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With layoffs in the Supercharging division, Elon Musk is beating Tesla’s past into a pulp.
Chaos at Tesla is nothing new. But the company now appears to be going through something of an identity crisis, with its future at war with its past.
Let’s just recap the past few weeks: First, Tesla released first-quarter delivery numbers that came up well short of even analysts’ most cynical predictions, followed by first-quarter earnings that were, in a word, poor. In between those two events, Reuters reported that Tesla had canceled a long-promised sub-$30,000 electric vehicle (a report CEO Elon Musk denied ... sorta), and the company laid off more than 10% of its workforce.
All of which brings us to today and reports of further layoffs at Tesla, this time in the company’s Supercharging division. To just about everyone who follows the company, this was shocking news. Tesla’s Supercharging network isn’t just a competitive advantage, it’s the de facto national standard for EVs in the United States. Major automakers — Ford, Toyota, General Motors — and EV startups like Rivian have signed deals with Tesla to use its charger design, known as the North American Charging Standard and designed their new vehicles (or sent adapters) so their drivers can access the network.
The Supercharging network was, however, consistent with what might now be called the “old” model of Tesla — a company that tried to “accelerate the world’s transition to sustainable energy,” as the company’s mission statement put it, by getting as many electric cars (ideally, but not solely, its own) on the road as possible. But that model seems to be on its way out. As Musk told investors on the earnings call, Tesla should be thought of “thought of as an AI or robotics company” — not, anymore, as merely a car company.
Those Supercharging partnerships weren’t an act of charity. BloombergNEF, Bloomberg’s in-house energy research group, estimated that Tesla’s charging business could generate three-quarters of a billion dollars of profits by 2030. While it doesn’t seem like Tesla is going to rip the Superchargers from the ground, a now-former Tesla employee said on X that “further improvements to standards and engagements across the industry will suffer.” Already the company has pulled out of four planned new Supercharger locations in New York, according to Electrek.
“Tesla still plans to grow the Supercharger network, just at a slower pace for new locations and more focus on 100% uptime and expansion of existing locations,” Musk tweeted (after the market close) Tuesday afternoon.
If the future of the growth of the Supercharging network is in doubt, Tesla’s expansion of its self-driving efforts (which are still well short of rivals like Waymo’s) is full steam ahead. Close Tesla-watchers have speculated that the future of Tesla’s charging infrastructure will change as the company advances further towards truly autonomous driving and its much-heralded “robotaxi,” which Musk has promised to reveal by August 8. All of this seems to have pleased investors, who responded to the announcement by sending Tesla shares up 10% in aftermarket trading. That share price jumped again Monday, after news that Musk had paved the way for Full Self-Driving to be deployed in China.
One would think that reports of Tesla further tightening its focus on artificial intelligence and automation would have delighted these investors. The company's burned some $2.5 billion of cash in the first quarter thanks to both its extravagant spending on developing its AI capabilities and the fact that it made too many cars for what turned out to be a soft electric vehicle market. “Hopefully these actions are making it clear that we need to be absolutely hard core about headcount and cost reduction,” Musk wrote in an email to staff about the Supercharging layoffs, according to The Information. “While some on exec staff are taking this seriously, most are not yet doing so.” And yet shares were down 5.5% by the time the market closed on Tuesday.
The investment community can’t seem to decide whether it wants Tesla to be the type of company that will devote its resources to a mass market car or throw them at a much more exciting — though by no means assured — autonomous driving play.
In its earnings presentation, Tesla said that new models were coming, but not on a whole new platform, which meant that there would less capital expenditure for a new production line. For some analysts, it was all they needed to hear, Morningstar's Seth Goldstein wrote a note titled “Our Long-Term Growth Thesis Is Confirmed as Affordable Vehicle Still in Development.”
And some in the the analyst community were also jazzed by Musk's China jaunt. Morgan Stanley’s Adam Jonas, a longtime Tesla bull, hailed the trip, writing “whether Tesla’s CEO is sleeping on a floor or on a plane ... the message is clear: he’s back.” Dan Ives of Wedbush Securities, another Tesla optimist, said approval for FSD in China was “a watershed moment for the Tesla story.” As recently as Tuesday morning, Axios cautiously declared that the company “may be steadily regaining investor confidence after a rough patch.”
