Tesla’s recent “Investor Day” presentations differed from previous events as it started by highlighting the so-called Master Plan 3. More of a vision for sustainable energy than a venue for future products, the Austin event wasn’t a big hit for investors looking for short-term guidance. Rather, it provided a macro view of a potential sustainable energy economy and Tesla’s contribution to that future. This plan included information on the total amount of energy currently being used worldwide, how much of that is from sustainable renewable sources, and how much is from fossil fuels?

Not surprisingly, it highlighted solutions that mainly favored Telsa’s product lines: large-scale batteries for homes, industrial mini-grids, and electricity producers; solar panels for houses and commercial properties; and electric vehicles for consumers and semis for long-haul transport. Particularly interesting was the manager of charging and the construction of a network infrastructure of superchargers. The rest of the event elaborated on the innovations for profitable production and recycling systems, as well as the efficiencies in geographical range and charging times for EVs.

Less attention was put on political context for reconstituting supply chains for needed materials and minerals in the post-Covid, high inflation, Russia-Ukraine war environment. This is more the domain of Peter Zeihan, a geostrategist with four books to his credit, mostly about the political economy of global energy flows. He worked in Austin, Texas for a decade as part of Stratfor, a forecasting company. In 2012, he started his own firm, Zeihan on Geopolitics. His primary areas of expertise are economic geography, population studies (demographics), and energy, but he considers himself a generalist who designs forecasts for specific clients. He has become a popular YouTube star primarily because of his statements about the possible end of globalization and its impacts on various countries and the supply challenges of different industries.

He also gained traction with his analysis of the Russian war on Ukraine and the consequences of continued fighting, particularly its implications for sustainable development worldwide. With both countries preoccupied or sanctioned, we face losing major suppliers of critical materials needed for the green economy. Russia is the 2nd largest exporter of crude and refined petroleum products, the largest source of palladium, and the 2nd largest source of platinum group materials (ruthenium, rhodium, palladium, osmium, iridium, and platinum) that often occur together in the same mineral deposits. Also, we are losing the third largest copper, titanium, and aluminum sources. Russia and particularly Ukraine, in combination, are also first in neon gases, which is critical for laser technology. All these are critical for the green revolution and continued development of the information and communication technologies (ICT) revolution.

Zeihan is also concerned that the withdrawal of political support for the US Navy operating worldwide to ensure freedom of navigation will be problematic for global trade. During World War II, the Battle of the Atlantic took over 5,000 commercial ships and 60,000 lives from Allied and Axis powers. Lack of maritime protection could collapse the intricate supply chains for the materials and sophisticated technologies needed for the sustainable energy revolution. Is that something we could see in our modern era of globalization?

While not a critic of sustainable energy, Zeihan is less confident than Tesla about its prospects. Claiming to have solar panels on his Colorado house, he is particularly concerned about the geographical distribution of good sunlight and wind energy. He points to Germany’s attempts to go green as particularly problematic. It has poor solar and wind potential and was recently cut off from Russian natural gas and oil. As a result, it has been forced to return to coal and lignite, both significant emitters of carbon dioxide and other pollutants that threaten its climate and pollution goals.

Zeihan points out that the border area around Mexico and the southwest US has significant solar and wind potential. They can provide the new efficiencies of smaller electrical grids run by renewables while still having ready access to the necessary hydrocarbons for paints, plastics, PVC resins, and other carbon-based industrial materials. When a barrel of oil is distilled, not all of it is used for transportation. Even companies from Germany are moving to the area to take advantage of cheap energy and carbon.

This geographic advantage appears to be no mystery to Tesla as it built a major “Gigafactory” in Austin, Texas, with its rooftop solar panels spelling out its logo that can be seen from space. It also announced a new Gigafactory facility across the border in Monterrey, Mexico, rumored to be designed to produce a new $25,000 consumer EV. Telsa is also building a major lithium refinery in Corpus Christi that will be designed to support 50GWh a year of storage capacity and easily draw in the abundant metal from significant producers in Central and South America. In addition, Musk’s related company, SpaceX, has been building and testing rockets in Boca Chica on the coast of the Gulf of Mexico for years now, very close to the border.

Looking back at Tesla’s Master Plan 2 in 2016, it emphasized several important strategies. These included solar roofs with integrated battery storage, expansion of the EV product line, and developing full self-driving (FSD) that is 10x safer due to massive machine learning from vehicle fleets on the road sending back information. Also, they suggested opportunities for using your car with FSD as a “robo-taxi” when you weren’t using it. FSD is still a work in progress, but Tesla Dojo supercomputers are collecting “big data” from over 400,000 participating drivers that have driven over 100 million miles. Tesla estimates that some 6 billion miles of driving will be needed to make the FSD relatively foolproof. Modeling with digital twin vehicles is taking up some of the slack in self-driving testing, but FSD is not universally accepted nor fully tested for its impact on sustainability.

In retrospect, Tesla’s Powerwalls are now in many homes, and its Megapacks (Megapack, Megapack 2, Megapack 2XL) are making a significant difference in both mini and major electric grids. For the latter, the Megapacks have drawn praise for its Virtual Machine Mode (VMM) firmware that smoothes out oscillations in long-range electrical grid transmissions. In addition, Megapacks have been standardized to an optimal size based on the legal requirements for transporting them over common road infrastructure. This standard means they can also be easily and quickly transported and deployed in various storage arrangements that can be scaled up quickly.

