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The savings that equals investment is just the preservation of the money used for investment spending.The expression savings equals investment does not include any accounting of new wealth produced or wealth depleted.I argue here that in order for the expression for savings to include an accounting of what happens to the level of wealth, that the equation for savings must be modified to include an additional element.Specifically, I show that we must add to the equation for savings the expression “net production”.The proper expression for Savings is Savings = Investment plus “Net Production”In this linked answer:Daniel Bright's answer to Is it possible to show that the investment = savings identity is not equilibrium but always true? Is it also possible to show that the reason it is always true is that the money saved is the same money that was used for the investment?I have shown a model where we define spending as the transfer of ownership of money for a purpose, and make the idea of what we consider to be a purpose for spending general enough to allow us to include all transfers of ownership of money as qualifying to be considered spending. Using this definition, I show a way to derive the savings equals investment identity.Using that model I am able to show that, not only is the savings equals investment identity a true identity, where saving is always equal to investment, but I also show the reason it is true is because the money saved is the same money as that initially used for investment spending. I leave it to the reader to review the linked answer or to refer to Chapter 2 of my book, Enlightened Capitalism, for a more detailed explanation.I called this definition of Savings, the “preservation of the investment money” or just “the preservation of investment”.As such, I then concluded that this savings that equals investment, this savings that is “the preservation of investment money” is just that, the preservation of money. Even though money is a form of wealth and is included in any calculation of total wealth, this “savings that is the preservation of money”, only describes wealth (in the form of money) that exists at the start of a period of economic activity, and continues to exist (as the same amount of money) at the end of that period. The savings that is “the preservation of investment” does not describe any new wealth creation, and, in fact, does not describe ANY change in the level of wealth, increase or decrease.So we have a quandary: How can we have an economic theory that does not describe changes in the level of wealth? The fact is, that in typical explanations of the Savings equals Investment identity, one might come across in economics courses, it is implied that somehow this Savings that equals investment DOES include changes in the level of wealth. And that, I believe, is not only not true, it has led to all sorts of confusion. After thinking about this, I realized that the expression for savings needed an additional element, if it was going to include any changes in the level of wealth. So I had to do just that. I had to add changes in level of wealth to the expression for savings.So I added to the definition of any savings that “results from a period of economic activity”, the amount of any changes in the total level of wealth that occurred in that economy. And actually not just added the amount of wealth created, but also subtract off the amount of wealth depleted.So, to the definition for savings I add “wealth created” minus “wealth depleted”. I call this quantity the “net production of wealth”, or simply “net production”.So this means the accurate expression for the amount of savings to “come out of a period of economic activity” needs to include the “savings that is the preservation of investment money” PLUS “net production of wealth”.So to include all Savings we have the following definition:Savings equals Investment plus Net Production.And that is the better, more accurate equation for savings than just savings equals investment.In this new expression for savings, we have some of the savings being the preservation of the investment money, and other savings being the net production of wealth. It is only the part of the equation for savings referred to here as “net production” that accounts for changes in the level of wealth.***Now, here we come to a very interesting point.In the macroeconomy, we have spending, of a certain amount, creating income for the recipients of that spending in the same amount. This is gross income, as we are including all transfers of ownership of money for a purpose. And the accounting of this spending does not describe in any way shape or form any change in the level of wealth, since all it describes is wealth in the form of money having its ownership be transferred from one person or entity to another.And we have added another element to the definition of the savings I am calling “net production” that does describe changes in type and amounts of wealth.Looking at this I realized that spending does not directly cause a change in level of wealth. It is only the net production of wealth that affects the level of wealth. And even though spending, and the economic activity it promotes can lead to production of wealth, a given amount of spending and income does not absolutely or uniquely determine the amount of net production that occurs.For example, it could occur that the same amount of income is associated with varying amounts of “net production”. Or it could occur that different amounts of income are associated with the same amount of “net production”.Therefore I finally came to the realization that, at least according to the model where I have described spending and income as I have, that “Income” and “Net Production of Wealth” must be accounted for on different axes. They are INDEPENDENT VARIABLES!For this reason I began to describe spending and income to occur on the “income axis”, and wealth production, maintenance and depletion to occur on the “wealth axis”.Further, unlike in microeconomics, in macroeconomics spending does not represent a “depletion of wealth”, just a transfer of ownership of money, where that money still continues to exist in the same amount. In macroeconomics, any change in the level of wealth, including the depletion of wealth, we must account for by a direct accounting of what happens to the amount and type of the wealth. The quantity of the spending, that is the accounting of the total amount of gross spending and gross income is describing only the transfer of ownership of money. And we must keep that accounting on the “income axis”. Whereas the type and amount of changes in the level of wealth is kept track of on the “wealth axis”.***In the macroeconomy “total spending” does determine the “total income”, they are always equal. But even though the accounting of spending is not the accounting of wealth, spending can promote production of wealth, or it can pay for activities that preserve and maintain wealth. And sometimes spending can lead to the destruction or depletion of wealth too.Spending and wealth are certainly related and interact but they are still independent variables. They must be accounted for with a model with two degrees of freedom. I believe that all sorts of misunderstandings of macroeconomics have resulted from the attempt to combine wealth and income so that they are one variable with one degree of freedom. I am saying, that in order to describe the economy as it really is, we must have a model where income and wealth are accounted for by two variables, not one.We can see how this operates in the concept Keynes described in what he called the “Paradox of Thrift”. In this macroeconomic concept, Keynes realized that any attempt to increase wealth, cannot occur if spending did not occur. He realized that “not spending” would not change the level of wealth, and would not increase savings. If one reduces investment spending, one would also reduce the savings that is the preservation of investment, by the same amount. Also neither “spending” or “not spending” are responsible for any change in the level of wealth, and therefore “not spending” cannot cause an increase in the net production of wealth.He also realized that “not spending” would keep from occurring, all of that economic activity that would otherwise result from spending. “Not spending” would prevent from being promoted all of that economic activity that would be creating new wealth and preserving already existing wealth. Keynes realized that not only would “not spending” prevent the production of new wealth, but would also lead to the decay and loss of much our economic infrastructure, further reducing overall wealth.So this shows Keynes’ awareness that in reality spending does not represent the depletion of wealth. He realized that the solution for production shortages in a situation where we have un- or underutilized resources, (including un- or underemployed people), is to increase spending, not to decrease spending. He realized that the increased spending will, for the most, part lead to increased employment of resources and increased net production of wealth. He showed that in such a situation, due to the effect of producing new wealth and preserving current wealth, increased spending can cause increased total wealth, and a higher standard of living, and improved quality of life.I believe that this concept becomes most clear when we realize that income and net production of wealth are indeed independent variables. It is using that model that we can understand how “spending” does not get subtracted off of wealth, because the two things are not accounted for on the same axis. And further, rather than being subtracted off wealth, at less than full employment, spending normally, on the average does lead to production of more wealth, not less wealth.