Last month, an oil industry magazine based in Canada – you know, that country that considers ‘tar sands’ a good idea – placed an automobile on the front of its cover. So far so good, nothing unusual about that. To make a car go you need lots and lots of oil.

Except not this car.

This oil industry appears concerned that a tipping point in energy choices will be the 'liberating' moment people choose not to use oil.

This oil industry appears concerned that a tipping point in energy choices will be the ‘liberating’ moment people choose not to use oil.

And the fact that Alberta Oil:The Business of Energy magazine chose the
Tesla Model S for its July 2015 front cover – replete with the headlines “Hell on Wheels” – demonstrates the power of liberalism.

Come again?

Liberal, yes. At least in the eighteenth-century, economic version of the word. What Elon Musk, CEO of Tesla, has accomplished over the past couple of years (and especially in 2015) is nothing short of revolutionary, so extraordinarily liberating that the basis of the global twentieth-century economy (oil) is, in fact, deeply troubled by Tesla’s very “electric” presence.

Let’s call Mr. Musk what he is: a neo-liberal.

To better understand how Tesla is a liberating force we need to travel back in time. There is also last years’ podcast “”Liberal” vs. “Conservative?” that provides some guidance on the definitions of these two terms.

In that podcast, I made the argument that the predominant force for liberal values arose from the exceedingly wealthy. When it comes to agents of change, historically, it is those in the upper echelons of affluence that trigger it.

So let’s use history, categorically, let’s use the history of automobiles to make this point. Twenty-first-century mass media simplifies this task with scores of articles that dare to compare Elon Musk to Henry Ford. Who am I to argue with such a simplistic allusion?

Historian Eric Foner rightly reveals that Henry Ford “did not invent the automobile,” he merely “developed the techniques of production and marketing that brought it within reach of ordinary Americans.” Much the same can be said of Mr. Musk.

Yes, I know. A new Tesla “Model S” is over $100,000 – but production of Tesla’s “Model 3” is in the works, and this is perhaps why Alberta Oil decided to put a Tesla on the front cover of its magazine.

Elon Musk has figured out a new business model, a bit of a tweak to that of Henry Ford’s. Whereas Ford found a way to standardize production through assembly-line vertical integration which then lowered the production cost of a single automobile to the point where the average American could afford one, Musk has discovered a similar, although, post-production motif. It’s what happens after you buy a Tesla that scares the bejeezuses out of the collective folks that drill, refine, and sell us all that oil that makes anything with a motor… go.

So yes, like Ford’s “Model T,” Tesla’s “Model 3” will be priced so the average American can acquire one (The “Model 3” is slated for delivery in 2016, but may be pushed back a year). And further, just as Ford’s “Model T” was a rugged beast that could travel America’s back roads (in 1920, 50% of America’s population lived in rural communities), Tesla’s “Model 3” is purported to go nearly 200 miles on a single charge, inviting its drivers to escape their urban confines… and all for around $32,000.

But wait!

The tyranny of Musk’s liberalism isn’t done yet. Not only is the “Model 3” affordable and capable of delivering a range that is digestible to the typical driver, it is the very post-production habits of the new “Model 3” owner that is truly liberating… and by every means a challenge to the oil-based economy of old.

And to explain this we need to take a peek at Mr. Musk’s altogether new business model. Just like the Ford Motor Company, Tesla will employ assembly line productivity to make its cars. There is nothing new here. But this is not the vertical integration business practice that drives “the Elon Musk vision.” No. Where Musk wishes to employ verticality is upon the post-purchase processes.

The what?

The habits that most people perform after the purchase of their car. Simply put, most folks buy gasoline to make their cars go. So here’s a simple question: does Ford Motor Company refine the oil to make the petroleum that the post-purchase Ford owner consumes? No, of course not.

But in the Tesla world, electricity is that spark that makes the automobile runabout (the Tesla “Model S” can go from zero to sixty in 2.8 seconds!). And who owns this electricity in the new Elon Musk business model? You do, sort of… at least with the purchase of a Tesla “Powerwall” battery hooked up to a “SolarCity” solar panel that you then lease (Musk does not own SolarCity, but he does own shares and has a seat on its board of directors). Get it?

Tesla's

Tesla’s “Powerwall” battery hangs in the garage storing electricity from a leased solar panel. At night, merely plug in the battery to the electric car – voila! Good to go in the next day.

The new post-purchase vertical business model places the owner of an automobile at the center. It works like this. The electric car, in order to go, needs a power source. So the car is at the bottom end of our vertical model. It is the power source that is the next rung up – and this is what the electric car owner will plug into. Musk is betting that most Tesla owners will also purchase the Tesla “Powerwall” Battery. After a full day of driving, the owner of a Tesla vehicle will pull into the garage and plug it into the “Powerwall” power source. That’s two rungs: the third? The Tesla “Powerwall” battery stores electricity gained from a solar panel – where Elon Musk is hedging that the owner of a Tesla car will lease a SolarCity solar panel. The panel is the third rung, drawing its ability to produce electricity from the fourth rung – the sun itself.

Sun, to solar panel, to “Powerwall,” to a Tesla owned automobile: a post-purchase verticality that bypasses both the oil industry and also the power companies. All that is necessary is for Elon Musk and Tesla Inc., to come up with is a vehicle capable of traveling near 200 miles, affordable to the average American, and whose power source is virtually free. Musk has nearly accomplished all three.

If he can do it, the effect will lead toward a transformation of the status quo and “liberate” the global economy from the stultifying grip of 100+ years of oil cartels and their dominance. It is truly radical, revolutionary, and by all means liberal.

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