Why Elon Musk should build nuclear power plants
Elon Musk has completely revolutionized multiple industries in a very short amount of time. He usually approaches each market with three strategies:
- Reduce the product into its fundamental principles (an approach known as first principle thinking)
- Take control of the value chain
- Create a compelling story that changes the perception of the industry
Electric is the new black
One of these industries is the automobile sector where Elon established himself with Tesla. One of his first goals was to change the perception of electric vehicles from a lame middle-class equivalent of Khaki pants to an exciting sports vehicle.1
He did this by starting at the very premium end of car sales with the Tesla Roadster. The Roadster started at $80,000 base price and was considered a completely new kind of electric car. Not only did the Roadster change the perception of electric cars, but it also gave Tesla a chance to slowly ramp up production since only about 2,450 cars were sold.
The Tesla Model S displayed as an aspirational luxury car with technological touch.
The later models S and X continued to reinvent verticals within the automobile market. After many decades of rejecting electric cars as a consumer's dead end, large auto manufacturers slowly turned around to face reality: electric vehicles are the future. Elon himself summarized this strategy in a blog post in 2006 that he recently tweeted:
A friend just sent me this excerpt from a Tesla blog I wrote 14 years ago pic.twitter.com/Hr8w52ithY— Elon Musk (@elonmusk) January 29, 2020
But Elon had to do more than just to come up with a new story of electric cars and build a slick design. He knew that he would not be ablet to compete with automobile manufacturers if he was playing their game of producing cars.
The accepted model was that a car manufacturer like the German Volkswagen was essentially the assemblers of car parts produced elsewhere. A typical car consists of around 30,000 parts and most of them are manufactured by sub-suppliers that are highly specialized. This approach can drive down unit costs significantly and enable car manufacturers to focus on your core business of assembling and selling cars.
However, there are also huge downsides to this approach. Elon realized that by outsourcing a large part of the manufacturing process traditional car companies not only lost know-how - they also became inflexible. Tesla took a radically different approach and started to design and manufacture everything from scratch. For example, in 2018 Tesla decided to design its own AI chips for processing data to ultimately enable autonomous driving.2 Most automakers would consider designing computer chips an endeavor completely out of the scope of their core business.
One of the many competitive advantages coming out of this total control over the manufacturing process is Teslas over the air updates. They pioneered this method of enhancing the functionality of the car or even adding completely new features through software updates.3 Other manufacturers are still not even close to achieving a similar feat within their product lines.
And then there are rockets.
The earth is not enough
Musk has a clear and logically induced, nonetheless extraordinary vision: he wants to make the human race an interplanetary species. He has identified Mars as the most qualified of the planets. The first problem to tackle was how to get there. Launching rockets is expensive.
Elon used his skills of first principles thinking perfectly in the space industry. As he observed:
“Obviously the lowest cost you can make anything for is the spot value of the material constituents. And that’s if you had a magic wand and could rearrange the atoms. So there’s just a question of how efficient you can be about getting the atoms from raw material state to rocket shape.” - Elon Musk
He estimated the costs of raw materials for a rocket to around 2% of the total manufacturing costs. That gave him confidence that the true cost of going to space might be much lower than the current prices suggested.4
Again, he took complete control of the manufacturing process. 70% of the Falcon 9 rocket is manufactured inhouse. This enabled SpaceX to produce extraordinary innovations like the reusability of its rockets. But it also confirmed his suspicion that the price of launches could be reduced significantly. Between 1970 and 2000 the prices for sending a payload into space remained relatively steady at US$ 54,000 per kilogram. The Falcon 9 reduced this price to US$2,270 per kilogram!5
Lastly, Musk knew that he would not achieve his goal of reaching Mars without sparking a renewed excitement in space travel. He used publicity stunts like the Tesla Roadster in space to reinvigorate the desire to explore the universe waiting beyond our planet.
There is another industry with surprising similarities to the car and space verticals: nuclear power.
While electric cars have been identified as one of the many necessary solutions to climate change, space travel and colonization is our backup in case we fuck it up. Both industries have suffered from a decline in interest and innovation for decades.
The misunderstood technology
Nuclear power has been doing even worse. It has been unpopular since it's inception. You cannot help but associate the power that is produced by nuclear fission with it's much more devastating evil twin, the nuclear bomb. When something goes wrong in a nuclear plant it is dramatic and in turn great material for a movie or TV show (like the excellent Chernobyl).
However, these accidents don't occur very often. Only three serious ones have occurred in the history of nuclear power and killed a total of 31 people. That is less the number of people killed by coal emissions every day!6 Many political forces around the world, among them green parties, have adopted a stance against nuclear power. Absurdly, nuclear power might actually be the solution to many of our environmental problems.
Great examples of countries that have used nuclear power to decarbonize their energy production are Sweden and France. They emit less than 10% of the world's average of carbon dioxide per kilowatt-hours.6 And if that weren't enough, those countries produce cheaper energy too.
I come originally from Germany where the government abruptly decided to close down nuclear power plants throughout the country. They proceeded with heavy investments in green energies like solar and wind. The problem is that the sun doesn't shine all the time and the wind doesn't always blow. Germany produces at times more energy than it's grid can possibly handle. The result? It has to pay neighboring countries to offload energy onto their grids.7 Not a bad deal for France that got paid to use free energy.
Most problems cited around nuclear energy, like storing waste and security, are often exaggerated. And many of them are being solved with modern technologies like Bill Gates' company TerraPower. TerraPower's plant designs reuse depleted uranium, so in effect waste from older nuclear plant models. The plants are also much safer as they can operate at lower temperatures.
There is just one major problem TerraPower faces: the price of one plant. A demonstration reactor's cost is estimated at a royal $3 billion. Gates had signed an agreement with China to build the reactor, but it was shattered because of the trade war with the US. Current tensions between the US and China due to the Covid-19 crisis make it unlikely that this project will resume.
If even Bill Gates failed so far to revamp the nuclear power industry, who can succeed? Elon Musk might be the one. He has an unrelenting focus on driving down costs of new technologies and the ability to create new stories for dusted industries. If we want to stand a chance to slow down or even revert climate change, we need a stable, clean, and renewable source of energy. And Elon Musk might yet again be the one to deliver.