Tesla is also working on wireless charging, as was confirmed last year in a video hosted by, of all people, Jay Leno. Tesla’s design chief, Franz von Holzhausen, told Leno that “we are working on inductive charging. You don’t even need to plug anything in at that point. You just drive over the pad in your garage and you start charging.” It’s obvious why this type of charging would be more conducive to autonomous driving than the company’s exist Superchargers, as all they would require is driving over them.
Even the multiple rounds of deep layoffs are a sign to some Tesla optimists that Musk’s attention is now fully devoted to the company. When asked by an analyst on the earnings call to “talk about where your heart is at in terms of your interests,” Musk said that Tesla “constitutes a majority of my work time,” adding: I'm going to make sure Tesla is quite prosperous.”
If investors are sending mixed messages, Musk, certainly, has made his preference clear. Tesla will become a autonomous driving company or die trying — at least until he changes his mind again.
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A conversation with VDE Americas CEO Brian Grenko.
This week’s Q&A is about hail. Last week, we explained how and why hail storm damage in Texas may have helped galvanize opposition to renewable energy there. So I decided to reach out to Brian Grenko, CEO of renewables engineering advisory firm VDE Americas, to talk about how developers can make sure their projects are not only resistant to hail but also prevent that sort of pushback.
The following conversation has been lightly edited for clarity.
Hiya Brian. So why’d you get into the hail issue?
Obviously solar panels are made with glass that can allow the sunlight to come through. People have to remember that when you install a project, you’re financing it for 35 to 40 years. While the odds of you getting significant hail in California or Arizona are low, it happens a lot throughout the country. And if you think about some of these large projects, they may be in the middle of nowhere, but they are taking hundreds if not thousands of acres of land in some cases. So the chances of them encountering large hail over that lifespan is pretty significant.
We partnered with one of the country’s foremost experts on hail and developed a really interesting technology that can digest radar data and tell folks if they’re developing a project what the [likelihood] will be if there’s significant hail.
Solar panels can withstand one-inch hail – a golfball size – but once you get over two inches, that’s when hail starts breaking solar panels. So it’s important to understand, first and foremost, if you’re developing a project, you need to know the frequency of those events. Once you know that, you need to start thinking about how to design a system to mitigate that risk.
The government agencies that look over land use, how do they handle this particular issue? Are there regulations in place to deal with hail risk?
The regulatory aspects still to consider are about land use. There are authorities with jurisdiction at the federal, state, and local level. Usually, it starts with the local level and with a use permit – a conditional use permit. The developer goes in front of the township or the city or the county, whoever has jurisdiction of wherever the property is going to go. That’s where it gets political.
To answer your question about hail, I don’t know if any of the [authority having jurisdictions] really care about hail. There are folks out there that don’t like solar because it’s an eyesore. I respect that – I don’t agree with that, per se, but I understand and appreciate it. There’s folks with an agenda that just don’t want solar.
So okay, how can developers approach hail risk in a way that makes communities more comfortable?
The bad news is that solar panels use a lot of glass. They take up a lot of land. If you have hail dropping from the sky, that’s a risk.
The good news is that you can design a system to be resilient to that. Even in places like Texas, where you get large hail, preparing can mean the difference between a project that is destroyed and a project that isn’t. We did a case study about a project in the East Texas area called Fighting Jays that had catastrophic damage. We’re very familiar with the area, we work with a lot of clients, and we found three other projects within a five-mile radius that all had minimal damage. That simple decision [to be ready for when storms hit] can make the complete difference.
And more of the week’s big fights around renewable energy.
1. Long Island, New York – We saw the face of the resistance to the war on renewable energy in the Big Apple this week, as protestors rallied in support of offshore wind for a change.
2. Elsewhere on Long Island – The city of Glen Cove is on the verge of being the next New York City-area community with a battery storage ban, discussing this week whether to ban BESS for at least one year amid fire fears.
