Elon Musk is nothing if not audacious. In the last few years
he's launched rockets into space, made electric vehicles cool
, and guided
to dominance in the residential solar market.
What's incredible is that Musk is just getting his feet wet.
Over the next half decade he's planning to transform Tesla and
SolarCity into manufacturing powerhouses. The scale of what he's
trying to do is unprecedented in clean energy and may change the
way we think about energy for the next century.
Tesla Motors will soon build its own batteries for vehicles
like the Model S. Photo credit: The Motley Fool.
Musk's $10 billion bet on clean energy
Tesla's Gigafactory has gotten most of the attention from the
media recently, but it's not the only audacious project Musk is
undertaking. SolarCity recently bought
, a solar panel manufacturer that Musk and Co. plan to turn into
one of the largest solar manufacturers in the world.
When his plans for Tesla and SolarCity are complete, Musk will
be investing up to $10 billion in the future of electric vehicles
and solar energy. Some of that money may come from partners like
for the Gigafactory, but the sheer scale is incredible
considering the nascent stage of both industries.
Below, you can see some details on Musk's planned investments.
SolarCity hasn't released a budget for Silevo but if we use
competitors' capital expenditures per megawatt we can estimate
around a $0.50 per watt cost for the facilities.
Silevo panel manufacturing
1 GW in 2 years
10 GW+ in less than a decade
~$300 million initially
$5 billion to build 10 GW
Source: Tesla and SolarCity news releases and the author's own
Can Musk's bets pay off?
Few would bet against Elon Musk today, but it's worth noting the
positive and negative of what he's trying to do.
The Gigafactory will transform Tesla from an electric vehicle
company to a battery manufacturer, and that industry has a
questionable history at best. The goal for Tesla Motors is to be
able to reduce costs to a level that will make electric vehicles
more accessible to a larger market. But that's not without
In the last few years,
have all gone bankrupt chasing energy storage or electric
vehicles. Tesla has the internal demand to succeed, but it's no
SolarCity will also be using batteries from the Gigafactory
for energy storage systems like this one. Source:
Solar is potentially more challenging because technology
changes quickly and few companies have been able to generate a
long-term competitive advantage with their own panels. Musk
admits that the solar market is currently very oversupplied,
which keeps prices for commodity panels low. He's betting on a
boom in demand that will lead to a shortage of panels, and while
that has happened in the past in solar, it's a market dynamic
that has never lasted long because competitors quickly rush to
There's also technology and execution risk to consider.
SolarCity and Silevo say they can produce panels with higher
efficiency and similar costs to competitors, but Silevo's
technology has never been proven at scale. If you wonder how hard
it is scaling up a huge solar plant just remember one word --
Foolish bottom line
Musk isn't someone I would bet against, but the sheer scale of
what he's trying to do in very young and risky industries is
huge. Investors putting their dollars behind him are betting that
he can transform into a large manufacturer in not one, but two
industries simultaneously. If he can, Musk will cement his legacy
as one of our generation's greatest innovators.
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Elon Musk Making an Audacious and Risky $10
originally appeared on Fool.com.
has no position in any stocks mentioned. The Motley Fool
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