title: DERVOS 2025: Energy Dominance and the Electrostate
author: DER Task Force
contenttype: podcast
publication: DER Task Force
published: 2026-01-16T14:00:00
sourceurl: https://api.substack.com/feed/podcast/184145945/eb782449e8900236698bf5317109743e.mp3
word_count: 11946
Welcome to another edition of Thamda Now! I can't express how excited I am about this panel, which is so you guys know we now have a tradition at Dervos that started last year, which is we save like the headiest most intense conversation for the very end of the day. So I hope everyone had a coffee because we might go deep on this one, but yeah I'm gonna sort of tee things up but I thought we could just start by having each of you introduce yourself briefly and what you're doing today. Sure thing. Hi Drew Baglino. I'm the founder and CEO of Heron Power. Prior to that I was at Tesla for 18 years helping to build the foundations of an electoral state in the United States. That's probably enough for me. I'm San Diego DiBico, CEO of Impulse Labs. We build very high-performance stoves. I think we have some customers in the audience including folks picking them up this weekend. Backgrounds and consumer electronics. Yeah. You may have used VR heads that I worked on before I got into this whole adventure. Good to see everyone. Tristan Dory, Chief Product Officer at LG Energy Solution Vertek. The LG Energy Solution part of that is a huge massive-scale US manufacturing of lithium-ion LFP batteries starting in Michigan and expanding beyond that quite a bit in the next year. So the Vertek part of that is the full end to end-to-end system integration. So we're the US office doing all grid scale energy storage for LG Energy Solution. Super. And I'm Dan Davelter. I'm a principal at Embra Energy and NGO that focus on open source data on energy transition. I myself am the principal energy strategist. So we focus on global research of where the transition is going. And you guys know me. The only thing I'll add is unlike this crew, I don't have a ton of experience actually in what we're going to talk about other than a few years back wrote an article called The Age of Electron which I think was an early way too much time on my hands during COVID exploration to know what we're now talking about with electric states. And so I'm very excited to learn directly from you guys. But you know I thought I may start by just saying I myself on this topic and I kind of want to use this to solve like an internal debate. Like I'm on the one hand very hopeful about where we can go but also some days can be pessimistic or fearful. And that is around this emerging conversation about electric states. And the US is very clearly a petro state today. And you know I wonder if are we going to get left behind in this transition? Are we going to be able to lead a historic transition in becoming an electric state? And is that the right thing to do and how? And so I think we're going to explore that today. But maybe to start a simple way of thinking about this is I'll propose a theory that you can just sort of look at the rise and fall of empires as a function of who dominates the cheapest energy source and their conversion technologies, right? So Britain had coal and the steam engine but they declined as oil and the internal combustion engine came along which catapulted the US into our position in the first and very clearly dominant petro state. Britain didn't have a lot of oil so there wasn't much they could do there. And now with electricity fast becoming the dominant energy input, you know China is emerging as Jesse alluded to earlier as the first and most dominant electric state. So are we destined to the same fate as the Brits in that framing? I hope not. Because on the other hand America has some of those incredibly rich energy resources across natural gas solar wind on the planet unlike the Brits not having oil. And so could leaning into becoming an electric state potentially usher in a new era of American growth and prosperity. So I'd like to answer two questions which is why would we want to become an electric state and how do we get there? But to start you guys have all done incredible thinking each one of you in your own ways on this topic. And so I'm going to give you as much time as you need to just like introduce your frameworks, right? And I think we just work down the stage. So Drew we're obviously going to want to hear a lot about heron power and everything. But you did lead the Tesla master plan three and did a lot of incredible thinking behind sort of an electric electric world, right? And so I'd love to just sort of hear your vision for that. And we'll start with you and then I'll tip the rest of your guys concepts. But yeah, thanks James for that. Yeah, so I was fortunate enough to lead the build out of both Tesla's in-house cell manufacturing program in Fremont, California, and then in Texas. In the end, we're built somewhere around 50 gigawatt hours of manufacturing capacity of a novel cell form factor in the United States. But also ramp the design and ramp like the Powerwall 3, actually Powerwall 1, 2 and 3, Powerpack, MegaPack, all of these energy products in the US and go through the sort of supply chain building effort, the manufacturing capacity building effort for those products. And doing the same for the supercharger from kind of version 1 to where it is now. And in all of that, what I learned is