***Keynes realized that the best type of spending is the type of spending that directly pays for activities that produce more wealth. But he also realized, that if such spending were not forthcoming, and we were at less than full employment, that any spending increase, via its multiplier effect will still lead to increased production.Keynes has been grossly misrepresented repeatedly by those who imply that he was in favor of spending that would decrease overall wealth production in an economy. This is completely false.***Now I would caution that one not “get stuck” in that type of rigid thinking that implies that only certain types of production “count”. That is there are those who think that the only things that count as production is tangible wealth with easily appraised value. Cars, houses, electronic devices, fuel, etc. etc. But there are many less tangible things that have value, enhance standard of living, and quality of life, and even help make for conditions that reduce the destruction of some of those more tangible and easily appraised items of wealth. I leave it to the reader to think of things that are worth paying for that enhanced and improve conditions on earth, the worth of which, and the pricing of which, is not always so straightforward and easy to estimate, or for which assignment of value is a subjective thing, yet which certainly must be considered as part of our “total wealth”.***At any rate, in microeconomics, when we are talking about an individual or a firm, spending is the depletion of the firm’s or individual’s wealth. In the macroeconomy, spending is just the transfer of ownership of money and does not represent a depletion of wealth.In review:I believe the best formulation for savings is to say that there are two components to savings. The preservation of investment money, and the net production of wealth.The first part, the savings that is the preservation of investment does not represent any change in the level of wealth. Reducing spending will not, in and of itself, cause any reduction in the level of wealth. This is because whether a given amount of money is used for spending or not, it still exists in the same amount at the end of the given time period. Reducing spending does not cause any increase in the money possessed in the economy overall. For those individuals who did not spend, they have more, but for those who would have been the recipients of that spending, they have less.And since the decreased spending will probably reduce overall economic activity it is more likely to reduce “net production of wealth”, and not increase it, meaning, if savings equals investment plus net production, NOT SPENDING is more likely to decrease overall savings than spending is. Increasing investment spending will increase the savings that is the preservation of investment, and it will via its multiplier effect further increase total spending. And this overall increase in spending is more likely to increase net production as well, especially if we have un or underutilized resources that the spending can cause to be activated in the wealth creation and preservation process.***Just a comment that for total wealth on the wealth axis, one can try to value it by estimating the value of each part of the wealth to get one number, or one can divide it up like an inventory and try to value each category. Net production then might be an accounting of what the current period of economic activity would do to each category, instead of having net production just being a positive or negative number added to or subtracted from total wealth.———————————edit (on 4 25 2020):This is my response to a comment/question by Niranjan Nanavaty (who asked where inflation fits into this definition of savings). I think this material is pertinent and important enough that it should be added here.The first part of savings, the savings that is the preservation of money used for investment is a nominal measure, i.e., the face value of the money.Total wealth, a measure of wealth, and net production could be measured any way you want, in “nominal” or “real” terms. Since wealth is measured on a different axis, even though savings that is the preservation of investment is a nominal measure, the measure of wealth doesn’t have to be.In fact, at the end of the answer above, I point out that one can try to define wealth as one total number, and have net production of wealth be added to the total wealth as one number. Or one can break up wealth into different categories and measure wealth by an accounting of all the different categories of wealth.If one looked for a single number defining the value of wealth, and if one decided to measure all wealth in nominal terms, the value of the money that is the preservation of the investment money would have the same value as it did when put into spending as investment.If one decided to measure all wealth on the wealth axis in “real” terms, then the “inflation adjusted value” or “buying power” or “real value” of the savings that is the preservation of investment would be different than when it was first spent. It would still be the same money, in the same amount. but that same money would be worth less in “real” terms at the end of the given time period, than at the beginning, if prices changed over that period, i.e., if there was inflation. This is because inflation is actually a measure of what really did happen, not what the system of two independent variables allows to be described. They take a known amount of spending and total wealth sold at one point in time, and compare it to a known amount of spending and known about of total wealth sold, at another point in time. Notice that is measuring only wealth sold, not all wealth. That is where inflation fits in.If you were looking into that “one value” for all the wealth sold, and wanted to account for wealth in “real terms”, then you are still likely to be measuring the value of the wealth in terms of a given currency. The value for any amount of wealth is measured in terms of what that currency buys at a certain point in time. To translate that into something we might call the real value of that wealth we have to ascertain how much of the same currency would be required to purchase that wealth in an “anchor year”. The ratio of the amount of money needed to purchase the current amount of wealth today versus the amount of money needed to buy the same amount of wealth in the anchor year, gives us the inflation rate. For example if 110 million dollars pays for all the wealth sold this year and 100 million dollars pays for the same amount of wealth sold in the anchor year, which was 5 years ago, the inflation rate is 10% over 5 years or 2% per year average. The total “real” wealth sold would a hundred million dollars. The value of wealth sold measured in terms of what that currency would buy in the anchor year is 100 million.Now if we have ascertained that 110 million dollars of spending have occurred in the current year, that doesn’t mean we have determined that we have a 110 million dollars in currency, because a given amount of money can be used for spending over and over. In fact the proper way to calculate the amount of spending is the take the average number of times each unit of the money supply is used for spending in that year (the velocity of money V) times the face value of the total amount of money in the money supply (M).And if you notice, the amount of wealth we are concerned with, when calculating the inflation rate, was not the total amount of wealth. It is only the total amount of wealth sold. Now if you wanted to calculate the “real” or inflation adjusted value of all the wealth existing in the present year. You would have to compare it to the total value that wealth would have in the anchor year. Using the inflation rate determined by comparing the difference in nominal spending this year as compared to the anchor year, as we did in our example above, would be one way to do it.I would just like to point out that the money supply is part of the total wealth. The amount of total wealth that the money supply comprises can vary considerably, but if one wanted to figure out the real value of the money supply, then like any other form of wealth, we can use the inflation rate. So for example, if we had a money supply of 22 million dollars in the current year, it would be worth 20 million dollars 5 years ago, and its contribution to the total real wealth of the current year would be 20 million dollars. In real terms, 22 million dollars today is equal to 20 million dollars in the anchor year.That doesn’t mean that the money supply was 20 million in the anchor year. Sizes of money supply can vary widely.Now accountings of wealth do not always have to include every possible type of form of wealth. You can do accountings of all the wealth, or any portion of it, any category of it. And when one is doing calculations of a given amount of any type or category of wealth, those valuations may vary widely depending of the method used, and of course, subjectivity can always play a significant role. I bring this up just to mention even though I categorize money as a form of wealth*, when someone is doing an accounting of wealth, they could exclude that category, if so inclined. I do consider money as part of the total wealth, as a store of wealth, and something that enhances transactions as a medium of exchange. However, I understand that we would not exist if the only form of wealth that existed was money. So I think it is quite reasonable, if one was trying to get a measure of wealth that contributes to standard of living and quality of life, for someone to do an accounting of all the wealth other than, that is excluding, the value of the money in the money supply.