Leave it to SolarCity chairman Elon Musk, whom Forbes compared to a de-fictionalized Tony Stark, to completely revise the energy game.
Two weeks ago, Tesla Motors made all their patents free to the public “for the advancement of electric vehicle technology.” Writing on the company blog, Tesla CEO Elon Musk wrote that the company patented its batteries and products “out of concern that the big car companies would copy our technology and then use their massive manufacturing, sales and marketing power to overwhelm Tesla. We couldn’t have been more wrong. The unfortunate reality is the opposite: electric car programs (or programs for any vehicle that doesn’t burn hydrocarbons) at the major manufacturers are small to non-existent, constituting an average of far less than 1% of their total vehicle sales.”
So in the interest of spurring on the next generation of automobiles, Musk and Tesla released their technology into the world.
What some would consider crazy is actually the savviest business decision Musk could make. While the tech remains in the hands of a few, prices and saturation will be locked in place. By making it widely available, electric cars have a higher chance of going mainstream.
It was this philosophy that has led SolarCity to purchase Silevo, a manufacturer of high-performance solar panels. SolarCity intends to build a solar panel “gigafactory,” another concept borrowed from Musk. By 2020, the proposed Tesla gigafactory would churn out enough batteries for 500,000 electric cars. Some call the whole production a gamble, since Musk is betting that the huge supply of electric batteries will lower the cost of production (and, hence, the overall price of the car) as demand for Teslas continues to rise. In the same way, SolarCity wants to use Silevo’s cheaper, more efficient solar panels as the basis for a New York-based gigafactory – raising the supply of better panels to lower the overall cost of installation.
The name of the game is affordability. As Andrea James, an analyst with investment bank Dougherty & Co. writes, “There are parallels between Tesla and SolarCity in that Elon wants to innovate the supply chain. It’s one thing to innovate with the end product. But sometimes innovation needs to happen earlier in the supply chain.”
Or, as Musk himself puts it, “We’re building the gigafactory because we can’t think of any other way to scale. We either hit the sides of the Petri dish, or we build a bigger Petri dish.”