that there isn't like some magic ingredient that exists in China that means that they necessarily will be more capable of manufacturing something than we are in the US. Because everything I just described we did in the US first. And in some cases, we did overseas afterwards. But actually in all cases, we're still doing in the US. Or Tesla is still doing in the US. I'm not at Tesla anymore. I always got to be careful about that. So there's not some like secret ingredient. I think it's a question of will and capital allocation. And people, businesses making rational decisions in response to the stimuli, you know, on like where they can get the best return and the stable return. And China has just made that decision making calculus so easy for the participants in their market about like, yeah, where should I make a battery factory investment? Where should I make a solar factory investment? You know, where do I know I'm going to get my return on investment? And the US has made it hard. And why has the US made it hard? I don't think it's inevitable that it will always be hard in the US. Actually, I think you have to zoom out and say, what's going on with China? China was over the past three decades. Like we need to, they were like zooming out the planners. They're like, we want to have sustained GDP growth. We want to increase GDP per capita. We want to elevate our citizens. We want a lot of opportunities. And meanwhile, we currently import all of our energy resources. So that seems like a problem. And so along the way of developing their nation, they were like, we should also become energy independent. It makes sense. And now they're not still energy independent, right? Like they still import a ton of oil. They still import a lot of coal and natural gas. But they're, they're like very consciously like moving off of that to be as energy independent as possible by all of the government policies they've made. Now in the US, it's a complicated story. We're embedded with like, imbued with immense natural resources, wind, solar, everything else. But also all of these uber cheap through technology development, natural gas, and other fossil resources. So it's not as obvious a political decision. And that is why when you're making an investment decision as a, as a, as a company, it's like, well, where, which way will the political winds blow? I don't know. I mean, at some point, it will be obvious. And, and the US, I think, will at that point rapidly progress. It's already progressing the direction. Sorry to continue to talk here. But it's already progressing the direction of becoming an electric state. You know, LG is making big investments like Tesla did. You know, I am personally with my investment and building air and power to be a power electronics company to accelerate electrification. And I think at some point in the future, it will go even faster because the policy winds will always blow in the same direction. But it have no, have no doubt in your mind. Like, John did it because it was necessary. Right. Like, they don't have an alternative where the US does. Let's be fair. Okay. There's, there's so much to unpack there. We're going to use the full panel time. I'm excited. Before we do that, Sam, you've been putting on some amazing stuff recently on the electric tech stack concept. And so I'd love for you to just like walk through what that is. Yeah, just, just take it away. Yeah. So there's an article that came out a couple, like me, about a month ago with Paxton McCormack, who is a far better writer than me. So I want to make sure that I credit him with writing most of the article. But the, the idea is we're actually stuff that I've been circulating with, with, with him with, with Noah Smith with a couple others as well over the past several months. Basically, the, the, the idea is that there are like four critical technologies that every machine will be built out of in the future. And that's like batteries, particularly lithium ion batteries, power electronics, particularly like gallium nitride, silicon carbide, and also just like better silicon MOSFETs even. And then embedded compute, like the fact that we basically can put tons of, tons of flops anywhere and control those power electronics and batteries is truly effectively. And then the last piece is the electromagnetic. So converting, converting basically the energy from the batteries into motion or heat, if it's a stove or something like that. And effectively, one of the reasons that China has been able to sprint ahead is it turns out that like we can now build everything like we build consumer electronics. And like Tesla obviously pioneered being able to, like if you tear down a Ford automobile, the level of introspection into the custom components in that vehicle is, like their engineers were kind of like buying stuff more or less off the shelf. It's whether infotainment systems like only just recently got good because there was a five-year lag time on the component suppliers and stuff like that. Versus say Apple, they designed a custom camera for every model of iPhone. And so as we're starting to see like building these kind of different size machine, medium size and large machines, whether they're cars or stoves or what have you, more like consumer electronics, the other thing that's happening in parallel is all of these devices are starting to use the same fundamental building blocks of the electric