they become even more powerful.” That confluence is the essence of the Tesla flywheel.
EVs and other renewable energy sources rely on batteries, and Tesla has refused to relinquish its full autonomy as it grows into different products and sectors. As elsewhere, Tesla is planning for its own battery production in China and has been advertising for technicians for its Shanghai facility in recent months, part of better per unit profitability in the region.
The Tesla Energy division provides stationary storage batteries for residential (Powerwall), commercial (Powerpack), and utility-scale (Megapack) applications. Musk has noted on several occasions that Tesla Energy could someday become bigger than Tesla’s automobile business.
Storage is not just about enabling renewable energy — it’s also an important tool for ensuring the reliability of the grid, smoothing out peaks in demand for power, and preventing sudden surges that can overload local distribution systems.
Tesla’s Core Electric Vehicle Catalog
New regulations on safety and vehicle emissions, technological advances, and shifting customer expectations are bringing electric vehicles (EVs) into the consumer transportation mainstream. The Tesla flywheel is evident within its EV business model, which is based on 3 levels of consumer service: selling, servicing, and charging its electric vehicles, which maintains control over sales and service.
The Washington Post says that Musk’s “impulsive leadership” has vaulted Tesla from its initial entry “as an upstart electric vehicle pioneer to the world’s most valuable automaker.” Fortune named him its 2020 Businessperson of the Year.
An international network of Tesla-owned showrooms and galleries, mostly in urban centers, is based on direct sales and service, not franchised dealerships. The showrooms are complemented by internet sales as well as Service Plus centers. In some areas, Tesla mobile technicians make house calls, and service can even occasionally be delivered remotely — without ever physically touching the car.
Tesla has created its own network of “supercharger stations” where drivers can charge their Tesla vehicles in about 30 minutes using a proprietary network. The highly anticipated “Full Self-Driving” suite will be another way of allowing longer and safer road trips.
Future additions to the Tesla catalog include the Cybertruck, an all-electric pickup truck with angular proportions and stainless steel exoskeleton, and a Semi, which will invigorate long-haul trucking with more benefits for drivers and transit companies.
The Tesla Gigafactory Flywheel Phenomenon
Tesla’s has 4 “gigafactories” (‘giga’ stems from gigawatt-hour, or GWh, here):
- Giga Nevada — in Sparks, near Reno, Nevada;
- the Solar City Gigafactory at Buffalo, New York (Giga Buffalo? Gigafactory 2?);
- Giga Shanghai — the 2019 Tesla plant in Shanghai, China; and,
- Giga Berlin — the new European Tesla gigafactory, which is being constructed in Grünheide, near Berlin, Germany.
Three main gigafactory features are part of the Tesla flywheel phenomenon.
- Separate from their scale, Tesla’s organization of production reverses much current conventional wisdom regarding production geography. For example, Tesla’s automotive facility in Fremont, California, reconcentrates manufacturing onsite as in-house brand componentry, especially heavy parts, or by requiring distant global suppliers to relocate in proximity to the main manufacturing plant.
- As an electric vehicle producer, Tesla’s production and logistics infrastructures are important in meeting greenhouse gas mitigation and the reduction of global warming.
- Tesla’s deployment of Big Data analytics, artificial intelligence (AI), and predictive management are important. Gigafactory logistics contribute to production and distribution efficiency. Company effectiveness is a primer for all future industry and services as they seek to minimize time-management issues. Methods of reduction of wasteful energy usage become evident through dataset analysis.
Tesla’s global reach is extending to Europe and Asia. Tesla Motors India and Energy Private Limited was incorporated on January 8, 2021. Registered in Bangalore — the country’s technology hub — the company would start with sales and then potentially move on to assembly and manufacturing, Nitin Gadkari, India’s transport minister, said. Also see:
The Long Reach of Tesla’s Flywheel
Tesla solar customers from now on will buy power systems that feed exclusively to Powerwalls. Powerwalls will interface only between the customer’s utility meter and house main breaker panel, enabling a relatively simple install and seamless whole house backup during utility dropouts, according to Musk.
Updates reflect customer feedback — many people thought their battery-less solar system would work in a blackout, only to be disappointed when it didn’t. Moreover, Tesla consumers seemed eager to gain protection against blackouts, so streamlining the offerings into paired technologies made sense — and deepened the Tesla flywheel effect.
CleanTechnica’s Zachary Shahan has outlined the extensive list of internal “Tesla companies” and their immediate competitors. If there was any doubt about Tesla’s flywheel effect, look no farther than these intersections of products and consumer loyalty to understand Tesla’s ongoing and seemingly impossible accomplishments.