3. Garrett County, Maryland – Fight readers tell me they’d like to hear a piece of good news for once, so here’s this: A 300-megawatt solar project proposed by REV Solar in rural Maryland appears to be moving forward without a hitch.
4. Stark County, Ohio – The Ohio Public Siting Board rejected Samsung C&T’s Stark Solar project, citing “consistent opposition to the project from each of the local government entities and their impacted constituents.”
5. Ingham County, Michigan – GOP lawmakers in the Michigan State Capitol are advancing legislation to undo the state’s permitting primacy law, which allows developers to evade municipalities that deny projects on unreasonable grounds. It’s unlikely the legislation will become law.
6. Churchill County, Nevada – Commissioners have upheld the special use permit for the Redwood Materials battery storage project we told you about last week.
Long Islanders, meanwhile, are showing up in support of offshore wind, and more in this week’s edition of The Fight.
Local renewables restrictions are on the rise in the Hawkeye State – and it might have something to do with carbon pipelines.
Iowa’s known as a renewables growth area, producing more wind energy than any other state and offering ample acreage for utility-scale solar development. This has happened despite the fact that Iowa, like Ohio, is home to many large agricultural facilities – a trait that has often fomented conflict over specific projects. Iowa has defied this logic in part because the state was very early to renewables, enacting a state portfolio standard in 1983, signed into law by a Republican governor.
But something else is now on the rise: Counties are passing anti-renewables moratoria and ordinances restricting solar and wind energy development. We analyzed Heatmap Pro data on local laws and found a rise in local restrictions starting in 2021, leading to nearly 20 of the state’s 99 counties – about one fifth – having some form of restrictive ordinance on solar, wind or battery storage.
What is sparking this hostility? Some of it might be counties following the partisan trend, as renewable energy has struggled in hyper-conservative spots in the U.S. But it may also have to do with an outsized focus on land use rights and energy development that emerged from the conflict over carbon pipelines, which has intensified opposition to any usage of eminent domain for energy development.
The central node of this tension is the Summit Carbon Solutions CO2 pipeline. As we explained in a previous edition of The Fight, the carbon transportation network would cross five states, and has galvanized rural opposition against it. Last November, I predicted the Summit pipeline would have an easier time under Trump because of his circle’s support for oil and gas, as well as the placement of former North Dakota Governor Doug Burgum as interior secretary, as Burgum was a major Summit supporter.
Admittedly, this prediction has turned out to be incorrect – but it had nothing to do with Trump. Instead, Summit is now stalled because grassroots opposition to the pipeline quickly mobilized to pressure regulators in states the pipeline is proposed to traverse. They’re aiming to deny the company permits and lobbying state legislatures to pass bills banning the use of eminent domain for carbon pipelines. One of those states is South Dakota, where the governor last month signed an eminent domain ban for CO2 pipelines. On Thursday, South Dakota regulators denied key permits for the pipeline for the third time in a row.
Another place where the Summit opposition is working furiously: Iowa, where opposition to the CO2 pipeline network is so intense that it became an issue in the 2020 presidential primary. Regulators in the state have been more willing to greenlight permits for the project, but grassroots activists have pressured many counties into some form of opposition.
The same counties with CO2 pipeline moratoria have enacted bans or land use restrictions on developing various forms of renewables, too. Like Kossuth County, which passed a resolution decrying the use of eminent domain to construct the Summit pipeline – and then three months later enacted a moratorium on utility-scale solar.
I asked Jessica Manzour, a conservation program associate with Sierra Club fighting the Summit pipeline, about this phenomenon earlier this week. She told me that some counties are opposing CO2 pipelines and then suddenly tacking on or pivoting to renewables next. In other cases, counties with a burgeoning opposition to renewables take up the pipeline cause, too. In either case, this general frustration with energy companies developing large plots of land is kicking up dust in places that previously may have had a much lower opposition risk.
“We painted a roadmap with this Summit fight,” said Jess Manzour, a campaigner with Sierra Club involved in organizing opposition to the pipeline at the grassroots level, who said zealous anti-renewables activists and officials are in some cases lumping these items together under a broad umbrella. ”I don’t know if it’s the people pushing for these ordinances, rather than people taking advantage of the situation.”