On April 20th, during the quarter investment call Tesla’s CEO Elon Musk made clear that the Lithium price has reached insane price levels. Regardless of this, he clarified that Tesla was able to secure lower prices for lithium thanks to the locked-in long term contracts. Once again, Tesla beat market expectations and delivered a record 184,800 vehicles globally in the 2022 January to March quarter, beating market expectations on strong demand from China. Elon Musk is confident that Tesla will continue to beat market expectation as it is able to innovate and solve problem at a much faster pace than others.

While Tesla is on the news for being removed from the S&P 500 ESG index – shorthand for “environmental, social and governance” – it is also applauded globally as a business leading the development of eco-friendly technologies such as electric vehicles. Tesla fell off the ESG list due to issues with elements of its business, including lack of a low-carbon strategy and concerns about its internal human resources practices. No wonder Elon Musk, Tesla CEO called ESG a politically motivated scam.

Let’s return to Tesla aspiration to create and advance the sustainable energy future. While Tesla produced about 1 million vehicles in 2021, the company has very ambitious aspirations and wants to produce 20 million cars by 2030. Elon Musk wants to replace 1% of total car per year to have a dent in the sustainable and efficient transport sector. If he accomplishes that, this would have a huge impact in the global decarbonization efforts. These are often called the Net-zero 2050. The main constraint for Tesla is to secure metals like lithium at a cost-effective price, ensuring that the refining process is streamlined. To accomplish that Tesla may even acquire lithium mining going forward, as this will give pricing and efficient supply advantages to Mr. Musk. In a recent interview Musk said that “he may get into the lithium mining and refining business directly and at scale because the cost of the metal, a key component in manufacturing batteries, have gotten so high”. According to Benchmark Mineral Intelligence, the cost of the metal has gone up more than 480% in the last year, and Bank of America expects the metal price to increase another 1000% over the next 5 years. Tesla has not debt has a lot of cash and can go after strategic mining acquisition easily.

What is clear to me is that Tesla has accelerated the pace for a total shift towards electric vehicle and has generated a global race to shift toward cleaner EV based society, and thus advanced the sustainable energy future. This revolution includes massive deployment of solar wind, hydrogen, and stationary battery to store energy when sun does not shine.

Going Forward

Tesla’s ambition as one of the greatest sustainability market player don’t end there. Where asked what is the biggest innovation in transportation? Musk said that Tunnels are very underappreciated as he foresees tunnel becoming a key piece of the sustainability transition. What Musk meant is the following. You have people starting to live in a three-dimensional world, be it through the Metaverse or the general digitization of their lives. This seems to be contradictory of what politicians are doing, which is forcing people to live in a two-dimensional reality by building more roads. Musk elaborated, “we should delete roads not built them”. We should instead build tunnel to de-congest cities. Think of tunnels as a multidimensional, multi-layer system that takes away congestion from the equation. You can build as many layers as you want, and if we couple tunnels with flying cars (low noise vehicle) then we will have resolved traffic forever. There is a proof of concept for this in Las Vegas to connect hotels, casino, and transport hubs. It has been tested and people can now check it out themselves and see how it works. When the politician tested the pilot, they unanimously voted for the full city integration of this system, and we should expect many US cities to follow suit. This eliminates traffic automating driving, increasing overall economic and societal efficiency.

To transition to the sustainable energy Musk will do whatever it takes, no matter what the ESG movement and/or the politicians say. Time to de-politicize the sustainability agenda and create the right incentives for other corporations to follow Elon Musk disruptive and sustainable model!