*(though the transfer of ownership of that form of wealth is a measure of spending and income, not wealth.).***By the way, I would have preferred to just make the expression for savings be “Savings equals Net Production”. That is where we measure the change in the level of wealth, and that is where one could even include any change in the real value of the money used for commerce, during the period of commerce. But since the expression “savings equals investment” is so prevalent in our economic teachings, and since it is so often represented as measuring changes in the level of wealth, [i.e., it is represented as including net production, which it does not], then I felt I needed to keep the savings that is the preservation of investment money (Savings = Investment) as a component of the definition of savings, so it is clear what it’s meaning and place is. Which is, that it does NOT represent the net production of wealth and it does NOT measure any change in the level of wealth.***By the way, on the wealth axis, increasing the money supply can reduce other money’s buying power, but only if that newly created money got into a position where it is actively being used for direct spending of goods services, labor and other desired outcome….. and only if the amount of things sold increased at a rate slower that the rate of increase in spending.

20150308 edit: Our recent review paper on solar PV (Pathways for solar photovoltaics) analyzes the technologies and scaling considerations discussed here in much more detail.20150608 edit: The MIT Future of Solar Energy Study is online. Check it out here: The Future of Solar Energy.The future of solar?Let's start with the future of the world.To properly frame any discussion about the future of any kind of energy, we need to keep a few facts in mind:(1) Climate change is a real and present threat to the future of human life and all other life on Earth. Suppose we want to minimize our (children’s) risk of encountering the very worst impacts of climate change. That translates to reducing global greenhouse gas (GHG) emissions ~80% by 2050. Since ~60% of global emissions stem from energy use, we need to deploy low-carbon energy technologies at massive scale, starting yesterday.***Details: Below is a plot of typical ranges of lifecycle ("cradle to grave") emissions (or carbon intensity) of different energy technologies (units: grams of CO2-equivalent per kilowatt-hour (kWh) of electric output). The green dashed line is a projection of the average U.S. carbon intensity required to cut emissions by 80% (from 1990 levels) by 2050 and keep global warming below 2ºC. [1]. Wind and concentrating solar power (CSP) are by far the lowest [2]. Geothermal and solar photovoltaics (PV) are comparable. Hydro and nuclear are higher but in some cases still within range of the 2050 target [2]. Natural gas [3], coal [3], and even coal with carbon capture and storage (CCS) [2] are far above the acceptable limit.(2) Solar is by far the largest energy resource available on Earth—renewable or otherwise. All other energy sources—aside from nuclear, geothermal, and tidal—come from sunlight. Fossil fuels are just solar power integrated over millions of years using dinosaurs (and other carbon-based life forms) as batteries. Wind and wave power is merely solar power absorbed unevenly across the Earth’s surface, leading to thermal gradients and mass flow. Among low-carbon energy sources, only solar, wind, and possibly nuclear can reach the terawatt (TW)-scale deployment needed to satisfy ever-growing global energy demand (currently ~17 TW average).(3) Solar photovoltaics is growing fast—faster than any other energy technology. Cumulative installed PV capacity worldwide has doubled every two years (43% CAGR) since the year 2000, reaching ~200 gigawatts-peak (GWp) in 2014. This Moore’s Law-like growth shows no sign of slowing, though slow it must, as naive extrapolation leads us to some untenable conclusions: If PV capacity were to keep growing at the current rate, solar panels would satisfy all world electricity demand within a decade, cover the Earth by 2050, and form a Dyson sphere around the sun just after 2100.Just for fun, here's the naive extrapolation:That said, solar PV accounted for only ~1% of our total electricity consumption last year, so there's clearly a lot of headroom left.OK. So now we know a few things: Climate change is happening, we need lots of low-carbon energy to stop it, solar is one of our only practical options, and solar PV is growing faster than anyone ever imagined.But how do we turn sunlight into useful energy? What’s the future of PV? And are there other non-PV solar technologies in the R&D pipeline?Let’s talk about the technology.Solar Photovoltaics (PV)Solar photovoltaics (aka "solar cells") are by far the leading solar technology in terms of total deployment*. PV is quite nice: It's truly modular (a single PV module is no less efficient than a huge array), it operates silently and at low temperatures, and it doesn't require much maintenance over its 25+ year lifetime.*Aside from solar heaters, which are used widely in China for heating domestic water and in the U.S. for keeping swimming pools warm. Solar heating can’t be compared directly with PV since its output is heat [GW-thermal] rather than electricity [GW-electric].[Solar-Powered Camel Clinics Carry Medicine Across the Desert]We typically name PV technologies by the material (or material class) used to absorb light: crystalline silicon (c-Si), gallium arsenide (GaAs), hydrogenated amorphous silicon (a-Si:H), cadmium telluride (CdTe), copper indium gallium diselenide (CIGS), copper zinc tin sulfide (CZTS), organics, perovskites, or colloidal quantum dots (QDs), to name a few.It's convenient to think about these technologies in terms of material complexity, which corresponds roughly to the number of atoms in a unit cell, molecule, or other repeating unit of a material [4,5]. Material complexity is related to the degree of disorder at the nanoscale. For current PV technologies, higher material complexity often translates to lower technological maturity, materials use, processing temperatures, and processing complexity. These traits often open up new applications by enabling novel technical attributes, such as visible transparency, flexibility, and new form factors.With PV technologies, it's really hard to predict what will be the long-term winner.Crystalline silicon (c-Si) is king today, with ~90% of the global PV market, and I believe it will continue to dominate for at least the next decade. Silicon PV is abundant, efficient, reliable, and proven, but it absorbs light poorly. That drawback results in thick, heavy, inflexible solar cells and modules with relatively high manufacturing costs. For silicon, there's not much room to grow in terms of cell efficiency (25% current lab record), although production modules continue to improve: Typical modules are 16-21% efficient, with multicrystalline (mc-Si) technologies at the low end and single-crystalline (sc-Si) technologies at the high end.Today's commercial thin-film (TF) PV technologies, including CdTe, a-Si:H, and CIGS, overcome some of the challenges of c-Si—they use much less material and can be made at relatively low cost with high efficiency. CdTe dominates the thin-film market with simple manufacturing and high efficiency (21% cell record, production modules up to ~15%) but has major intrinsic scaling issues: Tellurium is about 4x less abundant than gold in the Earth's crust, and it's hard to extract from copper ores. Amorphous silicon is abundant, cheap, and flexible, but its maximum efficiency (13.4% current cell record) is likely too low to compete with crystalline silicon. CIGS is efficient (21.7% cell record, modules up to ~15%) but tough to make reliably, and it also runs into materials scaling issues with indium, gallium, and selenium.In the PV R&D community, we pursue emerging thin-film PV technologies, such as perovskites and quantum dots, for 2 primary reasons: (1) They may someday be able to reach a lower cost per watt than silicon and current thin films due to simpler manufacturing and reduced