tech stack. And what this means is if you get good at manufacturing, say, smartphones, you can switch to killer drones tomorrow and use the same factory, the same facilities, you know, and the same underlying supply chains. And this is not really happened before. It used to kind of be that like we'd have a different technology tree for different technologies. Like, okay, if like the steam engine and like all of and like how factories were, you know, factories worked in the 1800s going to kind of like a fully electrified factory of the, I don't know, of the like World War II sort of era. And beyond like basically like these things were fundamental technological shifts that required like a new way of doing stuff versus oh cool consumer electronics factory can build everything from a humanoid robot to a car like Xiaomi is built cars now of all things. And they're one of the better car makers surprisingly enough even though 10 years ago they only made phones. This is going to be the thing that's going to happen just more generally. And this is something where it's entirely enabled by the fact that there's a transition to this new technology stack. And then the second piece of it or the other piece of this that you'd imagine is just like fundamentally we're not switching to these technologies because of policy reasons. We're shifting to these technologies. They're better. And like I think there's a, I bet I'm anticipating a debate in Congress in like a year or two trying to reveal the fully hybrid or a serious hybrid infantry fighting vehicle at their military parade a couple months ago. I think we had a panel a couple of duravoses ago where I mentioned that the tanks were going to go woke. They have and China did it. And so but so this actually did happen. It was not just me making a thing aside but why are the tanks going woke? Well they're going woke because woke is better in this case. But basically what's going on is because of pure performance regions everything is going to adopt this set of technologies. And for that reason getting good at manufacturing them in the United States is a critical need. And then the other thing is what's cool about is you can be building stuff like what parents building, what we're building, you build phones, you can build like large scale ESS systems. And it turns out that these actually end up using much more overlapping supply chains than people would actually think. Yeah, totally. Again so much to unpack there. So I'm going to come back to a few things you touched on. Tristan I don't, I've not engaged with your public thinking as much as you know packing McCormack's incredibly long article. But I'd love for you to also just see how you think about you know the electricity. Yeah no and first I'll say I'm so glad to be at a conference where everyone talks as fast as I do because everyone's got so much going on. Sorry. But no we're we're brothers here. No I think very aligned with Drew in terms of how we view building out the US supply chains and building out a US domestic manufacturing ecosystem where maybe I both agree and disagree is that I think that there's yes there's a lot of uncertainty. There's a lot of there's a lot of like how do I invest the next dollar because I don't know if next year or next month or frankly next hour you know it's going to be the right dollar to invest. But if you have the ability as an organization to take a step back and look at a much a bit of a macro picture it's been clear and it's been clear and aligned for the last two three four five in county as many administrations as you can count back and everyone has said look we need to make sure that we have secure supply chains that we're starting to divest ourselves from a country who may or may not be friendly but you know maybe we're just overlaversed over there and we need to bring some of it back right and so if you play that angle and you say okay I'm going to look at the horizon I'm headed in that direction there's going to be some bumps along the way and as long as you have a balance sheet and the ability as an organization either to build a portfolio of different stuff so some of it works some of it doesn't or if you can just ride through those bumps I think it pays in dividends and I think that's where we are you know we've made we invested hugely into the EV supply chain we had something like 300 gigawatt hours of EV battery manufacturing supply here in the US and guess what the EV market hasn't quite turned out to what everyone expected it to be but second guess what the ESS market is turning into something that's really exciting and so when we started off it was oh we'll build four gigawatt hours of LFP cells for ESS maybe maybe that'll be interesting and then quickly it turned into 16 then it turned into 20 then it turned into 30 then it turned into 40 and who knows where it's going to go but because we saw that long-term view of divest yourself from an overlavered supply chain partner then bring it into the states we were in a position to take advantage be able to pivot and take advantage of that and so I think that's that's frankly where we're at now what I unfortunately worry about is that not every company is the size of LG that can just plop down 25 billion dollars and say we're going to build a huge manufacturing position and there's a lot of great technology that's coming out of this country there's a lot of really