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.
Tesla has changed the meaning of “Full Self-Driving”, also known as “FSD”, to give up on its original promise of delivering unsupervised autonomy.
Since 2016, Tesla has claimed that all its vehicles in production would be capable of achieving unsupervised self-driving capability.
CEO Elon Musk has claimed that it would happen by the end of every year since 2018.
Tesla has even sold a software package, known as “Full Self-Driving Capability” (FSD), for up to $15,000 to customers, promising that the advanced driver-assist system would become fully autonomous through over-the-air software updates.
Almost a decade later, the promise has yet to be fulfilled, and Tesla has already confirmed that all vehicles produced between 2016 and 2023 don’t have the proper hardware to deliver unsupervised self-driving as promised.
Musk has been discussing the upgrade of the computers in these vehicles to appease owners, but there’s no concrete plan to implement it.
While there’s no doubt that Tesla has promised unsupervised self-driving capabilities to FSD buyers between 2016 and 2023, the automaker has since updated its language and now only sells “Full Self-Driving (Supervised)” to customers:
The fine print mentions that it doesn’t make the vehicle “autonomous” and doesn’t promise it as a feature.
In other words, people buying FSD today are not really buying the capability of unsupervised self-driving as prior buyers did.
Furthermore, Tesla’s board has just submitted a new, unprecedented CEO compensation package for shareholders’ approval, which could give Musk up to $1 trillion in stock options pending the achievement of certain milestones.
One of these milestones is Tesla having “10 Million Active FSD Subscriptions.”
At first glance, this would be hopeful for FSD buyers since part of Musk’s compensation would be dependent on delivering on the FSD promises.
However, Tesla has changed the definition of FSD in the compensation package with an extremely vague one”
“FSD” means an advanced driving system, regardless of the marketing name used, that is capable of performing transportation tasks that provide autonomous or similar functionality under specified driving conditions.
Tesla now considers FSD only an “advanced driving system” that should be “capable of performing transportation tasks that prove autonomous or similar functionality”.
The current version of FSD, which requires constant supervising by the driver, could easily fit that description.
Therefore, FSD now doesn’t come with the inital promise of Tesla owners being able to go to sleep in their vehicles and wake up at their destination – a promise that Musk has used to sell Tesla vehicles for years.
Electrek’s Take
The way Tesla discusses autonomy with customers and investors versus how it presents it in its court filings and legally binding documents is strikingly different.
It should be worrying to anyone with an interest in this.
With this very vague description in the new CEO compensation package, Tesla could literally lower the price of FSD and even remove base Autopilot to push customers toward FSD and give Musk hundreds of billions of dollars in shares in the process.
There’s precedent for Tesla decreasing pricing on FSD. Initially, Musk said that Tesla would gradually increase the price of the FSD package as the features improved and approached unsupervised autonomy.
That was true for a while, but then Tesla started slashing FSD prices, which are now down $7,000 from their high in 2023:
The trend is quite apparent and coincidentally began when Tesla’s sales started to decline.
FSD is now a simple ADAS system without any promise of unsupervised self-driving. This might quite honestly be one of the biggest cases of false advertising or bait-and-switch ever.
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The new Chevy Bolt EV is set to enter production later this year, with one fewer shift, following GM’s reduction in production plans at several US plants. Apart from the Bolt, GM promised a new family of affordable EVs. Are those, too, now at risk?
GM says more affordable EVs are coming, but when?
GM remained the number two EV maker in the US after back-to-back record sales months in July and August. However, with the $7,500 federal tax credit set to expire at the end of the month, the company expects a slowdown.
On Thursday, GM sent a note to employees at its Spring Hill plant in Tennessee, outlining plans to reduce output of two Cadillac electric SUVs, the Lyriq and Vistiq.
A source close to the matter confirmed the news to Reuters, saying the production halt will begin in December. GM will significantly reduce output during the first five months of 2026, according to the source.
GM is also delaying the second shift at its Fairfax Assembly Plant in Kansas City, where the new Chevy Bolt is slated to enter production later this year. The Bolt will be the first of a new series of affordable EVs that GM intends to build in Kansas.
However, those too, may now be in jeopardy. According to local news outlets, GM Korea Technical Research Center (GMTCK), a spin-off of GM’s Korean subsidiary, was recently cut out of a secret small EV project it was developing.
GMTCK president Brian McMurray reportedly announced internally last month during a trip to the US that the project was cancelled and only 30% to 40% complete.