materials use, and (2) They offer new functionality, including transparency, flexibility, and extremely light weight, and may open up new applications for PV.Examples of emerging thin films include CZTS, organic PV, dye-sensitized solar cells (DSSCs), perovskites—which have largely swallowed the organic and dye-sensitized PV R&D communities—and colloidal quantum dot PV (QDPV). Perovskites are extremely promising, with impressive material characteristics and cell efficiencies improving at an unprecedented rate (up to over 20% in ~3 years). But we shouldn't get too excited yet—there's still a lot of work to be done, in particular on lifetime, air and water stability, and new cell designs. Although still relatively inefficient (~9% cell record), QD solar cells are also improving fast and can be processed entirely at room temperature from solution, which may someday lead the way to the fabled "solar paint" (which, contrary to popular belief, does not yet exist in any practical form).See the bottom of this post for several FAQs about solar PV.Concentrating Solar Power (CSP), aka Solar ThermalCSP uses mirrors or lenses to concentrate sunlight onto a tank of molten salt or other working fluid, which is then used to boil water and drive a steam turbine. CSP systems have been used for decades, but they only work effectively in places with high direct radiation*—such as the southwestern U.S., southern Europe, northern Africa, and other locations near the equator.*The MIT Future of Solar study recently analyzed the cost of CSP in Worcester, Massachusetts, and... nope, not a chance.CSP is not modular like PV—high temperatures require many mirrors over large areas, and turbines are much more efficient at large scale—so unfortunately you won't have a solar thermal generator on your roof anytime soon. Here's a picture of the new Ivanpah CSP plant in the Mojave desert (opened Feb. 2014), with over 340,000 mirrors:[brightsourceenergy.com]Global CSP deployment today is lower than PV deployment by about 2 orders of magnitude. As for the future, CSP will become more and more important as penetration of solar and wind increases, because it can potentially overcome the natural intermittency of those resources (discussed further below) using built-in thermal energy storage (on the time scale of 4-8 hours).Solar FuelsSunlight can catalyze chemical reactions that use water and CO2 to produce liquid or gaseous fuels (e.g., hydrogen, methane, various alcohols and hydrocarbons). These "solar fuels" have a unique role in a future low-carbon energy economy, since they could help decarbonize transportation—especially by air and sea, where electric-powered transport may be impractical. Solar fuels could also become a key energy storage technology for counteracting solar intermittency.All that said, solar-to-fuels technology is far from proven—my MIT colleague Bob Jaffe would say that there are many "tooth fairies'" worth of fanciful technological advances that still need to be made to get solar fuels to market at competitive cost.Technologically, the future of solar energy looks bright.So what's stopping solar from taking off? And what might limit it in the future?Well, there are a few things that might be worth thinking about: cost, intermittency, and scaling issues (i.e., materials and land use). Let's focus on PV for now.CostSolar PV is getting cheaper by the month. Average system costs in the U.S. are now below $2/W for utility scale (>1 MW) systems and just over $3/W for residential (usu. <10 kW) systems [4]. And that doesn't include subsidies (e.g., 30% federal investment tax credit (ITC), accelerated depreciation, various state renewable portfolio standards (RPSs), and net metering in some places), which in a competitive market can reduce the effective price for consumers. In regions with high direct sunlight, such as southern California, CSP is cost-competitive with PV [4].So what's the problem?System cost [$/W] isn't a complete metric. Solar energy technologies will only take off if they can produce and deliver electricity more cheaply than alternatives.The usual way of comparing the cost of generating electricity with different technologies is the levelized cost of energy (LCOE), in units of $/kWh (usu. “cents per kilowatt-hour”) or $/MWh.The LCOE of a power plant includes upfront capital costs, operation and maintenance costs (including fuel), subsidies, an assumed discount rate, and the total electricity produced over the plant lifetime. Typical LCOEs are $0.06-0.08/kWh for coal, natural gas, and hydro and ~$0.10/kWh for nuclear.Most LCOE estimates for unsubsidized solar PV today range from ~$0.10/kWh to $0.40/kWh, depending on the location (i.e., amount of sunlight) and type of system (large utility-scale systems are cheapest, small residential systems most expensive). In places like Hawaii, where fuels are hard to come by and hence expensive*, the LCOE of conventional fossil fuel generation is much higher and more volatile, and solar is much more attractive. But LCOE alone isn’t the whole story either.*Because it lacks local fossil fuel resources, Hawaii uses imported oil to generate most of its electricity, unlike the rest of the U.S. As a result, electricity prices in Hawaii are highly correlated with global oil prices.Even in places where solar costs more than coal (and gas and nuclear)—and even when subsidies are included—you can sometimes still save money by putting solar panels on your roof. Why?Well, your solar electrons aren’t competing directly with the grid’s electrons on cost. Electrons from a coal plant (e.g.) are purchased by a utility and transmitted to your house on the grid. The utility can’t give you the electrons at the same price they were bought for: It has to make a profit, and it has to amortize the costs of building and maintaining the grid. So the actual retail price of grid electricity—what you see on your electricity bill—is substantially higher than the underlying LCOE. Under current regulations (in many states), your rooftop solar electrons can compete with grid electrons at the retail price, and if your PV system makes more electrons than you use, you can sell them back to the utility at the retail price—a practice called net metering. It’s basically a subsidy for solar and a great deal for you, although utilities don’t like it because you’re not paying your share of the grid upkeep. Future policies will likely close that loophole by forcing homeowners with PV systems to pay some fixed cost for grid use.Fortunately, it seems likely that the cost (LCOE) of solar will continue decreasing steadily, which means that unsubsidized solar will eventually be cheaper than fossil generation in many places—especially if a price is placed on greenhouse gas emissions to account for their negative environmental externalities.For solar PV in particular, it's important to note that the total system cost is no longer dominated by the solar panel itself. Everything else that goes into a PV system—inverters, transformers, wiring, racking, installation labor, customer acquisition, permitting, taxes, financing, business overhead—add up to well over half of the total cost of solar PV in the U.S. today. We refer to these non-module costs as balance-of-system (BOS) costs, and in many ways, they're harder to reduce than module costs. To realize a solar-powered future, we need to innovate and reduce BOS costs.IntermittencyIn most places on Earth, sunlight isn't always available. Some of the variations in available solar energy are predictable or deterministic (e.g., diurnal and seasonal cycles and local climate), while others are unpredictable or stochastic (e.g., cloud cover and weather).When solar is deployed at large scale (several percent of total electricity generation) on a given grid, electricity markets will likely change significantly. After a solar PV system is installed, it costs almost nothing to operate. Zero-variable-cost generation means that solar energy will be used whenever it's available (i.e., when the sun is shining). PV will thus replace fossil-fueled generators (i.e., coal and gas) with the highest variable costs, reducing marginal electricity prices.But the impact on actual market prices depends strongly on the generation mix—i.e., how much coal, gas, nuclear, wind, etc. is deployed on the grid: Solar tends to stop producing when the sun goes down—and when the clouds come out—so other generators are forced to ramp up (cycle) more rapidly and more often, increasing wear-and-tear and hence their operating costs.In many places, adding solar PV without energy storage doesn't substantially reduce the net load that must be supplied by other technologies (total demand - solar generation). It simply shifts the time of peak load slightly later into the evening, when the sun goes down and everyone goes home after work and starts watching TV, cooking, reading Quora, coding, or otherwise consuming electricity (this is the origin of the famous CAISO duck chart).A few complementary technologies would ease the pain of intermittency. In decreasing order of current technological and economic feasibility: Enhanced grid infrastructure (e.g., improved long-distance transmission, demand response, and other smart grid concepts) could adjust demand to meet