cool startups that that are doing some really interesting things and unfortunately a little hiccup in policy that goes the wrong way can kill that and that I find unfortunate and that is sort of the the price of a really uncertain the uncertainty of the environment we're in now and perhaps the the Chinese environment where there's a lot more okay go this way and you'll make and you'll make your money back right we guarantee it I think that that can help some of that stuff so it's a mix I'm not necessarily as pessimistic as as some people are in terms of the ability to build a US supply chain I just think that we could be do we could obviously be doing it we could be leveraging a lot more a lot more efficiency here I think there's one other thing I would add like people believe or maybe some people believe that there is a lack of collaboration globally on these technologies but actually it's incredibly global whether you're talking about power electronics or batteries or magnetics or or any of the things compute you know that that that Sam mentioned and and so actually a lot of the capital equipment that is involved in you know making these objects you know are provided by us a series of service providers that are global in nature and you can actually choose to like hey we're going to build a 100 gigawatt our facility in the US you know like LG did and you're able to get that equipment in you're able to ramp that facility and with the support of experts from around the world and and get it going so if at any point a pivot to go faster was needed it could be done and and I think while it's easy to say oh why is China able to do it and we're not I don't I think that's oversimplifying the situation is really it really is I'm I'm so glad you you guys brought this up because we were going to drill even deeper on this I realize I should have started with Dan because you have LAG perfected in my view the electric state framework so we're going to let you go and then and then we're going to then we're going to start diving in that was a great presentation it was amazing thank you no so we launched our flagship report the electric tech revolution a few weeks back and this report was really I mean labor of love but also labor frustration with the current energy debate right because we're kind of stuck between these two camps at the moment where on the one hand we have sort of this fossil gradualist view that you know there's no energy transition there's only energy addition going on the sort of framing that fossil fuels the pinnacle of human invention and on the other hand we have a much more like technocratic view of the energy system as a problem to be solved it's a net zero or bust attitude where we need to solve this by 2050 or we might as well give up and we're we're potentially kind of annoyed by this by this attitude towards the energy sector and in this framing and when when we look as sort of under hood of the new exciting energy technologies that we're seeing I mean we're very much agreement I think on this stage with that these are on the supply side wind and solar new electric generation on the supply on the demand side its EVs and electric vehicles it is grids and batteries in between that make these things communicate with new software but the magnetic center that all these new exciting technologies are around is the electron right this is not clean tech it is electro tech it is new electric technology that is just superior and we we keep making this sort of category error by looking at these new technologies and saying oh that's energy and then we look at the smart ones or that's tech but these technologies are actually much closer to each other than many people actually appreciate and so we started writing this report with argument like listen this started well before a Paris agreement or a Kyoto court right it's not that this technology magically appeared when we agreed we were going to do something about climate change this this happened you know decades and decades and decades of innovation this is something our our parents and our grandparents worked on we're just now living in a very exciting decade where all this technology is kind of converging together becoming cost competitive and talking to each other with digital and AI systems and that's just we live in an exciting decade but it's not by no means driven by climate action and we're talking about drivers so the origins are much before climate action the drivers as well run much more like much deeper we see than just climate climate push the way we see it you have just three fundamental drivers of change for electro tech which is physics economics and geopolitics on the physics side electro tech is roughly three times more efficient than the incumbent fossil technology it is based on the systems of electrodynamics rather than thermodynamics and thermodynamically you're just going to lose two thirds of your energy that you put into your energy system to get useful work out you don't have that with electrodynamics and it's just more efficient in a leaner way to set up your system economics these are small and modular technologies that benefit from right slow right a version of more slow they become cheaper the more you make as we get learning fossil fuels of course the more you want the deeper you need to dig so any technology innovation you have and that reduce cost is offset by the fact