Ironically, this is the first time I've toured this particular auto-assembly plant (which was first owned by General Motors; then by New United Motor Manufacturing, Inc., a joint venture between GM and Toyota; and now by Tesla), even though much of my understanding of innovation and sustainability comes from bird-dogging the evolution of this building over the years.
When I was first asked to advise NUMMI, the GM-Toyota joint venture that reopened the plant in 1984, the invitation was presented as an opportunity to see how the increasingly dominant Japanese approach to manufacturing differed from the American model. When the team inspecting the plant discovered a huge old crack in the paint bay, through which millions of gallons of paints and solvents had contaminated the soil underneath, the GM response was "Call the lawyers." Toyota overrode them: "Call EPA and do whatever they ask." That became the new template. Within a year, the plant, which, under GM, had produced North America's shoddiest cars thanks to a workplace riddled with low expectations, was producing the best cars in the U.S. A decade later, when NUMMI was seeking to open a new truck-assembly line, there was great anxiety about getting the needed permits for what would be the largest new source of air pollution constructed in the Bay Area in many years. I advised that, given the plant's history of openness and environmental leadership, it might be smooth sailing. Six months later the permit had been issued in record time. Culture mattered, it turned out.
But cultural transplants have their limits. When GM abandoned the partnership as its bankruptcy overtook it, NUMMI had been given the lead role in repairing recalled vehicles in Toyota's accelerator crisis; after all, it was the company's best facility. But it was also Toyota USA's only unionized plant. The U.S. management didn't want that precedent -- getting out from under the union was more important to them than quality -- so they decided to shut down the plant. United Automobile Workers President Bob King organized a delegation to Toyota City, Japan, to appeal the decision. (I joined it.) Tokyo was sympathetic, but U.S. management stood firm, and in April 2010 the plant was shut down, its 5,400 employees laid off.
A month later Tesla announced that it would use part of the facility to build its Model S. But the prospects that Tesla, then struggling, would ever utilize this enormous plant seemed remote. So today, touring the Tesla Factory as part of the World Energy Innovation Forum, I find it stunning to hear that Tesla will soon need the entire building when it opens its second assembly line on the site.
If the NUMMI plant was light-years more innovative than the old GM plant, what I see today is more revolutionary yet. The plant is actually quieter than many open-plan offices, and cleaner. The dirty work is done by the robots, so the smaller work force has much better jobs.
And it may be the first time that a major tech-industry conference has convened inside an auto plant. Opening the Forum, Tesla CEO Elon Musk laid out the ideas behind this transformation. The internal combustion engine, he argued, "is an enormous kludge -- all those cylinders and millions of explosions to manage." It's remarkable, he pointed out, that engineers can make these engines reliable -- which, in his (and my) youth, they were not. "You didn't take it for granted that the car would start," he recalled.
Musk laid out a powerful vision. Innovation and sustainability mean you have to design from first principles -- from the ground up. That's why Tesla customers rave more about its performance than its fuel savings. "The engine block of an internal combustion engine is a very heavy mass, perched high, up front, on a rubber mount," Musk explained. "It's like trying to steer a big bobble head around a curve. We get to put the battery, the center of gravity, low and in the center. It's a totally different experience." (It is. I've driven one.)
Challenged on the $5-billion investment that Tesla is about to make in its Gigafactory to make lithium ion batteries, Musk pointed out that to produce the 100 million electric vehicles needed to replace the gasoline engine, it would take 200 such factories. "There's no choice but to go to scale," he said.
Musk was followed by Sun Edison CEO Ahmad Chatila and Tom Warner, head of SunPower. Innovation Forum Chair Ira Ehrenpreis put their panel in context. He pointed out that if you had, at the moment when Solyndra went bankrupt, invested in SunPower, your investment would now have returned 788-percent. A stake in Sun Edison did even better, with a 1,148-percent return since the summer of 2012. So the gains by these two companies alone absolutely dwarf the Solyndra losses -- and, as Ehrenpreis pointed out, the fact that most of the auto companies operating in the U.S. in 1920 were bankrupt by 1935 hardly meant that the automobile was a business flop.
More startlingly, 92 percent of the all-new electrical generation added to the U.S. economy in the first quarter of this year was renewable -- and more than half of that was solar. Much of this is being added not because of state policy requirements but because solar is now cheaper in many places, cheaper even than currently low-priced natural gas. The fact that the sun is free finally counts in the marketplace.
How much this matters was explaind by Stanford's Stefan Heck, who laid out the coming resource revolution, which will be driven by the fact that the world today is supporting 100 times more consumers, with 10 times more income and a growth rate that is 10 times faster than ever before. Reserves of minerals and fuels are getting more expensive to reach, and grades are getting lower. Kuwaiti crude oil costs less than $15 per barrel, whereas the new Caspian field at Kashagan produces oil that costs over $150 per barrel.
In his book with Matt Rogers, Heck argues that food and mineral productivity gains must exceed 1 percent every year between now and 2030, and that for energy and water we need gains in excess of 3 percent. In the last 15 years the previous century's gains in natural-resource prices have all been wiped out in real cost terms. Commodities are now correlated with oil because all of them take so much to produce. (Sixty-seven percent of the cost of international coal, for example, accounts for the embedded diesel used to mine and ship it. And Mogen Smed of Calgary builder DIRTT points out that the biggest cost in constructing a building is the freight to get stuff there.) But the appropriate productivity revolution in the use of oil hasn't followed.
But he's an optimist, because the "Black Swan" innovations needed are there to be plucked. A car, he points out, is used 2 percent of the time if privately owned and used. If deployed in a shared fleet -- think Zipcar or even Uber -- it get 60-percent utilization. So the steel, rubber, glass and aluminum we need to drive the same cars around can drop by 97 percent just from organizing the way we own them differently. The next-generation vehicles, which are autonomous, connected, electrified and shared, will push the cost of driving down from the current $0.67 per mile to $0.10 per mile. If we can make that transition in 40 years, we'll meet the needed 3.2-percent annual gain in transportation energy efficiency.
But what about the politics of this all? Former Michigan Gov. Jennifer Granholm gets that nasty little assignment. It helps that we were meeting in the Tesla factory where some very modest federal support has enabled an enormous business win. But Granholm conceded that for the moment, Congress is broken, and urged a focus on "distributed policy" -- incentives and investments from the city and state level up.
The takeaway? This old factory has seen many eras, good times and bad, but the one that is just starting bids fair to be the most exciting -- if not necessarily the easiest -- yet.
A veteran leader in the environmental movement, Carl Pope spent the last 18 years of his career at the Sierra Club as CEO and Chairman. He's now the principal advisor at Inside Straight Strategies, looking for the underlying economics that link sustainability and economic development. Mr. Pope is co-author -- along with Paul Rauber -- of Strategic Ignorance: Why the Bush Administration Is Recklessly Destroying a Century of Environmental Progress, which The New York Review of Books called "a splendidly fierce book."