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How Tesla’s Master Plan Is Similar To Germany’s Solar FiT

Reposted from Lenz Blog (image added):

By Karl-Friedrich Lenz

Tesla's Elon Musk Challenges New York TimesThis blog post at the Tesla Motors site is from 2006, but it was at the top spot in the “Energy” section of yesterday, so I found it that way.

In it, Tesla co-founder Elon Musk describes his “secret master plan” to get electrical cars on the street in big numbers. He observes that there are still some issues with price, which needs to get down, especially in 2006 (just like solar at the time).

To do that, his “master plan” does not rely on a feed-in tariff, but on the fact that rich people driving expensive cars don’t care much about cost. If anything, having the car become more expensive will increase sales for some people, who will appreciate the exclusiveness.

Building cars for the high end market first will give Tesla the opportunity to fund research, development, and price savings from mass production, with the ultimate goal of moving into middle and lower price market segments. From the blog post:

When someone buys the Tesla Roadster sports car, they are actually helping pay for development of the low cost family car.

Now note that once this strategy is successful, the chance to “helping pay for development” is gone. Early buyers of the expensive sports cars will have an unique and exclusive opportunity to help making the World a better place.

In exactly the same way, the opportunity to pay 50 cents Euro for solar photovoltaic is gone forever. Prices are already down close to fossil fuel in good solar locations, even if one doesn’t count the external carbon cost.

There is nothing wrong with Germany having paid a large chunk of that cost. On the contrary, I think Germany had a moral obligation to do more about global warming than other countries, since Germans have profited early and profited much from burning fossil fuel. I kind of like the fact that my country has contributed early, and contributed much to getting solar prices down.

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