that you need to dig deeper and so at some point these two things overlap and across and that has just happened and from here on out electro tech is only getting cheaper and third is geopolitics I mean less felt in the US as you put it through because in the US it's much less urgent because the US has built its own fossil fortress I think at the moment that is independent right now but for many many countries in the world like my own I'm from the Netherlands myself that is definitely not the case energy securities top of the agenda 75% of the global population lives in countries that are net importers a quarter of the world imports from more than five percent of their GDP in energy these countries are looking everywhere at the moment to find energy securities and at some point they will look towards the sky and go like you know what I have more than enough solar power to power my own energy system once twice three times over if we're looking at countries in Africa we're talking about a thousand times over so obviously at some point these countries are going to realize and that's what we're seeing right now with the stories of we're seeing in Pakistan and I'm sure this crowd is familiar with that a rapid change to move towards electro tech and so we shouldn't be surprised I think that I'll close on that is we shouldn't be surprised that we were given that so many people misunderstand the origins of electro tech and misunderstand the drivers that we keep on the estimating the pace of change right and so every year the IA comes out with yet another upwards correction whoops who are wrong again and it happened time and again and just because the fundamental view of the world I think the the in German developed unshow and right the way that you approach the way that you see change happens is just wrong in energy right now and so that's that's our main theory I want I want to put a finer point on this something you said to me yesterday which I found very funny was that you were talking about how the the climate view of the world is almost bristling at the success of say China and other developing countries that leapfrogging and actually leading the charge here because they weren't part of the Paris accord and the climate with community was saying hey we're going to sign these agreements and then that's what's going to make everything happen and everyone's just blown past this actually and they're sort of upset in a way actually that it could happen without them holding the keys right so I want to I want to loop back to something that you know Sam started in to basically unpack like you know again we're taking a very US specific lens here I think because I mean I think we're you know we're here in the US but what the state of the world is of these critical technologies and you know I would say you know that's the electric tech stack but also things like transformers and solar I know and you know you guys aren't necessarily actively working on building solar right now but Sam said something very interesting of like almost the consumer electronics as like a door into like we are building the stack in that but also that you know as at least in my limited understanding a lot of that manufacturing is actually maybe we're designing it in the US but like Apple is building it somewhere else and so just like across the board on the most important technologies in the electro tech stack like where are we today what are the biggest gaps and then and then you know maybe as we progress how we can start closing those gaps wow anyone can jump in that is large problems I have I have a very spicy take which is GM had the infinity stones on their fist in like friggin like 1987 or something like that they had like an IGBT group they had a they had they had they had some advanced batteries stuff going on little team on had obviously not been really pioneered yet they had they had a what is it magna quench the they actually had the invented neodymium iron boron magnets and they had all this embedded compute DSPs and other things like that so like they had every single piece of the electric tech stack in like 1987 or something like US basically invented all and we invented all our panel at Bell Lab and I'm saying I'm saying friggin GM had all of it and and could have been could have been Tesla they went and entered the world solar challenge and like whooped everyone's butt like with with with a vehicle that basically was like let's demonstrate all of the stuff we can actually pull out of our research labs and school a bunch of kids or whatever and it's mostly a college competition but basically the but basically basically the point is like we had we invented all this stuff from like the speak and spell allowing us to ramp up DSP production with Texas instruments to you know Detroit techno basically being downstream of all that so it's kind of crazy it's kind of crazy but we invented all these things and then we basically decided hey let's go hand them to people who know how to do the more detailed manufacturing and then it turned out that like the actual industrial capacity to make these things became more important as process engineering and other things like that became more invoked and I would say that there's there's one engineering discipline that I think is just not taught in the United States which is like building stuff in volume in the consumer electronics way and then