- Tesla Cars vs. BMW & Audi & Toyota & Honda — car manufacturing
- Tesla Network vs. Lyft & Uber — mobility services
- Tesla Supercharging vs. Electrify America & EVgo & Ionity & Fastned — fast charging
- Tesla Charging vs. ChargePoint & EVBox & many others — home/destination chargers
- Tesla Autopilot vs. Mobileye/Intel & Waymo & Cruise/GM & Nvidia — self-driving/driver-assist tech
- Tesla Solar vs. Sunrun & Vivint Solar — solar panel installation
- Tesla Solar Tech vs. SunPower & Trina Solar — rooftop solar generation tech
- Tesla Energy Storage vs. AES & SimpliPhi & sonnen — stationary energy storage
- Tesla Grid Services vs. Utilities around the world & Stem — grid services
- Tesla Insurance vs. Allstate & Geico & State Farm — insurance
- Tesla Stores vs. Auto dealerships — auto sales & service
- Tesla Trucks vs. Freightliner/Daimler & MAN Truck and Bus & Scania & Iveco — semi trucks
- Tesla Infotainment vs. Apple & Google — in-car infotainment
- Tesla Computers vs. Nvidia & Intel — computer chips, systems on a chip, supercomputers
- Tesla Batteries vs. LG Chem & CATL & Panasonic — battery cells
- Tesla Seats vs. Faurecia & Johnson Controls & Lear Corporation & TS Tech & Toyota Boshoku — automotive seats
- Tesla Robots vs. Kuka & ABB & Yaskawa Electric Corporation — industrial robots for manufacturing
Tesla offices in Fremont, California. Photo by Zachary Shahan, CleanTechnica.
A new bill introduced Friday by US Senator Angus King of Maine could unlock the true potential of electric school buses and provide stability to communities in need. The BIDIRECTIONAL Act would “create a program dedicated to deploying electric school buses with bidirectional vehicle-to-grid (V2G) flow capability.”
Zero-emission electric school buses are being deployed nationwide as state leaders and school districts look to protect the children and communities they vow to serve. New information shows school districts that replace just one diesel school bus with an electric one can reduce toxic emissions by 54,000 pounds a year.
However, the benefits of electric school buses don’t stop there. The massive batteries they utilize also make perfect energy storage devices. Several automakers and charging companies are experimenting with vehicle-to-grid (V2G) technology that enables vehicles to send energy back to the grid.
Manufacturers of electric pickup trucks (like the Ford F-150) and other EVs have dived into bi-directional charging, but this technology makes even more sense for electric school buses because they have large batteries that sit most of the day. To illustrate this point, Thomas Built Buses partnered with Proterra to show two electric school buses can send 10 MWh total back to the grid, enough to power around 600 homes.
Senator King wants to capitalize on this ability with the BIDIRECTIONAL Act to promote the widespread deployment of electric school buses with V2G capability to improve community stability.
The BIDIRECTIONAL Act is designed to accelerate adoption of EV school buses while using them for more than just a ride to school.
According to Senator King, the BIDIRECTIONAL Act will:
- Establish a Department of Energy (DOE) program to roll out electric school buses designed with V2G capabilities in communities that need them most.
- Require the DOE to report on current V2G initiatives (such as Thomas Built and Proterra) while also requiring electricity providers to consider bi-directional integration.
Senator King commented on the initiative, stating:
Vehicle-to-grid school buses are another common sense tool that can help to create a reliable grid, promote clean energy, and cut costs for local towns and school districts.
Adding:
The BIDIRECTIONAL Act will assist school districts across Maine and America transition to electric buses and make sure these vehicles provide greater stability to their communities. Combined with electric bus investments in the Inflation Reduction Act, this will be an important step towards unlocking America’s clean energy future. It’s a simple, win-win bill and I hope it can get bipartisan support across Congress.
Several major electric school bus makers and other organizations are backing the bill, such as Blue Bird, Highland Electric, Lion Electric, Nuuve, Proterra, and Xcel Energy.
Electrek’s Take
Electric school buses with V2G are a no-brainer. Not only will they reduce greenhouse gas emissions, protecting the communities they serve, but they can also play a key role in providing energy stability to communities in need.
The Environmental Protection Agency (EPA) just announced it would be nearly doubling EPA clean school bus program funding to $965 million in its initial round . Federal funding is a huge first step, but strong state leadership is also necessary if these clean machines are going to become widely adopted. Virginia, for example, just surpassed 500,000 electric school bus miles driven thanks to a state initiative to roll out 13,0000 electric school buses in 2019. They now have the nation’s second largest fleet of electric school buses.