varying solar supply, or allow geographical averaging to smooth out minute-to-minute variations due to clouds. Grid-scale energy storage (e.g., pumped hydro, compressed air, or big batteries) could store energy during the day and discharge it at night. And solar fuels could someday make solar energy truly dispatchable.Scaling: Materials and land useThe land use issue is actually not that big a deal. To satisfy all U.S. electricity demand with solar PV at average solar insolation levels, we would need on the order of 50,000 square kilometers [4]—which sounds like a lot, until you find out that we currently dedicate ~100,000 square kilometers to producing corn ethanol satisfying only ~10% of U.S. gasoline demand.Materials use is a bigger concern: Covering thousands of square kilometers with PV will require huge amounts of raw materials, from the elements used in solar cells to supporting commodity materials, such as steel, glass, and concrete [4,5].Our analysis suggests that most commodities will not be major obstacles to scaling, except perhaps the flat glass used to cover today's c-Si PV modules [4,5]. For glass, aluminum, and copper, the amount of material required to satisfy 100% of 2050 world electricity demand exceeds 6 years of current global production, which indicates that PV might eventually become a major driver for those commodity markets.Critical elements will be limiting for some technologies:For c-Si, silicon is not an issue, but silver conductors will need to be replaced by copper.For CdTe, Te is a huge obstacle to scaling: At current rates of global Te production, we would need 1500 years to extract all the Te required to satisfy 100% of 2050 world electricity demand with CdTe PV [4,5].Emerging thin films are generally more scalable than current commercial technologies, since they mostly use small amounts of abundant, widely-produced elements: For example, to satisfy 100% of 2050 demand with PbS QDPV, we only need the equivalent of 23 days of global lead production and 7 hours of current sulfur production [4,5].So what is the future of solar?Yes.The main takeaway is that there will be more solar than you think. To spare future generations from the worst impacts of climate change, we’re going to need a lot more solar (and wind and nuclear) generation capacity—10-100 times what’s currently deployed. Today’s technologies (mostly crystalline silicon PV) can—and likely will—scale up to multiple terawatts of capacity worldwide by 2030 without any major technological advances.The main obstacle is cost: Global PV growth thus far has largely been driven by federal and local subsidies. That said, PV is already cost-competitive with fossil fuels in some places, and system costs (and prices) continue to decline. And even though current technologies will likely plateau at some minimum sustainable cost floor, it’s clear that there are many new and exciting solar technologies in the pipeline, with many new and exciting applications to come. I can’t wait.References[1] J. E. Trancik and D. Cross-Call, Environ. Sci. Technol., 2013, 47, 6673-6680.[2] M. Z. Jacobson, Energy Environ. Sci., 2009, 2, 148-173.[3] U.S. Energy Information Agency (EIA), 2014.[4] MIT Future of Solar Energy Study, 2015, in preparation.[5] J. Jean et al., Energy Environ. Sci., 2015, DOI: 10.1039/C4EE04073B.(Pathways for solar photovoltaics)*Just to be clear, the views expressed here are my own. My opinions are informed by my involvement in the MIT Future of Solar Energy Study but don’t necessarily reflect the final conclusions of that study. I encourage you to read the report when it's released later this year (and others) and come to your own conclusions about the future of solar.**Feel free to use the figures in this answer for educational purposes. Figures without citations are my own, and proper attribution is appreciated.Solar PV FAQsDoes a solar panel produce more energy than it takes to manufacture it? In other words, is the energy payback time (EPBT) shorter than the lifetime of the panel?YES! A typical silicon PV module today produces as much energy as it took to manufacture it in less than 2 years (<1 year for CdTe), and continues to operate with minimal efficiency loss for at least 25 years.I hear solar cells can only convert 15% (or 20%) of incoming sunlight into electricity. Why are solar cells so inefficient? I mean, my body can convert a Big Mac into useful energy at 25% efficiency. Why can’t you scientists do better?Physics is tough to beat. Thermodynamic limits (see Shockley-Queisser limit) cap the ultimate efficiency of typical solar cells based on a single material at ~31%. Using multiple materials—as in multijunction or tandem cells—boosts the theoretical maximum efficiency (e.g., to ~49% for 3 junctions). Some “exotic” approaches (e.g., carrier multiplication, hot-carrier collection, and intermediate band cells) can theoretically bypass the Shockley-Queisser limit, but none has yet achieved practical efficiency gains.But in the end, we don’t really care about efficiency anyway; we care about the cost of energy [$/kWh]. Photosynthesis is on the order of 1% efficient at converting sunlight into chemical energy, yet the U.S. still tries to grow corn to make ethanol. That said, it’s worthwhile to work on improving the efficiency of solar cells because higher efficiencies can decrease module and system costs.Why are production PV modules so much less efficient than record cells in the lab?Intrinsic scaling losses: Scaling from small cells (~1 square centimeter) to large modules with multiple interconnected cells (~100 square centimeters) incurs physical scaling losses. Electrons must travel farther, increasing resistive losses. Shadowing from electrodes reduces the available light. Longer wires in modules dissipate more power, while spacing between cells reduces the module active area. The output of a module is often limited by its worst-performing cell.Extrinsic manufacturing losses: While researchers typically target high efficiencies without much regard to cost, manufacturers may sacrifice efficiency to reduce cost, improve yield, and increase throughput. Fabrication techniques that produce high efficiencies in the lab may not scale to large areas. High-quality materials used in research labs may be too expensive for high-volume manufacturing.Do solar cells work when it’s cloudy?Yep, although somewhat less efficiently. Clouds and atmospheric particulates turn direct sunlight (what you see when you look right at the sun) into diffuse light (what you see when you look anywhere else in the sky, or at the ground). A solar cell doesn’t really care where photons come from—whether scattered from a cloud or transmitted straight through the atmosphere. Once a photon of a given color is inside a solar cell, it’s converted into an excited electron with the same probability as any other photon of that color.But a solar cell DOES care about how many photons are incident on it—that is, the light intensity. Higher intensities generally give higher efficiencies. Because some direct sunlight is scattered back into space by clouds—and because more light is lost to reflection at the front surface of the panel at wide angles of incidence—the light intensity that a solar cell sees is lower on overcast days than on clear days, leading to lower efficiency and lower power output.On a related note, concentrating solar technologies (CSP and CPV) don’t work at all when it’s cloudy: You can’t concentrate light that’s coming from all directions.Are solar cells toxic?Yep—but only if you eat too many of them. In all seriousness, silicon solar cells are about as benign as any other piece of technology that you probably wouldn’t eat. Cadmium telluride is a bit worse—cadmium is toxic—but the amount of Cd inside a typical solar cell is quite small. The CdTe layer used in cells today is about 1/50th the thickness of a sheet of paper, or roughly 2 µm, and it’s sealed up tight between two thick glass sheets. As for emerging technologies, you’d have to eat a lot (!) of solar cells to get lead poisoning from lead sulfide quantum dot PV or methylammonium lead halide perovskite PV.When solar electricity becomes cheaper than current grid electricity (“grid parity”), will it completely displace all other generation technologies?Nope. We’ll probably still need other types of generation—certainly at night, and likely during northern winters as well. Like any other free market, electricity markets generally follow the laws of supply and demand. Increasing supply of zero-marginal-cost electricity from solar PV depresses electricity prices at exactly the hours when solar is available (i.e., when the sun is shining). For any given electricity grid and cost of PV, there will likely be a natural break-even point for solar penetration—above that level of deployment, additional solar generation will no longer be profitable, and further investment in solar is unlikely. The story might change if grid-scale electricity storage gets way, way cheaper or if CSP (with built-in thermal storage) is deployed widely.

