Earlier this month, Elon Musk made news again when he announced his intention to offer solar roofs, a product he sensed might need a few words of clarification.
"It's a solar roof as opposed to a module on a roof," he said on an earnings call about the planned merger between his electric car company, Tesla, with his cousin’s solar panel company, SolarCity. "It's not a thing on the roof, it is the roof."
This wasn’t technically the first mention of the solar roof — it also appeared in Musk’s Master Plan, Part Deux, released in July:
Create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility, and then scale that throughout the world. One ordering experience, one installation, one service contact, one phone app.
Intriguing indeed. But we don’t have much more information than that.
Since then, the roofs have been called "out of left field," and "a sweeping expansion of Tesla’s clean energy ambitions," but they are neither. Solar roofs are not some side goof of Musk’s; they’ve been part of his ambition all along. People just haven’t been taking him seriously.
In making sense of this and other Musk moves, it seems to me that a few facts have been, if not missed, at least not emphasized enough.
Electricity is evolving into a more consumer-facing product
It might seem odd to graft a solar panel company onto an electric car company, like joining a dishwasher company with a lawnmower company. Why bother?
But as I noted when he first proposed acquiring SolarCity, Musk is targeting what he sees as an emerging ecosystem, or in terms more familiar to techies, a platform. Solar roofs fit snugly into that platform.
The default structure of the electricity system for the last century has been "hub and spoke" — large power plants which pour power into transmission lines, which pour it into distribution grids, which pour it into toasters, air conditioners, and televisions.
It was a one-way flow, and mostly "dumb" — there wasn’t the will or the technology to closely track or economize power consumption. The system was built to expand, to drive more electricity use, not to wring the most work out of every electron. The consumer’s only relationship to power was to consume it and pay monthly power bills.
Today, consumers can also generate electricity — they can be producer/consumers, or "prosumers," as people who hate the English language call them.
They can share electricity peer-to-peer, through microgrids. They can store it in home batteries, or electric car batteries, or as ice, or hot water. They can track its use at a granular level with smart appliances and home energy management systems, which can also shift household supply or demand based on price signals from the grid. They can participate in open power markets using automated software, based on real-time data about grid supply and demand.
Or at least, you know, that’s the idea. Obviously we’re not there yet. The technology is getting close, but a whole skein of incumbent institutions, practices, and regulations lies between here and there. (I’m looking at you, utilities.)
Musk wants to design clean energy platforms, not just products
Nonetheless, here and there, that consumer-side electricity ecosystem (at the grid’s edge) is coming together, spurred on by reforms like those taking place in New York and California.
And Musk wants to make that emerging market apparent to consumers, by offering a branded suite of products that encompasses their new relationship with electricity — generating it, storing it, and using it to get around.
To begin with (post-merger), Tesla’s platform will contain three products: rooftop solar panels, electric cars, and home batteries. But that’s just the beginning. Remember, Musk says he wants Tesla to be a "vertically integrated energy company offering end-to-end clean energy products to our customers."
Obviously the company’s short-term moves will be dictated by finances and where Musk sees the lowest hanging fruit (turns out that’s solar roofs and heavy-duty trucks). But at least in theory, the Tesla platform could eventually extend to include other means of home electricity generation (solar roofs, solar windows, backyard wind turbines), various means of home energy storage and management (smart appliances and batteries, software to communicate with the grid), and other electric vehicles (small vehicles like scooters, bikes, or Solowheels, utility vehicles, autonomous vehicles).
I am in no way predicting that Tesla will pursue any particular one of those products, just saying that Musk wants to apply Tesla’s engineering acumen and slick branding to a range of products up and down the clean electricity consumer market. Solar roofs are just another piece of that platform.
It’s all insanely ambitious, even for someone who’s not also trying to send a manned mission to Mars. Despite the connective tissue of electricity, the businesses in which Musk is getting involved are quite disparate; vertically integrating them won’t be easy. Among other things, it would require a ton of consumer education. And many of the markets required to make the products work as an integrated platform barely exist yet.
Indeed, any one piece of the platform could blow up and damage the rest. Tesla is behind schedule on the Tesla 3. SolarCity stock is in the crapper.
And as numerous pieces have pointed out (see Grist, MIT Technology Review), solar roofs have been tried before, to no avail. Most notably, less than five years after a high-profile launch, Dow Chemical recently ceased manufacturing its solar roofing shingles.
Over at Greentech Media, Eric Wesoff lists more than a dozen companies that have tried and failed to commercialize solar roofing, windows, and roll-on panels, and another dozen that are still working at it, with no break-out successes.
It is certainly true that Tesla’s solar roof could flounder like the others, though something tells me it will be a lot nicer and get a lot more press. (Had you heard of Dow Chemical’s solar shingles before a few paragraphs ago?)
But all this talk about the risks Musk is taking misses something key to understanding his ambitions for Tesla. I think it’s safe to say the possibility of failure means something different to Musk than it does to most entrepreneurs.
Above all, Musk is trying to create markets where there were none
Musk is not in it for the money. If all he wanted was money, he wouldn’t keep risking enormous sums of it on schemes that nine out of 10 people predict will fail.
Instead, as he’s been very forthright in saying, he’s trying to address what he sees as humanity’s most pressing problems. (For insight on Musk, see Ashlee Vance’s biography or this invaluable series on Wait But Why.)
One of those problems is sustainability. This is how he puts it in the Master Plan:
By definition, we must at some point achieve a sustainable energy economy or we will run out of fossil fuels to burn and civilization will collapse. Given that we must get off fossil fuels anyway and that virtually all scientists agree that dramatically increasing atmospheric and oceanic carbon levels is insane, the faster we achieve sustainability, the better.
Sustainability means moving as much energy use as possible to electricity, and cleaning up electricity generation. Tesla is meant to help with the former; SolarCity is meant to help with the latter.
Clean energy markets are inevitable. Musk just wants to hasten their arrival. That is how he frames the overarching goal of the Master Plan: "Here is what we plan to do to make [sustainability] come sooner."
With Tesla, the idea wasn’t only to make money selling cars, it was to revive the moribund EV market — mission accomplished. SolarCity was meant to make solar panels a mass market — mission accomplished.
No, I’m not giving Elon Musk sole credit for either of those markets, but he did hasten their expansion in a significant and measurable way. Similarly, by going into batteries, solar roofs, and whatever energy gizmo he targets next, he’s trying to kickstart those markets.
If Tesla’s solar roof (or the Tesla 3, or SolarCity) fails but demonstrates that there’s a viable market, and other competitors come in to do it better, I don’t know that Musk would be pleased. But the larger and more important part of his aim — to unleash consumer capitalism on the problem of sustainability — will have succeeded.