Following the Volkswagen emissions scandal, Tesla’s CEO Elon Musk and 44 CEOs, investors and environmental organizations sent an open letter to Mary Nichols, the chairperson of California’s Air Resources Board (CARB). (By the way, no other auto executive signed the letter; more on this later.)
In the letter, the authors argue that industry has reached the point of diminishing returns in extracting greater performance from diesel while reducing air pollutants. Therefore, they reason, any money spent by VW attempting to fix cars that cannot be fixed or removing these cars from the reads before the end of their useful lives will be wasted.
Instead, the signers encourage the CARB to direct VW to “cure the air, not the cars.” They suggest to release VW from its obligation to fix diesel cars already on the road in California and direct the company to accelerate the rollout of zero emission vehicles and to achieve at least tenfold reduction in pollutant emissions over the next 5 years.
Furthermore, VW will be required to invest in new manufacturing plants and/or research and development in the amounts that it otherwise would have been fined. Specifically, the letter suggests that VW will invest in building a large battery manufacturing plant.
I think this proposal deserves consideration.
Cynics might suggest that Musk is using this crisis to promote awareness to electric vehicle (EV) technologies and drive market activity in a space that continues to exhibit a disappointedly sluggish growth. Since its introduction in 212, Tesla’s global cumulative Model S sales just made it passed the 100,000 units mark, compared to 88 million cars sold annually worldwide.
You could also suggest that the announcement in 2014 that Tesla is releasing its patents to the public was a publicity stunt and a desperate attempt to prop the fledgling EV space.
Or, you might say, the ability to meet future demand for electric vehicle will be severely hampered by limited availability of battery packs. In 2014, Tesla broke ground on the Gigafactory battery manufacturing plant outside Sparks, Nevada. Forcing VW to spend some of its money on the same is going to further mitigate supply chain risks for Tesla, and for Tesla’s competitors, which, I believe, is the real motivation behind the letter.
Although Musk has an auto manufacturing company to run, he is looking farther than that. He truly wants to “cure the air” and has proven time and again he is willing to invest his own money and take financial risks for causes he believes in.
Musk is willing to share, collaborate and be in a “coopetition” where it accelerates innovation and spur more competition. Unfortunately, traditional automakers do not operate in the spirit of “the rising tide lifts all boats” and are unlikely to join Musk and the other executives in learning from the VW scandal and use it as an opportunity to move the industry forward.
(Photo: Francis Storr via Flickr)