I don’t like buying expensive things. What’s more, I positively hate buying hugely expensive things. When my wife says, “Honey, let’s buy this expensive dining table,” I ask, “What wrong with the inexpensive one we have right now?” When she says, “Let’s buy a new set of bedroom furniture to replace this set that we’ve had for the past 22 years, I turn to her with a deadpan expression, and ask, “Why?”Before I bought my spanking new Tesla Model 3, I owned two cars – a 1999 Honda Odyssey EX (with 140K miles) and a 2004 Honda Accord EX (with 70K miles). I was very happy with these cars, and had no intention of buying another. I watched Tesla from a distance, and always considered the Model X and Model S outside my modest budget.In all these years, it’s not that I couldn’t afford to buy a new car. I could pay cash for one if I wanted to. But I saw no need to buy a new car – because they offered me nothing more than what my existing old cars already provided me.Then one day, my wife said, “SRP (our local electric power company) is hosting an EV (electric vehicle) event. They will have all kinds of hybrids and EVs available for display and test drives.” You can see my wife has become incredibly smart when it comes to dealing with me. No more, “Let’s buy a ...” Instead, it has become a, “Let’s look at ...” And what man can resist test driving cool, new technology?So we went to the SRP event. We got lots of data. Now I am a natural analyzer of data. You put data in front of me, and I began to analyze it – just like how a monkey grabs a banana in front of him and eats it. So I came home from the SRP event and began to analyze the data, and do some of my own research. I ended up buying a Tesla Model 3 the very next day! It just made a lot of sense to do so. I’ve written this article so that you can benefit from my research, and enjoy the experience of driving a Tesla too.If you’re like me, when you leave home for work in your car, you are probably thinking about your workday, and it is quite possible that you will forget to close your garage door. How nice if your car can detect that you are driving away from home, and shut your garage door automatically as you drive away. Similarly, when you are arriving home, how nice if your car is able to recognize when you’ve reached, and open the garage door at just the right time. You will be pleasantly surprised to know that Tesla cars do just that!When it rains – and especially when it rains sporadically – you have to turn on your wipers, and then keep adjusting them to the correct speed so that they take the water off your windshield quickly enough, and yet not go on wiping when there is no water. Keeping on top of that can be such a bother. Wouldn’t it be convenient to have the wiper automatically sense the water on your windshield and wipe it off, and stop when the water is gone? You guessed it – Tesla cars do just that!When you are driving on a dark, divided highway at night, using high beams is a must. What’s a bother is that, as a good citizen, you must dim that high beam every time a car approaches from the opposite direction. If the traffic is frequent but sporadic, doing this can become a tiresome chore. It would be so convenient if your car could do that automatically. Once again, Tesla cars do just that!Welcome to the grand experience of driving a Tesla! It seems as if Tesla has analyzed every aspect of driving a car, and built a car that makes driving as pleasant and convenient as possible, using the latest technologies available.To explore this in more detail, let’s take a look at what one typically does with and in their car, and examine how Tesla makes it better.When you are on the highway, what does driving entail? You must steer to keep within the lane. You must slow down if there is a car in front of you, and accelerate to your cruise speed when the road ahead is clear. You need to determine whether your lane is slower and a lane change will save you time. Occasionally, you need to change lanes. If your trip requires you to change highways, you need to be alert to that and make the change at the proper time. If an ambulance or police car appears behind, you need to move to the side, and slow down or park. Your Tesla Model 3 will do all of that for you automatically (except for the last one, which is expected to be available soon). If you cross lanes without using your turn signal (this happens when people are sleepy), an alarm will sound. And yes, you can indeed configure your Model 3 to even tell you when changing to a different lane will allow you to go faster due to reduced traffic in that lane. How cool is that?While you’re on a surface road, what does driving entail? You must do things similar to highway driving. In addition, you must watch for signals and traffic signs, and pedestrians and other objects that may be in your path. Your Tesla offers you adaptive cruise control whereby it will slow down if there is a car in front of you, and accelerate to your cruise speed when the road ahead is clear. This single facility, when done well (which is how Tesla does it), can simplify driving significantly. If you use your turn signal to indicate that you want to change lanes, you will be notified if it is unsafe to do so. If a crash is imminent when adaptive cruise control is on, an alarm will sound. Your Tesla will also show you objects (cars, motorcycles and people) around you. What’s more, on most well-marked surface roads, your Tesla will also steer automatically for you too. However, right now, you own stopping at traffic signals and signs, but that too will be taken care of soon.Whether you are on a highway or a surface road, as the speed limit changes, you need to change your cruise control speed limit to account for this change. That is such a bother. But Tesla has a solution! Since your Tesla car knows the speed limit of the road that it is on, it allows you to set your car to go at that speed limit, or a set miles above or below it; as a result, when you have traffic aware cruise control on in a Tesla, you no longer have to think about whether you are too fast or too slow – the car will automatically adjust your maximum cruise speed to the set limit relative to the current speed limit of the road, and slow down as little as possible when another car is in front of you. Brilliant!When you want to park, what does driving entail? Well, there usually are three options: parallel parking or perpendicular parking or angled parking. Angled parking is simple and needs no assistance. When perpendicular parking, it is preferable to park with the front facing outwards. You need to spot a location as you drive by, and then park. Parking is easy if there are no cars in adjacent spots, but difficult otherwise. Your Tesla will automatically spot a suitable location as you slowly drive by, and will automatically park for you if you so desire. If you are parking manually, your Tesla will tell you how far objects around and close to you are in precision of inches. If you are about to hit something it will tell you to stop. So cool! What’s more, if your garage is small, or you are trying to fit too many cars in it and you don’t have enough place to open a car door while parked, Tesla allows you to stand near your car and move it forward or back remotely. So you can pull it out of the garage to a place where there is more space and then enter it. Oh, I just love that!One of the complexities of driving is figuring out ‘how to get there.’ Google has made this easier through Google Maps. But using it in a car is cumbersome – you are stuck with the small screen of your smartphone. Tesla cars have a 15” (or bigger) touchscreen monitor that displays maps and directions in 60% of the screen area – big enough to see your location and direction and path to the destination, and the surrounding area. You can give it a specific address, and it will direct you to it. If you want to find a certain place (e.g. a Chinese restaurant nearby, or a Tesla supercharger, or a ChargePoint charger) you can ask (i.e. speak to it), and your Tesla will show you several options (potential destinations), and after you select one, it will give you step by step driving directions to it, and show you the surrounding area (with labels for what’s there) on a screen that is about ten times bigger than your smartphone. Further, it knows how much battery charge you have left, and will also include necessary Tesla supercharger locations at intermediate destinations so that you don’t run out of battery. It solves your navigation problems (i.e. your problems of finding a suitable destination (such as a particular type of restaurant in an unfamiliar place), and how to get to there) – all without touching a dial. Better still, wherever you are, you can simply say, “Navigate to home” and it will show you how to go home. At the end of a long and tiring day, I find that rather comforting.A key part of the driving experience is keeping yourself and your guests entertained as you drive. You want variety (i.e. different types of music and radio and podcasts) and flexibility (i.e. different sources of content like streaming, smartphone, USB, etc.). Most of all, you want ease of use (no fiddling around with buttons and dials to find the content you want). In a Tesla, you can listen to music or radio or podcasts from your USB, or your smartphone (via Bluetooth), or via streaming radio, or from music distribution sites.But that’s not all! While driving, when you