Tesla’s stock price rose sevenfold in 2020. It is now the fifth highest valued American company and by far the world’s highest valued car company.
Whether or not this market valuation is warranted, Tesla’s cars have a snag: their battery packs weigh ~1200 pounds. That’s a lot of weight that each Tesla Model S has to carry around. By way of comparison, an entire Renault Twizy electric car weighs 1000 pounds, including a 200-pound battery.
All this extra weight may not limit Tesla’s business success, any more than the waste associated with other sellers of convenience and speed, like Amazon, have limited theirs. But it will guarantee that cars like Tesla’s do not come anywhere close to maximizing economic or environmental efficiency.
Tesla vs. Economy class
Electrifying transportation in an economic way is not rocketX science. There are a few simple ways to go about it:
- electrified railways, subways, LRT, streetcars, etc.
- lightweight battery-powered electric vehicles, such as e-bikes or small or slow or lower-range electric cars and trucks
- electric wired automobiles, like trolleybuses and trolleytrucks (which are now often equipped with small batteries in order to travel relatively short distances off-wire).
These options all share the advantage of not having to lug heavy batteries around. Not only does this make them a lot more energy-efficient (particularly in trucking; the battery pack of a Tesla Semi weighs an estimated 26,000 pounds), but it also saves large amounts of energy and other resources needed to produce large batteries, and avoids the later challenge of battery disposal. (A similar, less frequently discussed problem exists with regard to the energy needed to produce the many computer chips that semi-autonomous cars like Tesla’s require). In the case of electric railways or trolleybuses, not requiring battery-charging stations can also help to save money, and time, and avoid the environmental problems associated with “fast”-charging. Plus, railways are simply more energy-efficient than automobiles. And for e-bike batteries, which tend to weigh only 5-10 pounds, or for the smallest electric car batteries, battery-swapping stations might become viable, something unlikely to happen on a significant scale for car batteries that weigh over a thousand pounds.
Much of the confusion here comes from pursuing only electrification, rather than electrification and economization. While it is often pointed out that most electricity in the US is still generated from fossil fuels, and that even renewable sources of electricity can be problematic in various ways, what is almost never discussed is that even were 100% of US electricity to be renewable and non-problematic, driving electric cars like Tesla’s would still carry significant environmental opportunity costs simply because the rest of the world still generates most of its electricity from coal. America is not an island*: building and charging tens of millions of bulky car batteries means less power available for use elsewhere in the economy, and therefore possibly a greater reliance on imports of goods or services from other fossilier countries, or fewer fossil-free exports of goods or services to other countries. Ditto for social justice: spending needless trillions on cars means less money for investment in people.
*A Canadian digression: actually, the US economy is like an island to a certain degree, at least compared to most other, smaller countries. But what is especially annoying is that the same arguments used to promote Tesla-style cars are also found in countries like Canada. Since Canada’s electricity already is almost all non-fossil-fuel based (hydroelectric and nuclear) and cheap (especially in hydro-rich Quebec, BC, and Manitoba), the argument heard in Canadian media is that all we have to do is get that last little bit up to 100% “renewable”, and then we can enjoy buying EVs. This, of course, ignores the massive opportunity cost coming from the fact that the rest of the North American economy still gets most its power from coal and gas. We may have a responsibility to economize the use of our clean and cheap power in order to help other parts of the continent wean themselves off coal – especially as some of the pollution from that coal directly reaches our air and water. Maybe I have not been paying close enough attention, but I have never once heard or read this Econ-101 line of thinking in Canadian media. At best it is only implied, for example in the newly popular argument that we need to pivot from exporting oil to exporting more electricity to the US following the cancellation of the Keystone XL pipeline by President Biden.
Battle of the Sedan
Similar challenges exist for conventional electric cars with regard to concerns like traffic jams, passenger and pedestrian safety, and ease of use for elderly people, people with disabilities, etc. Many Tesla supporters claim that autonomous driving will eventually solve each of these issues. That may or may not be true (or, to put it another way, it’s very probably not true) but even if it were true, it still ignores the pesky reality of opportunity costs, which force one to ask not merely “how might this improve things?” but also “how far from perfect would this still be?”
A future built around autonomous electric cars would still create more road traffic (even if they were able to travel in Musk’s underground tunnels) and require far more resources than would a future built around electric rail, lightweight electric vehicles, or wired electric buses and trucks. And that is without even counting the biggest opportunity cost of all: delay. Even if we get to a future of safe and fast electric autonomous driving by, say, 2030 or 2040, that still leaves a decade or two of lost life-years and injuries from car accidents, wasted time and stress in traffic jams, and other forms of loss, which could all be reduced much sooner than 2030 if we act intelligently.
This vision of the future also begs a further question: if cars are going to be driving themselves while we relax, then why do we even need them to have the top speed of a sports car? Where exactly are we rushing to in that automated world? And if we really are still in such a rush, why not simply have them drop us off at the nearest train station? Trains, unlike cars, can travel at high speeds without wasting too much energy.
Of course, a counter-argument to all this it that people actually want the type of cars that Tesla makes. And Tesla’s cars are still better than the internal combustion engine status quo, so why make the perfect the enemy of the good? Well, sure, that is an argument that can plausibly be made. But it’s not exactly the Tesla ethos, is it? I’ve never heard anybody say “hey, have you seen my new Tesla? It’s relatively decent. That Elon Musk is a real evolutionary”.
Many Tesla supporters still believe the company will change the world. With a market capitalization of 794 billion dollars, it could actually do so now. A good place to start would be no longer making cars with batteries as heavy as full-grown cattle.
Future Economics 