like looking at the statistics of it and I guess we did invent the whole six segment thing kind of and then we gave to the Japanese and they give it back to us but basically the the thinking here is like there is a way to perfect perfectly engineer one of something and then there's the way that like China and some of these other countries have actually figured out like we're going to build a lot of these things and then figure out through the process engineering like how to actually make stuff like highly reliable of human eye batteries and stuff like that and so I think some of those skills slipped away over the decades and then the yeah I just think they're in different places maybe so you know I I did as one of my aspects of my former role like go from no real internal knowledge about how to make batteries to making you know tens of gigawatt hours per year over the course of from basically 2019 to 2024 you know five years doing it all vertically integrated with completely new processes that had not been done before and you know it's like you're right like you can't go and like on the shelf find a whole bunch of trained battery process engineer at the time in the United States although with actions of LG and others now they're easier to find but instead you have to go to like like industries so what are the like industries that I was looking for talent from at the time it was like candy you laugh cigarettes bottle like can like making soda um uh what were the other things uh there's some like pharmaceutical stuff like syringes there's super high volume things made in the US all day long um and have been for decades with the whole industry of people like ramping yield the the the person who runs the 4680 factory in in Texas right now formally was an end and hires her bush production and facility manager so it's more transferable than you think and don't count it out and again I'm just describing one thing that that that I was responsible for and and it happened over five years um I think you know to your specific question what's the state of the state of affairs so I like to use some uh lessons from history so in 2014 there were there was no silicon carbide really at all um and there were no real EVs using power electronics at all and uh in 2024 there was over four terawatts of silicon carb of not just silicon carbide silicon carbide plus silicon that went into EVs over four terawatts that's an amazing number in one year um and that's in a decade actually less than a decade because 2014 really didn't count like I think Tesla shipped like maybe 25,000 cars they have something like that so that's in 10 years and then also I'll do the same 10 year thing again so in in 20 in 2014 there was no utility scale storage at all like maybe somebody like uh I don't know AS maybe deployed uh a couple handful of megawatt hour site or something like that and then in 2024 it was you know it was like 50 gigawatts you know something like 150 gigawatt hours was deployed and that's in 10 years and and Tesla had 30% of that market as a US manufacturer so it doesn't have to be it's not a given that it will be you know trying to first or anything like that um and and and uh and yeah I don't know if that's so no I and it's not exactly state of the of the situation but I think you can't be done well if I sort of aggregate your two views Sam is saying we kind of like shipped it off and and sort of lost an opportunity but I feel it feels something very hopeful in what you're saying in that we actually can re-acquire it very quickly I agree with the CPG you know I'll see because it's like literally all the stuff that we figured out automated in the 60s state in the United States and those are the industries that like like I was shocked when like I was like who's gonna manage the cold chain for all the vaccines for COVID rollout and somehow we just like that was easy for us and like like a micro example of like what's the supply chain to get everyone in the United States vaccinated it seems like that was no big deal meanwhile it's like oh there's a bunch of things happening behind the scenes that we probably don't even know about but they but basically like but then you look at like okay why can't we do x y and z and it's like the CPG industry actually is is a really impressive thing in the United States um there's a second piece which is like I think that there's a vertical integration quandary that exists in the United States that like makes it easier for like a business like me to go overseas and work with contract manufacturers and stuff like that like I'm not going to saturate a single cycle of or like a hundred percent of any one piece of manufacturing equipment except for maybe our final assembly fixtures and stuff like that because of like the volumes I'm doing or not what like say Elon could go and and and just like will will will directly and so absent that it's better for me to timeshare ashare manufacturing facility those services have kind of rotted out in the United States and you do not in historically you basically didn't really get attached engineering services whereas in China it's like there's now all these under employed engineers that are now working at manufacturing firms so like if you go work with BYD they can go design like a e-scooter for you like and it's like a couple million dollars for the entire program and it's sort of this crazy thing you can go do