think of a song you want to hear, you don’t want to be fiddling around trying to find it on your USB drive or smartphone or on some streaming site. That’s downright dangerous. Ideally, you just want to say something like, “Play Jailhouse Rock by Elvis Presley,” and presto, the song should start playing. You can do that in your Tesla! When streaming, you can ask your car to play almost any song (just like you do with Amazon’s Alexa) – you don’t have to touch a dial to get content. Needless to say, moving to the previous or next song, pausing your song, or adjusting volume can all be accomplished without taking your hands off the steering wheel.Similarly, when you want to make a phone call to someone in your smartphone contacts, you can simply say, “Call Mom,” for example, and your Tesla will initiate the call to the phone number labeled ‘Mom’ in your smartphone contacts. No searching for, and selecting, ‘Mom’ on some screen. Of course, all the while, your phone remains in your pocket or purse. That is the power of voice recognition technology, and Tesla makes excellent use of it.Another uniquely wonderful thing about Tesla cars is that the software that gives the car its smarts can be updated over the air (OTA) – you don’t need to go to a service center to do it. Due to the practicality of OTA updates, your car becomes smarter as time goes by, and your driving experience continually improves – and (this is so cool!) you don’t have to pay more for this.You can use your Tesla’s front camera as a dash cam. It saves the video to a USB stick you put in. This dashcam functionality came in a recent software update, and is a perfect example of the value of over the air (OTA) software updates. Someone in Tesla had the bright idea of using the front camera as a dash cam. They implemented the functionality and added an icon to the touchscreen, and updated the owner’s manual, and voila, without any hardware update or recall, you now have valuable new functionality without having to pay for it.In addition, Tesla cars like the Model 3 simplify controls by replacing almost all controls with a graphical user interface (GUI) operated by a touchscreen. This allows for an highly configurable car. This also reduces cost and assembly time because you have fewer buttons and dials to buy and install. This also reduces maintenance. For example, you will never have to deal with issues like having the cruise control buttons stop working (I had to have these replaced in my past cars). In addition, this also allows for a dynamically changing user interface that grows as the car’s capability grows; specifically, a touchscreen GUI interface allows Tesla to add new features to, and improve existing features in, the GUI as time passes by, giving car owners a continually increasing value for their initial expense. Further, the chances of recall are reduced because fixes can be sent via OTA updates, saving Tesla even more money.Other neat features of Tesla cars are: the safety rating is at the top of the list; the car handles superbly due to its low center of gravity, they have excellent acceleration and instant response, allowing you to get out of danger when needed; the drive is unusually smooth due to no engine vibration; they have all wheel drive, giving you excellent traction on uneven surfaces; and finally, having no engine in the front allows crush space to absorb the energy of the collision better than ICE cars and hybrids. Further, the dual motors increase traction, and reliability – if one motor goes bad you can still drive the car on the other one to a repair shop.Tesla cars come with a thick tinted glass roof that meets all safety requirements. Glass has far better thermal insulation than metal. Therefore, your car will absorb less external heat and cold via conduction, and it will take less energy to keep your interior temperature constant even when it is very hot or cold outside. The tint sufficiently prevents too much sunlight (and harmful UV radiation) from entering into the car. You can use an aftermarket tint to make this even better.Tesla provides you with a smartphone app that serves as a Bluetooth based key. But that’s not all… With it, you can unlock the car just be approaching it, and lock the car just by walking away from it. You can also lock or unlock it remotely. The app also allows you to move the car forward and back while standing near it (enabling you to get out of a tight parking spot, for example). You can open the (rear) trunk, front trunk (or frunk), doors and charge port with it too. You can even set the internal temperature of the car with it so that you can cool the car down on a hot day, or warm it up on a cold day, ready for you to enter in and drive in comfort. You can set the battery charge limit with it so that the car will charge only up to that point. You can see the current charge. You can get notified when the charge limit is about to be reached. You can view the location of the car – which is a big theft deterrent. You can set the maximum speed limit of the car – which is useful when you loan it to a teenager. You can put the car in valet mode – which limits its functionality (e.g. the glove box cannot be opened and the configuration cannot be changed). You can flash the lights or honk the horn – this helps you locate the car if you have forgotten where you parked. What a useful app!I like going camping, and sometimes going all alone to ‘get away from it all’ for a few days. However, doing that in the height of summer, or depth of winter, can deter getting a good night’s sleep, because a tent doesn’t offer much insulation from the heat or cold. Using an RV is out of the question because it is simply too expensive. But now that I have a Tesla whose rear seats fold flat with the trunk, I can actually sleep in the car. I can keep the cabin at a balmy 72 degrees throughout the night, typically losing only ~10-15% of the charge. And I don’t need to worry about the battery getting too low if I camp in an RV site with 50 amp power outlets because I can charge my car while I sleep. I can’t do this in an ICE car because the battery is too small to last the night, and I can’t keep the engine on all night because its noise will disturb other campers. Soon after I bought my Model 3, I bought a 4” thick folding foam mattress that forms a very comfortable bed in my Model 3 , and made camping reservations at many of Arizona’s state parks that offer RV camping throughout the year. Next year, I will go even further. In fact, in this way, I can travel throughout the US on a cheap budget and answer the call of the sky (you may be familiar with the poem ‘Wander-Thirst’ by Gerald Gould).No other car can do all these things, and do them as well as a Tesla.Now you may think, “All this is great, but isn’t this an expensive car?” Yes it is an expensive car – but only if you take a shortsighted perspective! If you consider the cost of purchasing and maintaining and repairing the car over its lifetime, it can actually be cheaper than an ICE or hybrid car. This may not be very obvious, so let me explain...When you buy an EV (electric vehicle) instead of an ICE (internal combustion engine) car or hybrid, one of the key savings over the life of the car comes from significantly less maintenance for the EV. Simply speaking, an EV just has a battery, an inverter, and one or two induction motors. These need little maintenance over the life of the car. An EV doesn’t have an ICE, and because of that, it has no transmission, no starter system (i.e. no starter motor, solenoid, Bendix gear, etc.), no gasoline fuel system (i.e. no fuel pump, fuel filter, etc.), no fuel injection system (i.e. no engine air filter, carburetor or fuel injector, etc.), no ignition system (i.e. no spark plugs, distributor cap, etc.), no exhaust system (i.e. no exhaust manifold and gasket, catalytic converter, muffler, resonator, etc.), and no generating system to keep the battery charged (i.e. no alternator, solenoid, etc.). You have no emissions tests, no oil changes, no transmission fluid changes, no engine air filter or fuel filter changes, and so on. Fewer things can go wrong, and fewer things need regular maintenance. Even the brakes last longer because EVs have regenerative braking – the car slows down as soon as you take your foot off the accelerator. This saves you time (the time to keep your car well maintained) and money – lots of it (at least $15K, and perhaps even $20K) – over the life of the car. For example, over the life of the car (~20 years) you will save $2K on oil changes, $3K on transmission and steering wheel fluid changes, $3K on brakes, 0.5K on emissions testing, $0.2K on air and fuel filters, and perhaps $7K - $10K on other things that go bad.The Model 3’s drive train is expected to last one million miles.When compared to a well-equipped Tesla Model 3, buying an ICE will cost you about $10K - $30K less in the initial purchase. But buying an EV will give you $7.5K federal tax credit (or maybe just half of that now). Furthermore, many states also offer incentives to buy an EV. For example, Arizona has lowered the registration fee for an EV by as much as $500 / year, and so a five year registration will cost you just $150 instead of $2.5K. At the time of my writing, California