A GM Korea spokesperson clarified that “the EV project being led by GMTCK was a global undertaking, not undertaken solely by GM Korea. The spokesperson added, “The project itself has not been canceled; the role of the Korean team has simply changed.”
The new electric car, dubbed “Fun Family,” was scheduled to launch under the Chevy and Buick brands, using a single platform. Production was expected to begin in 2027 with deliveries starting in 2028.
GM Korea exports over 90% of the vehicles it makes to the US, but with the new auto tariffs, the subsidiary is expected to play a drastically smaller role, if any at all. The news is fueling the ongoing rumors that GM could withdraw from Korea altogether.
In addition to the tariffs, South Korea’s recently passed “Yellow Envelope Law” could make it even more difficult for GM with new labor laws.
Will this impact the affordable EVs GM is promising to launch in the US? They are scheduled to be built in Kansas, but with the R&D Center, GM’s second largest globally, following the US, claiming to be excluded from a major global EV project, it can’t be a good sign.
In the meantime, GM already has one of the most affordable electric vehicles in the US, the Chevy Equinox EV. Starting at under $35,000, the company calls it “America’s most affordable” EV with over 315 miles of range.
With the $7,500 federal tax credit still available, GM is promoting Chevy Equinox EV leases for under $250 a month. Nowadays, it’s hard to find any vehicle for under that.
Source: Newsworks Korea
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Connecticut and Rhode Island are suing the Trump administration to overturn its “baseless” decision to halt Revolution Wind, a nearly completed offshore wind farm set to deliver clean power to New England.
Attorneys General William Tong of Connecticut and Peter Neronha of Rhode Island announced Thursday that they’ll file suit in Rhode Island federal court to overturn the August 22 stop-work order from the Bureau of Ocean and Energy Management (BOEM). The order abruptly shut down construction without citing any violation of law or safety threats. Instead, BOEM vaguely referred to “concerns” under its Outer Continental Shelf Lands Act authority, offering no explanation.
Revolution Wind is 15 nautical miles off Rhode Island and expected to come online in 2026. Once complete, the $6 billion project would supply 350,000 homes with electricity and save ratepayers in Connecticut and Rhode Island hundreds of millions of dollars over 20 years. The project supports more than 2,500 jobs across the US, including over 1,000 union construction jobs, and has already cleared every required state and federal review. Construction is already 80% complete.
The lawsuit, to be filed against the Department of the Interior, BOEM, and their nominated leaders, argues that the stop-work order violates the Administrative Procedure Act and the agency’s authority under OCSLA. The complaint says the government’s action is arbitrary, capricious, and undermines both states’ legal and financial commitments.
“Revolution Wind is fully permitted, nearly complete, and months from providing enough American-made, clean, affordable energy to power 350,000 homes. Now, with zero justification, Trump wants to mothball the project, send workers home, and saddle Connecticut families with millions of dollars in higher energy costs,” Tong said. “This kind of erratic and reckless governing is blatantly illegal, and we’re suing to stop it.”
Neronha added, “With Revolution Wind, we have an opportunity to create good-paying jobs for Rhode Islanders, enhance energy reliability, and ensure energy cost savings while protecting our environment. And yet, this stop-work order is not even the latest development in this administration’s all-out assault on wind energy. Just yesterday, we learned of reports that the Administration is pulling in staff from several different unrelated federal agencies, including Health and Human Services, to do its bidding. This is bizarre, this is unlawful, this is potentially devastating, and we won’t stand by and watch it happen.”
Connecticut Governor Ned Lamont said the administration has offered no explanation nearly two weeks after the order. “We hoped to work with the Administration to lower energy costs, strengthen grid reliability, create jobs, and drive economic growth, but only if they share those goals. But if they do not, we will act to preserve this vital project and protect the energy future of Connecticut and the entire New England region,” he said.
Senator Richard Blumenthal (D-CT) called the shutdown “insane, illogical, and illegal,” while Senator Chris Murphy (D-CT) said, “The Revolution Wind project has already made it through exhaustive reviews by multiple federal agencies, and I doubt Trump’s flimsy excuses for scuttling this project will stand up to legal scrutiny.”
Danish renewables developer Ørsted, which owns a 50% share in Revolution Wind, also announced Thursday that it’s suing the Trump administration in a bid to restart construction on the blocked wind farm.
Read more: Trump’s latest offshore wind cancellation is a threat to the grid – ISO New England
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