What's up guys and welcome to wall street millennial on this channel, we cover all things related to stocks and investing today we're doing a video about tesla's plans to disrupt the airline industry with an all-electric plane, tesla revolutionized, the automobile industry, by proving it's possible to make Mass-Market evs prior to tesla the legacy automakers thought this would be impossible. Elon musk has a history of pushing the envelope and achieving things that nobody thought would be possible both with tesla and spacex, which is the first company to make reusable orbital rockets. Tesla's corporate mission is to solve the climate crisis by advancing renewable energy to replace fossil fuels. They are already doing this with their electric vehicles in solar city.

However, one area of the economy that has so far resistant electrification is aviation. Passenger planes burn large amounts of jet fuel and currently account for about 2.5 percent of global emissions. While this doesn't sound like a lot, this number is expected to triple by 2050, as people in developing nations get rich enough to afford air travel. Passenger planes weigh hundreds of thousands of pounds and often have to fly for more than 10 hours at a time.

This makes electrification very difficult. However, elon musk has plans to apply tesla's, cutting edge technology and innovation to design an electric plane and revolutionize the aviation industry. Some of the time, how does it make a design for a plane? You do yes, a better design, i mean, probably i think it is yeah who've you talked to about this, and i've talked to friends, friends, friends and i'm your friend girlfriends. You can tell me, what do you got what's going on? Well, i mean the exciting thing to do would be some sort of electric vertical takeoff and landing supersonic jet of some kind of vertical takeoff, and let it mean no need for a runway, just shoot up straight in the air, and then musk says that he will Design, an electric jet that can accomplish vertical takeoff and landing and travel at supersonic speeds.

Vertical takeoff has been accomplished by military jets, including lockheed martin's f-35, but is extremely expensive and thus not able to be applied to commercial planes. A commercial plane with vertical takeoff capabilities will eliminate the need for runways and allow for smaller scale airports in rural communities. This will dramatically decrease costs and expand access to air travel. Musk also says the tesla plane will be supersonic, meaning it will travel faster than the speed of sound.

This could decrease the duration of a transatlantic flight to just a couple of hours. Tesla isn't the only company toying with the idea of an electric plane. There are a few other companies also researching the idea. For example, airbus recently unveiled the zero e electric concept passenger plane.

They do not have an actual design for the plane or the technology to make it work. It is merely a concept, but there are also some startups, such as lilium, which have developed all-electric air taxis. However, there are mostly small aircraft that can only carry a few people and travel short distances. They can be used for urban transport, but cannot replace long-haul commercial air travel.

Developing a large-scale long-haul electric plane will require billions of dollars of investment in new technologies. Aviation startups zoonum aero tried to do this, but they ran out of cash in 2019 and were forced to lay off the majority of their workforce. The only other companies with the financial wherewithal to potentially invest in such a project or the aerospace duopoly boeing and airbus. However, just like the legacy automakers boeing and airbus are unlikely to invest heavily in electrification because they don't want to cannibalize their traditional jet fuel-powered aircraft.

Furthermore, both of those companies have short-term focused investor bases who will not tolerate sacrificing short-term profitability to invest in new innovative technology. Tesla is the only company that has a realistic chance of developing a full-scale electric plane. Tesla's shareholders take a long-term view and are more willing to sacrifice quarterly profitability to invest in a massive market opportunity like electric aviation. Furthermore, tesla's market cap of 700 billion dollars is more than boeing and airbus combined.

This gives them the financial wherewithal to invest billions into this project. The biggest challenge in making an electric plane is the battery rechargeable batteries have three major technical disadvantages to gas engines one. They have much lower energy densities than fossil fuels, meaning that for the same amount of energy, you need a lot more battery than you would need fuel two. They have much lower discharge rates, which means that, even if you have a big enough battery in terms of capacity, it might not be able to produce enough power at a time to get a plane off the ground.

Three. They are much heavier than the equivalent amount of gasoline or jet fuel; in other words, batteries just need to be all around better. However, the developments in the battery industry over the years have drastically improved the state of the art. Take a look at this comparison of the different types of battery technologies in terms of energy density, which means the amount of energy a battery can store for each kilogram of weight.

Batteries have been drastically getting better. An older technology such as lead acid, can have as low as 30 watt hours per kilogram, which is the type of battery that cards use to start their engines. Lithium-Ion batteries, which are the type of battery that tesla uses in its electric vehicles, can have energy densities. More than five times that that's a huge benefit for an electric plane in terms of maximum discharge rate, the newer technologies are also getting huge improvements.