Master Plan 3 has a more global macro-perspective examining what Tesla thinks is needed for a sustainable civilization. It proposes that the sustainable energy economy is achievable and within reach during our lifetimes. It starts with some calculations dealing with quantities of electricity produced. The Master Plan suggests that the world needs some 30 TWh of ongoing renewable power capture/generation and a backup of 240 TWh of battery storage capacity. This storage number is a lot of battery capacity, but the trend is toward reducing cobalt, nickel, and even lithium. Instead, using more metals like iron, magnesiumm, and phosphorus provide safer and more long-term energy storage. The TWh (Terawatt-hours) is used in measuring energy and is equal to a million (1,000,000) megawatt-hours (MWh) or a billion (1,000,000,000) Kilowatt-hours (KWh). A Tesla uses about 34 KWh of electricity to go 100 miles. That’s 34,000 kWh per 100,000 miles of travel. Those figures are hard to fathom, and keep in mind that the Petawatt (PWh) units are even larger than TWh.

PWh units (a trillion KWh/hrs) are helpful when considering fossil fuels. The world uses some 165 PWh/year, roughly 80% of which are from combusting extracted hydrocarbons. Furthermore, about 2/3 of that is wasted. For example, an ICE car only uses about 25% of the energy of the fuel pumped into it at the fuel station. Factor in the mining and transportation of carbon-based fuels, and you get even less efficiency. So Tesla argues that instead of the 165 PWh/yr of current energy consumption (of which 20% is renewable), the world only needs 82 PWh/yr of energy if a transition occurs to sustainable sources. That means the world needs half as much energy from current consumption levels if it converts to an electric economy because of the waste factor in hydrocarbon combustion.

Significant transitions will likely occur in the following areas. First, the switch to renewable sources for electricity grids (instead of coal, natural gas, and oil) is expected (by Tesla) to replace 46 PWh/yr of fossil fuel combustion (35%). This transition is already occurring quite rapidly. Sixty percent of new investments in the existing grid have been in renewables.

EVs will replace 28 PWh/yr (21%), and high-temperature heat (stored heat for industrial purposes) and hydrogen will displace another 22PWh/yr (7%). Bill Gates has invested heavily in micro-grids using mirrors to concentrate sun energy and heat liquids to temperatures of over 1000 degrees Celsius. Geothermal and hydrogen are used as well. Replacing fossil fuels in boats and aircraft would reduce another 7PWh/yr (5%). Electric vertical take-off and landing vehicles (eVTOLs) are on pace to reconfigure certain supply runs and delivery speeds, bypassing trucking and trains. Shipping is already energy efficient compared to other types of transportation but still accounts for 3% of CO2 greenhouse gases (GHGs). Finally, heat pumps in buildings will be vital to the move to sustainable energy. These are like air conditioning (AC) units in reverse as they don’t pump heat but refrigerants. Tesla has no current plans to produce them, but they could replace some 29 PWh/yr of fossil fuels, primarily natural gas.

Another issue is real estate. Telsa says that only 0.2% of the Earth’s 510 million square kilometers of surface area is required. But less than 30% or 153 million square kilometers is land. So 0.2% of that is 30,600,000 square km. They further calculate that solar direct land area needed is 0.14% while wind direct land area is 0.03%. So, that is a lot of necessary land, but this is energy we are talking about, and it is absolutely critical for modern life.

Lastly, Tesla suggests this can be done with roughly USD 10 trillion in capital investment. Most of that (70%) will be required to switch to EVs, and another 10% for planes and ships. USD 2 trillion will be needed for the renewable energy grid, heat pumps for buildings, and high-temperature heating for industrial processes. Ten trillion dollars is about 10% of the 2022 World GDP of USD 95 trillion.

Tesla’s Investor Day presentation broadly sketched a vision for a sustainable energy economy and how the company would contribute to that plan. However, Peter Zeihan’s work suggests a tougher road ahead with limited premium locations for solar and wind. Furthermore, a deglobalization trend and geopolitical conflict threaten access to critical resources needed for a green energy revolution.

Notes

[1] This post contains links but most of the information comes from either Tesla or Zeihan. Additional examination of the energy numbers, geopolitical concepts, and technological possibities are needed.

Citation APA (7th Edition)

Pennings, A.J. (2023, Mar 19). Zeihan’s Global Prognostics and Sustainable Development, Part II: Implications of Tesla’s Master Plan 3. apennings.com https://apennings.com/dystopian-economies/zeihans-global-prognostics-and-sustainable-development-part-ii-implications-of-teslas-master-plan-3/

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Anthony J. Pennings, PhD is a Professor at the Department of Technology and Society, State University of New York, Korea. From 2002-2012 was on the faculty of New York University where he taught comparative political economy, digital economics and traditional macroeconomics. He also taught in Digital Media MBA at St. Edwards University in Austin, Texas, where he lives when not in the Republic of Korea.

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Category: democratic political economies, digital geography, dystopian economies, enabling frameworks, enterprise systems, geopolitical risk, sustainable development
Tags: Corpus Christi > electric vehicles (EVs) > full self-driving options (FSD) > heat pumps > Master Plan 3 > Tesla > Tesla Megapack > Virtual Machine Mode (VMM) > Zeihan

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