The Tesla Model 3 and why we ordered a few
With the first Tesla Model 3 cars being shipped to clients (well, Tesla employees to start with) and media coverage about electric cars currently reaching fever pitch, it’s worth making a few comments on the topic.
The first one is to note that there can be a lot of hype and PR on the topic. A recent example is the CEO of Shell announcing that he will start using an electric vehicle … the Mercedes S500e, a car with a whopping all-electric range of 12 miles on a full charge. Another is the fad for “green bonds”, which in practice are normal corporate bonds with a nicer label just because the borrower can show that at least some of its spending is not environmentally damaging. It is important to continue to be able to separate the wheat from the chaff and make sure that real progress is not obscured by the greenwashing or the marketing spin of a legitimate issue. But as they say, imitation is the sincerest form of flattery and if corporations see the need to appear green it may indeed mean that being green is actually a valuable thing!
The second thing is that the movement towards electric cars is, in our view, already pretty much irreversible. There is a convergence of factors on the demand side (a change of opinion about diesel in Europe, with cities and countries ready to ban such engines from their roads in the not-too-distant future) and on the supply side (with the Model 3 offering mass production at a competitive price, most manufacturers offering electric vehicles, and several cars on sale now achieving the kind of autonomy on a single battery that should be sufficient for most drivers, such as the Chevy Bolt, the Renault Zoe or the Tesla models). That does not mean the industry will be dominated by Silicon Valley and that European car manufacturers are about to die, but we do expect the switch in demand towards electric vehicles to be a lot faster than most people expect. There are worries about some raw material shortages to make all the required batteries, and how this could stretch the electric grid beyond capacity. We cannot comment on the raw materials issue but it’s worth pointing out at least that if all cars in Europe were transformed overnight into electric vehicles, this would increase power demand in Europe by only around 20% (using an energy consumption of 20kWh/100km, and assumptions of 12,000km/car/year, an average 500 cars/1,000 people, and a population of 500 million people in Europe, you get a total demand equal to 600 TWh, to be compared to our current ca 3,000 TWh overall generation.
The third thing to remember is that there is no silver bullet. The current energy transition requires efforts on all fronts, and will take, even if as rapid as we expect, many years to play out. Power generation tends to get the most headlines, but changes in energy use in housing, transport, industry and agriculture will also play a role. Electric cars are exciting as they bring together two of the biggest sectors – individual transport and power generation – but they are not the solution all on their own.
Finally, it should be underlined that any switch towards electric cars will make a difference in terms of carbon intensity only if (i) electric cars are as energy efficient as internal combustion vehicles, and (ii) electricity generation is not fossil-fuel based. And, obviously, moving to electric cars may not resolve issues like congestion and other forms of pollution from cars like particles created by the friction of wheels on the asphalt. Thankfully, the impact of electric cars can also go well beyond the simple switch from oil to electrons: having tens or ultimately hundreds of millions of batteries connected to the grid will allow many new ways to manage the electrical grid (and for instance help deal with the local intermittency of renewables even better than we can today), not to mention the potential changes in transportation patterns if people switch from car ownership to short term rentals and/or shared use. We expect these changes to take shape over a few decades on an incremental basis, just like we moved from almost no renewables (excluding hydro) in the generation mix to more than 10% of generation in Europe today in just over 15 years.
Beyond Green Giraffe’s actual work in helping renewable energy projects happen, we want to be exemplary in our everyday behavior to encourage the transformation. Thus, we have put in place steps to be carbon neutral and, soon, be carbon negative (i.e. helping avoid more carbon emissions than our activities generate). We have made a strict assessment of our carbon emissions, taking into account all our activities (including obvious ones like heating and travel, but also email traffic, web browsing, paper use and meals) and have put in place internal guidelines to (i) reduce our consumption, (ii) buy offsets for certain activities such as flying, and (iii) start owning renewable power generation capacity that helps avoid emissions.
Since this topic started with the Tesla Model 3, one of the steps we have taken is indeed to switch our car fleet (currently 8 cars) to electric vehicles. We already own 4 electric cars (3 earlier model Teslas and 1 Renault Zoe) and have 4 Tesla Model 3s on order since April 2016, which we hope to see delivered soon. This will allow us to have an all-electric car fleet to make the trips that are not feasible by train or public transportation (for a 65-strong staff). Our next step will be to actually own solar power generation capacity – we have won the right to the SDE tariff (under the auctions run by the Dutch government every year) for 1,500 kW of solar panels, which will be installed on greenhouses and adjacent water basins not far from our Utrecht office by 2018. Such capacity will generate carbon emission savings equivalent to our full consumption by end 2018 and we expect, through further investment, to be able to offset our own consumption nearly 7 times by the end of 2020, even taking into account the growth of the company.
Every bit helps, and we can all do our part smartly – and profitably (and without draining the public purse – the SDE tariff we get is competitive with the retail price of electricity in the Netherlands).
Jérôme Guillet co-founded Green Giraffe in 2010 and was a Managing Director until 2021.