Tesla’s Musk says U.S. electricity generation needs to double

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CEO Elon Musk believes that the electrification of personal transportation will require doubling the power generation capacity.

And while the increase in production may seem intimidating to anyone worried about the transition to electric vehicles, investors – and American consumers who turn on the lights – shouldn’t worry.

“If we switch all transportation to electricity, the demand for electricity will roughly double… it’s going to create a lot of challenges with the grid,” Musk said Wednesday at CodeCon, a conference held at the Waldorf Astoria in Beverly Hills.

Now, Musk isn’t fooled: he’s built multiple entities worth tens or even hundreds of billions of dollars. And Tesla (ticker: TSLA) is essentially America’s first successful car-making startup for the past 90 years.

But to make the electric vehicle revolution a reality, utilities would need to generate many more electrons. Cars, after all, would be powered by electrical outlets instead of gas pumps.

If demand for electricity doubles overnight, the United States could experience progressive blackouts, but this dystopian view is impossible. It will take a generation to make a dent in the personal transport fleet: today there are approximately 276 million cars, trucks, buses and motorcycles on American roads. About 1% of them are fully electric.

Even if President Biden gets his way and 50% of new car sales in the United States will be fully electric by 2030, the US fleet could only represent 15% of fully electric vehicles by the end of this year. the decade. It will take a generation or more to convert all vehicles from gas to electricity. There could be as many as 50 million all-electric vehicles on the roads by 2030, but that shouldn’t be enough to cause an electrical crisis.

Still, that doesn’t mean the United States shouldn’t think and prepare.

Consider how many barrels of oil the United States consumes each day: roughly 19 million. That’s 7 billion barrels a year. About 40% or 50% of barrels are used to power cars, according to BP’s annual energy report. (Planes and homes need their fuel, too.) Cars burn about 3 million barrels of oil each year.

A barrel of oil contains around 6 million British thermal units, or BTUs, of energy. This translates to approximately 1,700 kilowatt hours of electricity. This means that American cars consume approximately 5,000 terawatt hours of electricity each year. Total electricity consumption in the United States in 2020 was around 4,000 terawatt hours, according to the EIA.

Musk is right: for the United States to only have electric vehicles, the capacity to generate electricity would have to nearly double.

The increase in demand is so slow, however, that there is still time. If the penetration of electric vehicles in new car sales reaches 90% by 2040, the US fleet will likely be two-thirds electric by then. The US economy has years to plan. Yet the electrification of vehicles will lead to bigger problems than just building more power plants. “Even if you increase sustainable production at the utility level, you will still have a problem at the distribution level,” Musk said.

More power means more power lines, as well as more utility substations that require space in cities. Musk says the local generation – at the household level – is part of the solution. This is why Tesla also sells solar roofs and battery backup power systems to residential customers.

Techno-optimists undoubtedly believe that business and technology will meet the growing demand for electricity. There is, after all, a profit in meeting the demand for anything. And profit is what investors expect from their portfolio companies.

“We need big developments in sustainable power generation… paired with batteries… for continuous power,” added Musk. “A lot of good things are happening in this regard. ”

This is the vision around which he builds his business.

Write to Al Root at [email protected]