offers a tax credit of $2.5K, and Colorado offers a tax credit of $5K. These incentives can shave off ~$10K from the cost.Another significant cost associated with a car is what you pay for fuel. EVs are a big winner here too. Electric motors are far more efficient than ICEs (~80% vs. ~20%). It turns out that in most places, the cost of electricity to drive a given number of miles in an EV is much less (half to one eighth) than the cost of gasoline for an ICE car. As a result, with an EV, you also save on the cost of fuel. Further, if you have solar installed in your home, you utility company will typically sell you electricity at an even lower cost. For example, in Arizona, I get electricity at the cost of ~4 cents per KWh during off peak hours (vs ~8 cents per KWh if you have an EV but no solar). As a result, it costs me less than $5 to charge my Model 3 to 90% of its full range of 310 miles. To go that far on gasoline would cost me ~$40. If you fill up every two weeks you save just under $1K per year, or ~$18K over the lifetime of the car (assuming the cost of gasoline stays around the same over all those years).As you can see, when taking into consideration the savings on incentives, maintenance, repair and fuel, an EV can be a whole lot cheaper than an ICE or hybrid car over its lifetime.If you are in the market for a new car, you have three broad choices: an electric vehicle (EV), an internal combustion engine (ICE) vehicle, or a hybrid of the first two.If you want a car that you will take on long trips (and who doesn’t want such a car?) then the only EVs that makes sense are ones from Tesla. No other car company that sells EVs has a supercharger network that can almost fully charge your car in under an hour, and an EV that has a range of over 300 miles on a single charge (as is the case for a dual motor Tesla Model 3). Multi-hour charging on a road trip kills the fun in the trip and makes long trips inconvenient.Hybrid cars have an ICE as well as a (smaller) battery. This allows you to get the range of an ICE when you want to take long trips, and the cheap fuel advantage by using the battery for short trips. Most hybrids also qualify for the $7.5K federal tax credit. However, since hybrids have all the components of an ICE car as well as all the components of an EV, maintenance costs for a hybrid will be more than for an EV, and also more than for an ICE car. Hybrids are also more expensive due to their many components. For these reasons, a hybrid is not as good an option as a Tesla EV. Perhaps this was why Chevy decided to stop producing the Volt.EVs (and Tesla EVs in particular) have many other benefits. For example, EVs allow fine control of the speed and the torque of the electric induction motors that turn the wheels. They also respond almost instantaneously. This makes it easier to provide automatic driving capabilities like adaptive cruise control (aka Traffic Aware Cruise Control for Tesla cars), auto steer, auto lane change, auto parking, and remote control (aka ‘Summon’ for Tesla cars). Tesla cars have one of the best ‘autopilot’ features I’ve seen in a car. As mentioned earlier, the ‘summon’ feature is useful if you have a small garage or if you have parked in a space that is so tight that there is no room to open the door of the car to get in.One cool feature of EVs is regenerative braking. Normally, the battery powers the induction motors that power the wheel. However, when you take your foot off the accelerator, the car’s momentum keeps it moving forward, and the wheels now power the motor which now generates electricity and feeds it back to the battery. Powering the motor causes the wheels to slow down much faster, and this is called regenerative braking. In ICE cars, the energy is wasted (because having the wheel drive the engine doesn’t result in the creation of gasoline) whereas in EVs the kinetic energy of the car can generate the electricity that is used to power the battery. When used well, regenerative braking reduces the use of the actual brakes significantly, making it possible for the brakes to last for up to double or triple the lifetime of brakes in ICE cars.An EV without a supercharging network is like Laurel without Hardy. To make long trips feasible in an EV, fast charging (90% charge in under an hour) along the way is a necessity. Most other companies that build EVs are just figuring this out. However, Tesla already has its supercharging network fully functional and established in the US, Western Europe, China, Japan, Taiwan, South Korea, New Zealand, and southwestern Australia. This network is still growing rapidly. Using a supercharger is very simple – just park so that the charge port is near the charge connector, open the port and stick the charger in. Then you can walk away and do other stuff. You can monitor your charging status via your phone app. Further, your phone app will notify you when you are nearly done, and also when you are done. While charging, no one can unplug you. There is no credit card to swipe, and nothing to pay. It is all taken care of behind the scenes because the charge port can recognize your car, and it knows your credit card number, and will automatically charge the correct amount to it. You can view the details later via your app or by logging into your Tesla account. What could be more convenient than that?EVs are almost silent, and therefore, on quiet roads, your music and media experience is far better than that of ICE cars (ICE cars and hybrids have a noisy engine and undesirable vibrations even after muffling the sound). With Tesla’s superb premium sound, you can really rock and roll as you drive. All Tesla cars have drag reducing door handles that also contribute to the silent drive.Some people have expressed concerns about how long a Tesla’s battery will last. Tesla has an “eight year / 120 K mile (whichever comes first),” warranty on the battery for the long range Model 3. I read somewhere that the battery will lose ~5% charge in 10 years. That’s not bad. Other statssay that the battery will last for the lifetime of the car without too much degradation. To ensure long battery life, only charge the battery to full capacity when you are about to go on a long trip; for normal commute don’t go beyond 90% charge. Also, don’t supercharge too often.In the interests of full disclosure, I must also tell you that Tesla cars have no spare tire. However, if you ever have a flat, you can call Tesla roadside assistance for help to repair the flat. Assuming you normally fix your own flats, this can make flats a painful experience, but on the other hand, flats don’t occur too often. In the past 25 years of driving, I’ve had only one flat. For those of you who must have a spare tire, Tesla does give you the option of buying a spare and keeping it in your trunk.Finally, among the three Tesla cars: the Model X, the Model S and the Model 3, the Model 3 has the best price, the best range / price ratio, and the best engineering. It is among the best selling sedans in 2018, and a Detroit magazine voted it the car of the year for 2018. People who have driven the top cars over several decades swear that the Model 3 is the best car ever for its price. It is relatively slower and smaller (i.e. it doesn’t accelerate as fast as the Model S, and doesn’t have as much space as the Model X), but how many people want a bigger, costlier, very fast car anyway?Taking all this into consideration, it seems to me that an EV beats out an ICE car or a hybrid, and among EVs, Tesla cars are the best, and among Tesla cars, the Model 3 is the best in many ways.About 130 models are sold in the US each month. Which one is the best in 2019? Acura? No! Audi? No! BMW? Cadillac? No! Infiniti? No! Jaguar? No! Lexus? No! Mercedes? No! Porsche? No!The Model 3 is the safest, smartest, most secure, most efficient, and arguably the cheapest (over the lifetime of the car) car you can buy today.It is therefore no wonder that in Dec 2018, Detroit Magazine named the Tesla Model 3 the car of the year (Payne: A Tesla is Detroit News Vehicle of the Year).In early 2019, Kelley Blue Book said that the Tesla Model 3 had the best resale value.Consumer Reports found that the Tesla Model 3 had the highest customer satisfaction.In July 2019, Auto Express named the Tesla Model 3 as the car of the year (Car of the Year 2019: Tesla Model 3).The Tesla Model S was Motor Trend’s ultimate car of the year (2013 Tesla Model S Beats Chevy, Toyota, and Cadillac for Ultimate Car of the Year Honors - MotorTrend). Motor Trend selects one car each decade as car of the decade, and then it selected one of about 92 excellent cars to be the best of all the cars in the past 70 years. That was the Tesla Model S. Not bad for a very junior car company, eh?These awards don’t come easily, you know.With such high honors how can one believe all the lies that people write saying that Tesla cars are unreliable and not well made?With all these things in mind, I ask: why buy any car other than a Tesla Model 3?—Edit: Thank you for the upvotes. Tesla has a referral program. If my answer has helped you decide to buy a Tesla, if you care to, please use my referral code: https://ts.la/rosario38710 when you purchase your Tesla. You will get 1000 free supercharger miles.