I believe Senator King is wise in proposing this bill. I truly believe electric school buses have unlimited potential waiting to be unlocked, and the BIDIRECTIONAL Act can do just that.
FTC: We use income earning auto affiliate links. More.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.
The Environmental Protection Agency (EPA) announced Thursday that the agency will almost double its funding for electric school buses to close to $1 billion after school districts from all 50 states applied for rebates.
Electric school buses are quickly taking over streets around the US as school districts and state leaders see how they can benefit the communities they serve in.
According to Dominion Energy, a power provider promoting the use of EVs for a cleaner and sustainable future, replacing one diesel bus can reduce greenhouse gas emissions by 54,000 pounds annually.
With help from Dominion’s initiatives, the second largest electric bus fleet in the US just crossed 500,000 service miles. By implementing EV buses, Virginia school districts were able to avoid 447.7 short tons of greenhouse gases.
These toxic fumes are known to creep into the bus’s interior while the bus is idling, harming the health of students taking them every day. A 2002 Yale study found dangerous particle levels were five to ten times higher while buses were stopped.
Although new standards have come along since then, it’s still not enough to limit the exposure when you can cut it out altogether.
Not only do electric school buses produce zero emissions, but they can also save school districts money on fuel and repair costs in the long run. For example, The Modesto Unified School District in California, which ordered 30 Blue Bird EV school buses, expects to save $250,000 a year on fuel.
With federal and many state funding options, there’s never been a better time to convert to an all-electric school bus fleet.
EPA doubles funding for electric school bus fleets across the US
The EPA Clean School Bus Program, part of the Bipartisan Infrastructure Law, provides $5 billion in funding for electric school buses through the next five years.
The first round of funding, announced in May, was supposed to free up $500 million, but after overwhelming demand from school districts across all 50 states, the EPA will now be almost doubling it to $965 million.
The EPA received about 2,000 applications, amounting to nearly $4 billion in funding, with over 90% submitting for zero-emission electric school buses. Sue Gander, director of the electric school bus initiative at the World Resources Institute, highlights the demand for fully electric options, claiming:
There’s more to the story. The overwhelming demand for electric school buses, over any other fuel type, is striking. Applicants across the country chose electric buses over propane at a rate of 10 to 1. There’s no doubt we’re entering a new, electric era in student transportation, one with massive benefits for our kids’ health, climate and the economy.
With requests for over eight times the initial funding round, EPA Administrator Michael S. Regan said on the program’s success thus far:
America’s school districts delivered this message loud and clear – we must replace older, dirty diesel school buses. Together, we can reduce climate pollution, improve air quality, and reduce the risk of health impacts like asthma for as many as 25 million children who ride the bus every day.
The EPA said it’s “moving swiftly” to review applications and expects the list of winning applicants to be released in October 2022. Applicants will be selected through a lottery-based system.
Another $1 billion round of funding for electric school buses will be in the Fiscal Year 2023, according to the EPA. The agency plans the next funding program to launch in the next few months, including a grant competition.
However, more may need to be done. Senator Carper, chair of the senate committee on environmental and public works, talks about the need for further funding, saying:
Given the response to the availability of these dollars, it’s clear that more funding is needed. I look forward to working with Administrator Regan, the rest of the Biden Administration, and my colleagues in Congress to build on this progress so that more communities can realize the clean air and energy saving benefits of these cleaner vehicles.
Will we have access to more funding for electric school buses? Time will tell. If the initial demand is any indication, school districts are ready and willing. It’s time to get the funding to make it happen.
FTC: We use income earning auto affiliate links. More.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.
-
World3 days agoLabour MP Rupa Huq suspended and apologises after calling Chancellor Kwasi Kwarteng ‘superficially’ black
-
Environment3 days agoWatch Eviation’s all-electric Alice aircraft first flight
-
US3 days ago‘Take this very seriously’: Florida warned over Hurricane Ian as fuel and food stockpiled
-
Sports3 days agoIn the heart of Texas, old Southwest Conference rivalries run deep. But for how long?
-
Environment3 days agoWeather the storm with Anker’s 1,024Wh solar power station at $1,600 in New Green Deals
-
Technology3 days ago
A game about sheep is going viral in China even as gaming regulation remains tight
-
Business3 days agoKwasi Kwarteng to hold meeting with bankers as fallout from mini-budget continues
-
Business10 months ago
Deliveroo picks Goldman as broker despite US bank’s role on IPO flop