Will Tesla ever rule the world?

You’re running a marathon.

You’ve been training for months for this event.

But you’re not just planning to complete it – you want to smash it in less than two hours – the holy grail of marathon running.

That is exactly what Elon Musk is trying to do, except he is going to do it with battery technology. Normally, I would be sceptical, but this man has a reputation for beating expectations. So, I take what Elon Musk says very seriously.

If he succeeds, Tesla will take over the automotive world. And, I relish the prospect of being part of that story.

It’s all about the $100 per kWh battery

Let’s put this into context first.

Tesla has managed to maintain a strong lead over the world’s car makers, when it comes to electric cars. However, the world’s biggest carmakers haven’t been idle. They’ve invested billions of dollars into developing their own electric vehicles. Nonetheless, they’ve barely been able to keep up with Tesla.

Now Tesla plans to extend its lead yet once again by setting a new benchmark for battery technology – the $100 per kWh battery.

This would put Tesla’s electric vehicles on a cost-parity basis with gasoline vehicles. Such a feat would mark the end of the combustion engine as we know it and propel Tesla into the stratosphere, as if it were strapped to a SpaceX Falcon Heavy Rocket.

I believe he could very well succeed. I’ve witnessed unbelievable progress in battery technology in the past few years. The change that is happening is breath-taking.

Our own research and development arm in Germany have made impressive progress over the past couple of years. They’ve developed a technology that can 3D-print a solid-state battery in any shape or form.

Solid-state batteries, if you don’t know, represent the next generation of battery technology. A solid-state battery, such as the one that Blackstone Resources is developing, holds double the energy density than a traditional lithium-ion battery.

Another way to look at it, is that it costs half the price of a conventional lithium-ion battery. This I believe, is exactly what Elon Musk is trying to achieve.

Quite frankly, the timing couldn’t be better.

The coronavirus won’t slow Tesla down

The economic fallout from the coronavirus has been significant. Auto manufacturers around the world have been hit hard. However, it doesn’t seem to be slowing Tesla down and it certainly hasn’t quelled its ambitions.

Tesla’s first quarter results positively surprised analysts. The company continues to see strong demand for its cars around the globe. It delivered 10,160 vehicles in March, which followed 3,958 vehicles in February.

The March figure represents about 30% of sales globally for the whole electric vehicle market. It also delivered its highest ever unit monthly total for China: this indicates a very strong level of demand from a country that is only just emerging from a coronavirus lockdown.

The pandemic might actually accelerate sales

Take a look at the image below. These are two snapshots captured by the European Space Agency’s Sentinel 5 satellite. Here, you can see the before and after shots showing huge drops in nitrogen dioxide over China during the coronavirus outbreak.

This phenomenon isn’t limited to China. Cities around the world have reported the same phenomenon.

The evidence of declining pollution has been seen all around the world. The canals of Venice have turned blue with shoals of fish swimming through its quiet crystal-clear waters. In China, the Ministry of Ecology and Environment reported that good quality air days increased 21.5% in February, compared to the same period last year in Hubei province, the epicentre of the global coronavirus pandemic.

The coronavirus if anything has given China a vision of the future, which involves pollution free cities and electric vehicles. China’s government was keen to assist Tesla in opening its Shanghai gigafactory.

This isn’t surprising. China’s leadership has frequently expressed strong support for EVs: it plans to completely electrify its road network within the next couple of decades and it has already spent huge amounts of money on building the infrastructure it needs to do this.

Meanwhile in Europe, political enthusiasm for electric vehicles is now at an all-time high. There have been bold pledges to ban the sale of combustion engine vehicles in a number of countries, including the UK. And, nearly every European country has set, firm dates for a full transition to electric vehicles.

Even in the US, where the Trump administration has pulled back on certain environmental safeguards for cars in the US, many US states are still very supportive of EVs.

Tesla’s future lies with battery technology

However, before we can pop open the champagne bottles, there’s just one niggly little problem – battery technology.

Electric vehicles use huge amounts of battery materials, compared to smartphones and laptops. We just don’t have enough of these battery materials to meet current global demand. So even if Tesla and other auto manufacturers experience strong demand, they might not be able to deliver.

Battery technology is, therefore, letting us down.

So, if Elon Musk delivers the $100 per kWh battery then hats off to him. This will be a massive game changer. In his eyes, Tesla will rule the world, but I think the benefits will be more far-reaching than Tesla’s profit margins.

Such a development would deliver the pollution free vision many cities so badly need. This would also create even more opportunities for companies other than Tesla.

Personally, I hope this dream becomes a reality.