3,2,1,0…..its 2,0,1,3

Elon Musk is a smart man. The former PayPal partner has his hands full with three startups today. These are Solar City, SpaceX, and Tesla Motors. He has tasted considerable success on all three. But, the focus of this post will be on Solar City and Tesla. We’ll go to space some other time.

Solar City and Tesla Motors are both public now. Briefly, Solar City is in the downstream solar business (installing & financing solar panels) and Tesla Motors is in the electric vehicle business. There has been a lot of talk about the long-term viability of both these firms. Tesla has been questioned about its product variety (it’s really a single product firm) and how such diversification (Model S) would hurt its ability to manage suppliers and keep costs to a minimum. Solar City has been criticized for its high costs of customer acquisition and its dependence on the Investment Tax Credit that will expire December 2016.

I am not going to delve into any of this here. My focus is at a more macro level. Recently, Tesla announced the launch of solar powered charging stations in the east coast. A half an hour charge at one of these would get you from Boston to DC. Who is in charge of these charging stations? Solar City. Musk is creating an ecosystem for his portfolio. A self-reinforcing portfolio if you will.

The Tesla batteries are helping store the solar power generated by Solar City panels on Walmart rooftops. The Tesla cars are being recharged at Solar City stations. This is amazing to witness. News broke earlier today that Avis is acquiring Zipcar for $500 mn in cash. I can see Musk planning a foray into the car share space in the future. He will be extremely well positioned to do so. A major assumption of course is penetration of the EVs.

The other bet that seems to have gone the South African’s way is the battery part. Better Place helmed until recently by Shai Agassi took a bet on swapping out batteries after they juice out. Musk went the charging stations at regular intervals way. Agassi was recently ousted and the firm is now helmed by Better Place Australia CEO Evan Thornly. The Ofers of Israel (shipping tycoons) have a significant investment and one of them Idan Ofer is playing an operating role in the firm.

It’ll be interesting to see if battery standardization becomes a reality in the EV industry. My bet is that it will not. I say so simply because of different power and mileage requirements that users might demand. And size determines all as far as batteries are concerned, in the current schema at least. Imagine the ICE being the same across all cars today?

That said, it would not be difficult for Better Place to setup its own recharging infra (technologically). Though, the issue of capital outlays required for the same might not go too well with the venture investors who have been patient for about 6 years now.

On a tech tangent, I want to talk about toothbrush tech. There were record 138 patents filed in 2012 on novel toothbrush tech designs! The filers spanned the gamut from behemoths like Colgate (smart brushes that adjust according to surface; gums versus teeth) to solo folks who are designing the bristle tilt to be a permanent downward 45 degree (which is recommended). The most interesting one for me was the disposable pellet dispensing brush. The paste is stored as dried pellets which when under running water generate the semisolid paste.

Happy New Year everyone!


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