The Dawn of the EoT Era of Smart Cars, Trucks, Grids, and Homes

As postulated by the Strategic Games Model, there exist narrow windows in time where the emergence of a new strategic approach fundamentally changes the nature of competition between incumbent old-game businesses and disruptive new-game businesses and leads to radical shifts in market share as adoption rates of new-game offerings rapidly eclipse old-game offerings. According to the model, a new-game business disrupts one or more old-game businesses by either a) focusing on a specific market segment and delivering an offering with superior features or b) fusing two or more market segments and delivering an offering with good-enough features. Microsoft Excel in the late eighties is a good example of the former and Microsoft Office in the nineties is a classic example of the latter. While the windows in time where fundamental disruption occurs are narrow, the product category cycles associated with such disruptions commonly lasts for many years.

Moreover, the technology wave that links the product category cycles typically spans one or two decades and comprises three distinct phases:

1. Innovation Phase
2. Platform Phase
3. Suite Phase

For example, the PC technology wave comprised the IBM PC innovation phase, the Microsoft Windows platform phase, and the Microsoft Office suite phase, and the post-PC technology wave comprised the Apple iPod innovation phase, the Apple iOS platform phase, and the Apple mobile suite phase.

We believe that we are on the cusp of the next great technology cycle, which we formally refer to as the electrification of things (EoT) sustainability wave, or EoT wave for short. We also believe that this newly emerging EoT wave will comprise three distinct yet interdependent product category cycles, which we refer to as the smartcar product category cycle, the smart home product category cycle, and the smart grid product category cycle, or smartcar, smart home, and smart grid cycles for short. Since these product category cycles are all expected to last a decade or more, we believe that each will evolve in distinct innovation, platform, and suite phases, as illustrated for the first time in the sections below.

AI-Powered Smartcar Cycle within the EoT Wave

The diagram above illustrates the three distinct phases of the AI-powered smartcar cycle within the broader EoT wave:

1. Smartcar Innovation Phase
2. Smartcar Platform Phase
3. Smartcar Suite Phase

The blue arrow in the diagram highlights the expected smartcar evolution trajectory from innovation to premium platform to suite.

The diagram above illustrates the three distinct phases of the AI-powered smartcar cycle within the broader EoT wave for Tesla:

1. Tesla Roadster Innovation Phase in 2008
2. Tesla Platform Phase in 2012
3. Tesla Suite Phase in 2017 - 2018 Expected

The blue arrow in the diagram highlights the expected Tesla smartcar evolution trajectory from innovation to premium platform to suite.

AI-Powered Smart-Grid Cycle within the EoT Wave

The diagram above illustrates the three distinct phases of the AI-powered smart grid cycle within the broader EoT wave:

1. Smart Grid Innovation Phase
2. Smart Grid Platform Phase
3. Smart Grid Suite Phase

The orange arrow in the diagram highlights the expected smart grid evolution trajectory from innovation to low-cost platform to suite.

The diagram above illustrates the three distinct phases of the AI-powered smart grid cycle within the broader EoT wave for Tesla:

1. Tesla Smart Grid Innovation Phase in 2015
2. Tesla Smart Grid Platform Phase in 2017 Expected
3. Tesla Smart Grid Suite Phase in 2020 - 2025 Expected

The orange arrow in the diagram highlights the expected Tesla smart grid evolution trajectory from innovation to low-cost platform to suite.

AI-Powered Smart-Home Cycle within the EoT Wave

The diagram above illustrates the five distinct phases of the AI-powered smart solar home cycle within the broader EoT wave:

1. Smart Grid Innovation Phase
2. Smart Grid Platform Phase
3. Smartcar Innovation Phase (not shown)
4. Smartcar Platform Phase
5. Smart Home Suite Phase

The orange and blue arrows in the diagram highlight the expected smart home collision-path evolution trajectories from innovation to low-cost platform to suite and from innovation to premium platform to suite, respectively.

The diagram above illustrates the five distinct phases of the AI-powered smart solar home cycle within the broader EoT wave for Tesla:

1. Tesla Smart Grid Innovation Phase in 2015
2. Tesla Smart Grid Platform Phase in 2017 Expected
3. Tesla Smartcar Innovation Phase (not shown) in 2008
4. Tesla Smartcar Platform Phase in 2012
5. Smart Home Suite Phase in 2020 - 2025 Expected

The orange and blue arrows in the diagram highlight the expected Tesla smart home collision-path evolution trajectories from innovation to low-cost platform to suite and from innovation to premium platform to suite, respectively.

The collision point where the orange and blue arrows collide in the upper right-hand quadrant of the diagram above depicts Elon Musk's vision for sustainable energy solutions. It represents a point in the not-so-distant future where most middle-class and upper-middle-class families in developed countries and upper-class families in developing nations will likely have solar panels on their roofs, battery storage in their garages, and two all-electric cars (one sedan for work and one SUV for family trips) in their driveways. Musk is betting that many of these fortunate families will visit their local Tesla showroom and purchase an end-to-end sustainable energy solution from Tesla comprising Tesla solar arrays, Tesla power walls, one or more Tesla wall connectors, a Tesla Model S or Model 3, and a Tesla Model X or Model Y.