Will Tesla Revolutionize Real Estate?

During the past few years no company has turned more heads or better shown how the world might evolve than Tesla, the electric-car company on the verge of changing every home and factory in America.

Tesla may seem like a start-up car company but it’s far more than that: It’s a conceptual pioneer in the mold of such firms as General Electric and Google, a company with wider ambitions than auto production.

Tesla says that its goal is to “accelerate the world’s transition to sustainable transport.” That’s undoubtedly true, but if Tesla is successful it will create a new electric economy, one which largely does away with the need for oil, natural gas and coal. The ideas promoted by Tesla have the potential to drive the price of oil down to pennies per gallon, transform national economies, reduce global warming, end energy dependence and change the nature and value of residential real estate.

If such goals seems improbable consider this: No less an agent of change than Larry Page, Google’s co-founder and one of the most insightful entrepreneurs of our era, has said that rather than leave his fortune to charity the money might do more good if it was simply given to Elon Musk, Tesla’s visionary founder.

“Especially in tech,” Page explained at a TED conference, “we need revolutionary change, not incremental change.”

So how is it that Tesla might allow you to electrify your home with no more environmental impact than a field of daisies? To answer this question we have to look at how homes have evolved — and why they may gain new value in the future.

Real Estate & Technology

The modern home is made possible with the development of two nifty pieces of technology which most of us regard as entirely common: Plumbing and electricity.

The catch is that until relatively recently such advances were hardly widespread. We forget that by 1934 only 11 percent of U.S. farms had electricity while figures from the 1940 census show that almost half of all the homes in America lacked indoor plumbing.

In terms of electric power we are only at the first stage of a renewable energy revolution. Today about four percent of our electrical generation comes from solar energy but by 2020 — just five years from now — between one to four million homes are expected to be powered with solar panels, depending how quickly costs fall and efficiency increases.

More solar homes mean less need for billion-dollar generating stations that rely on coal, oil and nuclear fuel so rate hikes for new facilities can be slowed or even eliminated. More solar energy also means less pollution, fewer greenhouse gases and little or no dependence on foreign oil production. Essentially, we will go from the central generation of electricity to a distributed network, one where each node — each home, office or factory — produces some or all of its own power and in times of excess generation can feed power back into the system.

Where Tesla Fits In

Tesla is seen as a car company so what does it have to do with homes and real estate?

As it happens, Tesla founder Musk is also the chairman of SolarCity, the country’s largest provider of residential solar energy systems. A major SolarCity player is Google, which has invested $280 million “to create a fund that will help SolarCity finance more solar installations across the country.”

Solar power by itself is not enough to spark a real estate revolution. If the goal is residential energy independence then solar energy does not solve the problem because it’s an at-the-moment power source. It can work very nicely on a sunny day in Phoenix or Pensacola, but at night or in the face of a storm the power is not there.

The missing piece is an effective way to store energy and the most-practical solution is a battery of some sort. The catch is that battery technology is only now beginning to evolve in a way that makes solar homes — and much else — energy independent.

And what company is most plainly identified with advanced battery technology? That’s also Tesla.

Meet The Powerwall Home Battery

Tesla operates a 5.3 million square foot auto manufacturing facility in Fremont, California. Instead of sending jobs overseas, it’s erecting a “gigafactory” with Panasonic at a cost of $4 billion to $5 billion to produce batteries in Sparks, Nevada. This will be the world’s largest lithium ion battery manufacturing facility, a factory that by 2020 will be able to power 500,000 cars per year.

As it happens Tesla does not just produce cars. It’s also developing another product, the “Powerwall.”

The Powerwall, says Tesla, “is a home battery that charges using electricity generated from solar panels, or when utility rates are low, and powers your home in the evening. It also fortifies your home against power outages by providing a backup electricity supply. Automated, compact and simple to install, Powerwall offers independence from the utility grid and the security of an emergency backup.”

Like batteries and solar panels, the technology and efficiency of the Powerwall system will only improve. Combine solar panels with an effective on-site battery system and millions of additional homes will be able to function largely — if not entirely — off the grid. The day’s sunlight will effectively be available around the clock and not coincidentally a self-fueling home might also supply power to an all-electric vehicle, say a Tesla.

In May, Telsa announced it will start selling the Powerwall home battery to let homeowners store solar electricity. The Powerwall home battery starts at $3,000 for a 7 kilowatt-hour model and $3,500 for the 10 kilowatt-hour version. Those prices don’t include a DC-to-AC power inverter or installation.

“The Reno Sparks transactional markets were running at near pre-recession levels in June.  The unit sales in the market are up more than 15 percent on a year-over-year basis,” said Craig King, COO at Chase International brokerage, covering the Lake Tahoe and Reno, Nevada, markets. “Last year seemed to be a bit flat, but our activity levels in the market place have increased dramatically. We are beginning to see the influence of companies like Tesla and Switch in the early stages of locating a workforce in the area.”

The implications of residential energy independence are enormous. There will be far less need to mine, drill or frack; the cost to move energy in pipelines and supertankers will fall and the political importance of oil-producing countries will diminish. Wars over energy will be a thing of the past because energy itself will be easily extracted from sunlight. With “net metering” allowed in many states, homeowners will be able to sell excess power back to local electric utilities. Because installing solar systems on millions of houses is a localized business, such systems will create large numbers of jobs inside our borders.

And if there’s a solar accident, say an especially sunny day, who will care? No harm, no foul.

Google — with Project Sunroof — has already begun to calculate the number of usable sunlight hours for a given address and the potential savings which can result from a solar panel installation. Many homes are now on the Sunroof system and more are coming. It’s hard to imagine that real estate listings will not soon include Sunroof ratings and show usable sunlight hours.

These transitions are not in the future. They’re happening now. Little wonder Larry Page thinks there’s a huge opportunity to better the world through Elon Musk.

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For the latest real estate news and trends get a FREE issue of our award-winning real estate newsletter, the Housing News Report.

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