Insights from a Top-Notch Cleantech Businessman
In the 10 years I’ve known Kansas City-based cleantech businessman Fritz Maffry, I’ve always been impressed with his understanding of the macro issues associated with energy and transportation. Fortunately, Fritz has the wonderful habit of jotting down his thoughts periodically and publishing them to a small group of colleagues. But these insights are too astute and too valuable to keep under wraps, thus I’m publishing this piece I received from him yesterday.
Hello. Tesla is moving forward with the $2.6 billion acquisition of Solar City. Our analysis of why this is happening is largely confirmed by Musk’s comments in the last few days: they want integrated, pre-tested, optimized, complete solutions–and getting that kind of alignment without conflicts is pretty much impossible unless the firms have exactly the same interests—which now they will. Full solutions are coming out in energy storage, solar energy, electric vehicles and more to come.
For those that are not keeping track, despite the media cascade since the “accident,” Tesla has gone up in value to where it is now closing in on its high of the year. Tesla took their autonomous automotive effort back in house; some people are now handicapping them as a smart, well-led effort that is near the front of the pack, with focus and ability to execute. With GM and Ford back significantly, and Apple experiencing some apparent delays, Google, Uber, and Tesla look to be front-runners in the next trillion dollar industry.
Tech has swept the top five spaces in market valuations of US-based companies, and each of them is also extremely secure in its cash position. It used to be all oil companies; now it is tech in the driver’s seat. They’ve also cultivated a lot of huge investment “seeds” in the next generation of solutions in growth opportunities, including autonomous, virtual reality, and artificial intelligence among the top targets.
Valuations of these markets go into the billions. It should be said tech is already transforming the economy more than is publicized; they have the world’s greatest brands, highest value companies, most cash, greatest growth opportunities in front of them, and brilliant management with resources to execute.
We think the top five have some self-generating synergies that will become virtuous self-supporting realization platforms; big tech of the new generation is much more likely to succeed than chasing small tech that lacks a critical mass of fabric of solutions. This generation of tech is unlike IBM, HP, Oracle, etc., in that they offer solutions that are direct user cases, experiences at the customer level, so the brand with the consumer is a real relationship. This contrasts with the old tech working at the IT department level on enterprise or business to business solutions. Since these new techs such as Google, Apple, Facebook, Amazon, and Microsoft all define their brands with user experiences, those will be enlarged in scope.
In the electric vehicle space, China kicked into a new gear, moving to a higher level of volume that is far ahead of Europe and North America. This is no time for complacency as the global economy prioritizes autonomous vehicles, renewables, virtual reality and energy storage, moving from interesting futures to the main economic battleground for superiority in the next two decades. The US cannot rely on competing with utility centric models, given that the markets are changing so fast. Tech will take the role of lead change-agent, spearheading innovation and change here; in fact, they already are.
The federal government is now embarrassed as to how huge mileage and emissions misrepresentations have been going on for two decades, but the story is changing strategies. VW is a great case in point as they have massively shifted investment into electric formats going forward. We need government to be smarter about working with tech, regulation, incentives and research.
In summary, tech is nailing it in growth and profitability, resources to win the future. Speed matters, and superbly executing leaders are hard to compete against. China is moving with great strategic purpose, thus, on all levels of government, the US must think strategically and actively towards gaining positive traction. Tesla is the fulcrum, leveraging the entire industry and knocking down barriers to make solutions more exciting and easier to acquire.
Anything energy- or transport-related are in near-term sights to be transformed. Those making plans should place a great of the emphasis on decentralized, open, competitively leveraged, and expecting leap frog progress with compelling benefits, stirring the public to demanding progress. The solutions will be there; there is little concern on product side as to where this is heading; advancement is exceeding anything expected, as compared to traditional industry where small incremental changes are all that are expected.
Tesla CEO Elon Musk: “This is really all part of solving the sustainable energy problem, something that has been a goal from the beginning.”
A few articles readers may want to check out:
The smart assistant is becoming your life quarterback, and it will go on and on as systems get IQ 1000 artificial intelligence capabilities; this is high ground of solutions.
http://electrek.co/2016/07/28/emotorwerks-juicebox-charge-electric-car-amazon-echo-alexa/
Five years ago, we said tech is going to be the well-resourced change-agent on energy and transport, and guess what: it is now accomplished, with even bigger things ahead.
https://twitter.com/usatodaytech/status/759045747883008002
Amazon and Microsoft leadership and results have been extraordinary, and we expect this to continue.
http://www.geekwire.com/2016/amazon-employment-2nd-quarter/
Current transport economics are about to crash into new models, with wildly different cost structures.
http://www.bloomberg.com/graphics/2016-merging-tech-and-cars/
China requires the US playing an A game. Are we there yet?
http://www.economist.com/news/business/21702786-chinas-dirty-race-clean-vehicles-charging-ahead?fsrc=scn/tw/te/pe/ed/chargingahead
Think about 1000 IQ electric autonomous cars, same IQ solar/energy storage systems, 1000 IQ virtual reality smart assistants with all the cloud set up to do your bidding in an ultra-efficient and satisfying manner. Care robots will have the same intelligence. Game change is underway and it is positively the biggest thing we will see in our lives; it boasts the ability to improve the quality of lives—everywhere, and for everyone.
Now if only our politicians are astute enough to enable this and not get in the way. Profound advancement is at hand; do we really get that? Are we working strategically to make it so? This should be Apollo mission, Manhattan Project, Marshall Plan priority action, alignment and execution. Why has it not been treated that way? We expect the market cap of top five techs to reach $3 trillion in the next few years, and then on to a trillion apiece for several of them.