Lithium ion batteries have three times the voltage of older nickel, cadmium and nickel metal hydride batteries, as well as current discharge rates that rival or even exceed the older technologies. So for the same weight and capacity of battery, the newer technologies can produce much more power than older batteries compared to jet fuel. The most modern battery technology has about 20 percent of the energy density of jet fuel. The 80 deficit might seem like a big gap, but it's really not that much considering that the older technologies have more like a 96 deficit.

Also, there's no reason why a tesla plane would need to have the same energy density as jet fuel, but in order for tesla to actually make a viable plane, it probably still would have to come up with a new battery technology that has higher energy densities than What is available today, but there is already evidence that elon musk is going to go in that direction. He is already building a second gigafactory when the first one isn't even fully complete. Yet the point of the gigafactories is to bring things like battery production and research. In-House, along with their car production, according to tesla's website in mid-2018, the first gigafactory was already the largest battery plant in the world.

Tesla already produces more batteries in terms of total capacity in the entire rest of the car industry, combined just to reach their goals for car production, they would need to acquire the entire world supply of lithium-ion batteries, which is one reason why they are investing so heavily In battery technology and production, the economies of scale of musk's gigafactories are largely due to the battery production issue. It would be unthinkable to imagine that elon musk isn't already working on making his own batteries better, lighter and more powerful. Elon musk has already thought about the opportunities and potentially huge advantages of an electric plane on joe rogan's podcast. He even said that he already has a design for such a plane and gave a mathematical reason as to why electric planes would actually have a significant advantage over jet fuel if the energy density of batteries can be good enough.

The interesting thing about an electric plane is that you want to go as high as possible, but you need a certain energy density in the battery pack um because you have to overcome gravitational potential energy once you've overcome gravitational potential energy and you're at at a high Altitude, the energy you use in cruise is very low, and then you can recapture a large part of your the gravitational potential energy on the way down. So you really don't need any kind of reserve fuel if you will, because you have the the energy of height gravitational potential energy. This is a lot of energy. So so, once you can get high at high, you, the the like the way to think about a plane.

Is it's a force balance, so the force balance so a plane that is not accelerating. Um is a neutral force, balance yeah the force of gravity. If the lift force of the wings, then you've got the force of the whatever thrusting device, the the propeller or turbine or whatever it is, and you've got the resistance force of the air. Now the higher you go, the lower the air resistance is air density drops exponentially, but drag increases with the square.

An exponential beats a square. The higher you go, the faster you will go for the same amount of energy and at a certain altitude you will. You can go supersonic with less energy per mile, quite a lot less energy per mile than an aircraft at 35 000 feet. As he says, the air density reduces exponentially the higher you are.

This is a double-edged sword for jet fuel-powered airplanes, because the drag incurred by air density decreases, but the engines need to burn oxygen in order to produce thrust. Electric motors do not require this oxygen, so they bypass this problem. If electric planes just fly higher than jet fuel planes, do they'll require much less energy to be able to fly. Another advantage.

That elon mentions, as a major benefit, is that electric planes would be able to recover the gravitational potential energy when they land, which is actually a huge amount of energy. This is the same idea of regenerative braking in electric vehicles, where the kinetic energy of an ev or hybrid car can be used to recharge the battery. Pretty much for free saving energy and reducing the necessary size of the battery fossil fuel powered cars and planes are unable to do this. If musk is able to take all these advantages of electric planes and make a viable product, the opportunity will be massive on a scale we've never seen before.

He would be able to compete with boeing, an industrial behemoth, selling planes that cost hundreds of millions of dollars. Each boeing is one of the most valuable companies in the world and is a dial component with the market cap historically averaging about 200 billion dollars, tesla would graduate from competing with relatively smaller companies like ford and gm and entered the big leagues of boeing and airbus. This industry could be triple the size of opportunity for musk, as the car industry was at least in the beginning. People thought musk was crazy for trying to make mass-market evs, but over time they improved the technology and reduced costs to an extent that nobody thought was even possible.

Now. Tesla has a market valuation greater than most of the other automakers combined tesla already has a multi-year head start on battery technology. They can also form cross-functional teams with engineers from spacex to design the plane. If anyone can develop an electric plane, it's elon musk, alright, guys that wraps it up for this video.

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