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What's amazing is that Tesla has been providing NRE R&D for OTHER automotive companies for years already. Last year, $15 million of their revenue was from development services but as early as 2011, $55 million of revenue (>25%) was from basically doing powertrain design for companies like Toyota and Mercedes.

Link to last 10-K: http://www.sec.gov/Archives/edgar/data/1318605/0001193125140...

Tesla will definitely make a killing on batteries. I actually think the supercharger network is going to REMAIN proprietary as a competitive advantage for Tesla vs. other electric car companies. As someone who's done research in this in the past, there are already well-established standards adopted by the IEEE and companies like GE for charging. This is obviously to encourage the adoption of the technology.

However, since most electric charging networks are run by private companies or utilities, we may have the "roaming charge" issue that telecom had once upon a time. In other words, if you lived in Texas and got your electric charge from your local utility as part of your monthly bill, you may have to pay "roaming charge fees" for charging in California.

But if you're on the Tesla network, the "fuel" is part of your purchase price. This is Apple-level walled garden tactics and it demonstrates the foresight of Elon Musk and his team. What an incredible entrepreneur.

The charging network also has a lot of risks associated with it. There are 192 other countries in this world all of whom will be looking to charging standards as opposed to relying on a single American company. This means that some time in the near future Tesla will have to go back and retrofit their cars/stations to meet this standard.

Apple's walled garden strategy works because the devices are cheap and relatively throw away. Cars are not.

Tesla cars are already compliant with J1772 (a small adapter that comes with every car) and CHAdeMO ($1,000 adapter, coming soon.)

Few cars cross borders relative to those that are driven exclusively or almost exclusively relative to those that always drive in country. That being the case, so long as I can use an adapter when I take my car into another country with a different standard, I would be mostly fine.

Could that be sold as an upgrade, something akin to the international outlet kits that apple sells for it's laptop chargers?

Tesla has always said their goal is to accelerate the adoption of electric vehicles. I suspect they will try to sell other car companies the drivetrains and rights to the super chargers.

> Did you think that the Tesla and Supercharger of proprietary connectors for no reason

This isn't just entirely for a competitive advantage, although I'm sure they plan on licensing as you mention.

The fact is none of the existing DC charging standards can handle nearly as much power as Tesla's system can. CHAdeMO can handle up to 62kW (but most are 50kW or less), and some of the new Combo chargers have demonstrated (but not implemented) ~100kW. Superchargers can do 120kW right now, and Tesla has claimed they will up this to 135. As with so much of what they do, the existing state of the art is just so far behind they had no option but to roll their own. Everything else that exists currently is simply too slow for recharging during long distance trips (which nobody else cares about, because no other BEV has anywhere near the range)

This reminds me of how Edison decided he needed to invent and build an electric utility system in order to sell light bulbs.

Musk is thinking 8 steps ahead of almost everyone.

I think he's just thinking from first principles and it's the rest of us that have convoluted reality with a panoply of suppositions and just-so stories. People like Musk only seem like they have a "reality distortion field because we're seeing his simple conclusions through the lens of our own distortions. (It's us that have the 8-steps, in a tortured circle.)

He seems to have a Reality Clarification Field to me.

That's a really good way to put it. And combining with that, he's got enough money that he can afford far-sightedness.

I agree with a lot of what you said. However, this:

"Competitors will not have the ability to compete on charging when they release cars because Tesla will already have an established network."

is dramatically wrong. They will absolutely compete on charging, stubbornly so, and probably leveraging politics in the process. The major energy companies will also get into the charging business (much like the oil companies did with gasoline stations), and they too will fight with Tesla on standards, and attempt to set their own. The one guarantee is that the energy industry, filled full of extremely powerful companies used to dominating and getting their way, will not simply go along with Musk because he got there first (ditto for Ford and GM). That's not to say Tesla's standard will or won't prevail (or whether several will win out), but rather that there will be a long fight over it, and the competition will be belligerent.

I very much agree with you: energy companies and other auto manufacturers will get into the charging business. They have to!

But I defend my point based on this: Would you buy a car that has an established charging network, or a car with only a few chargers nationwide? Of course, the established network since there is less worry about "filling up". This is a direct mirror of today's issue with electric vehicles: there isn't a large charging network. Tesla has been competing against other vehicles that have no range anxiety. Similarly, if GM produces a car to use only a GM charger buyers will feel this anxiety and tend toward an easier solution. Therefore, it would only make sense for GM to license the rights to use Tesla chargers since GM can quell range fears and still make money off the car sale.

As for a standard in charging. This is going to be a long fight. The energy and auto industry (minus Tesla) has the political power and money to force a standard many times over. The question becomes: accept a standard because it exists and was funded well (feature phones), or choose something new because it is supremely better (iPhone 1).

Who knows, I enjoyed your response. It made me rethink about this.

I think the best way to think about this is to think of the mobile phone network. Do you sign up with AT&T or do you sign up with T-Mobile? Despite T-Mobile's (allegedly - I don't live in the US, so I'm just going on what people say) better customer service, their network is just far less prevalent compared to AT&T's which enables AT&T to maintain its hold on customers. But T-Mobile continues to build out its network, having already achieved the point where there is enough of a network to pick up the necessary customers to fund the continued expansion of the network.

I would see car chargers going the same way. From now on, if you want to play in this market, you're going to have to face down Tesla's advantage in the charging network. This is Tesla building a moat to make it harder for competitors, but as with all moats, it is not unbreachable - with enough resources, a competitor can achieve a minimal viable network which gets them a foothold in the market.

Part of the problem with that comparison is while you can make do without cell reception, lack of charging for your car... will leave you stranded.

I'm still going to bet on the guy who has put something in space.

Yes. Because it's not like the other guys have decades of experience in the automobile industry.

Or, the regulatory capture industry.

It is not uncommon for manufacturers of 'systems' to hedge their bets by becoming suppliers of components to competitors. Examples abound in the cell phone industry: Samsung makes Apple's A series chips and possibly, other components.

It is not a certainty that Tesla's battery manufacturing facilities can lower the price of batteries to achieve the < $30k per-car price point. I'd imagine a single factory that also sells to other car makers will solve the existing problem with scale. Currently, making/procuring 10k batteries a year is probably a big factor in making them so costly. It is almost universally true that manufacturing in larger numbers will bring down the price (probably not in a linear way, rather logarithmically).

Infrastructure has been surprisingly important to a few innovations in the past: Edison didn't just invent a commercially viable light bulb... he also built the power stations (which of course didn't exist before they were needed); Mr Birdseye didn't just freeze fish... he (actually the company that bought him out) established freezers in supermarkets (which of course didn't exist before they were needed).

Nissan has built far more battery producing capabilities.

They certainly won't be dependent upon Tesla.

In fact, Nissan's Tennessee plant can already manufacture 200,000 battery packs per year. They have been in the game of producing new battery chemistry technologies since 2009, when they started work on a technology partnership to bring Lithium NMC batteries to production vehicles.

His move is economical as well as and advantage for his business.

If you take him for his word and since he believes in breaking down a problem into its individual components and improve it the the only reason he is building the battery factory is because he saw the opportunity and the potential to make a batter and cheaper battery.

And on the issues of charging stations is he needs them anyway and it's not like there's a standardized connector for quickly charging a car so he made his own, he would have done the same it there was a connector but it wasn't any good, however i doubt he would have done it if there wasn't an engineering advantage.

I'm not convinced about the success of their mega battery factory; after all, wasn't there a big problem with getting rare earth materials for things like batteries a while ago? Is there enough raw material to keep it supplied?

There aren't any rare-earth materials in Tesla's batteries.

The S doesn't use any rare earth materials in its motor, either.

Makes me think how much we need a revolution in batteries.

I am wondering if there will be a new type of batteries soon or maybe we'll get improved capacity by slapping a software layer that manages charging/discharging.

As far as I can tell - there's lots of "interesting" energy storage technology being researched, but there's nothing that's close to being ready for at-scale manufacturing.

We've needed one for ages! Lithium ion is the best we can do so far, and it has two GAPING flaws:

* tons of energy is lost as heat * volatility of the chemical storage mechanism occasionally causes that heat to get released as an explosion

I'd love to see Musk's solution end up in a massive increase in battery performance.

I've looked around and it seems there are lithium-sulfur based batteries with 10x capacity and all in all lasting 4x

Source: http://www.extremetech.com/extreme/157525-new-sulfur-based-b...

I've been adamant that we've needed a battery revolution since Terminator. Batteries were the major hurdle 30 years ago and they still today.

I can't believe it's been 30 years.

It's been 160 years since the first hydrogen fuel cell and the lead-acid battery were invented.