there at this point and it means that as someone who's running a business it's like you this is clearly the right move now if you can get the volume in the demand up above a certain critical threshold ensuring all this other stuff makes sense the people exist all this other stuff but that's kind of I think there's this sort of problem of like being able to reach the scale where verticalization works is incredibly tricky especially for new businesses that you know frankly like you're not going to be able to raise several hundred million dollars upfront in many in most most of not all cases even if you're even if you literally are some like some of the best entrepreneurs in the world you also have to acknowledge that like the the diversified conglomerate didn't really like exist in the United States after GE right like whereas Korea has so many I mean of which one of them is LG Japan has so many now China has so many and like how does that become sexy in the US again you know I mean that diversified conglomerate right where they're making washing machines and laptops and battery cells like that's crazy that's an amazing range you know is this the tag length of this panel make the diversified conglomerate sexy again but I like it but my underline theory here is actually that the diversified conglomerate now can essentially exist off of four foundational technologies which makes it a lot easier which is like okay back in the day GE had to be good at gas turbines washing machines like all these things used totally different technologies and then like in the interest of efficiency they were all kind of thrown away by you know managerial excesses of the 80s but but but versus realizing that like maybe you should just do the chable thing and make this work but but basic but basically the fact is like BYD if you look at if you I've been to BYD's like showroom at their HQ which is an insane facility and like if you ever get a chance to go visit you should definitely go visit but basically they've got like a monorail they've but they'll have they've got like a monorail that goes around their campus that they actually built and like they offered that to cities in South America but what's crazy about it is you go walk through all the products they make and it's like every single thing uses the electric tech stack like every single thing from like vapes to building scale ESS system same shit all right so build more vapes okay and by the way they're really one of the biggest vapes manufacturers in the world like someone made a sore a video of me testing vapes at BYD don't look it up okay so I you guys have opened a door to to somewhere I really wanted to get which is like what what degree of ensuring should we be targeting because I actually think Tristan LG is a very interesting sort of like friend shoring case study in that obviously a Korean company but a lot of the manufacturing is actually happening here I imagine there's a lot of like skilled transfer there and then obviously the you know Sam going over to you know I don't know what countries you guys are actually setting up you know agreements with whether it's China or someone else that that is sort of maybe not it's seen as bad or especially if it's China and so like what where is the line there is it like we must get those companies building here or is there something and how how how like can we are we actually progressing towards that like getting much more at home yeah I mean I depends how fast you want to do it I think you know to Drew's point sure you can you can develop all this high tech manufacturing capabilities in house if you have 10 years to do it or even if you have four or five years to do it but what if you want to do it in one year right and that's the sort of situation that I feel as though we're in right now and to do it in one year okay there's some friendly countries out there that have this technology and have these skilled people and we've got crews that hey they went and commissioned a bunch of factories in China and then they did it in Poland and then they've been doing it in the States and you bring those crews around you build that expertise and you can get things up and running in one year and not and hit high 90s percent yields and not have to suffer through the doldrums of 70 and 80 and you know and finally getting up to the 90s and that's the way to scale is to be smart about not just being completely myopic in the U.S. manufacturing's build out but but being smart about bringing people in making sure you can train a local workforce build that local workforce more quickly than you would otherwise if you're just sort of poking through the fog you know as you would as you're learning something the first time and so I think I mean that largely that's that's been our approach is yeah we got to bring people in we got to bring highly skilled people in who can come in and get everything working as quickly as possible because we're right up against it you know we're going to be delivering tens of gigawatt hours next year and and and we're not going to do it effectively if we're going to suffer through those that sort of scale up but then you have to follow through and make sure your local workforce is then trained to like to to follow and take it over because that crew needs to go to the next place to go do it again right okay so this is a very important bridge to to to sort of like U.S. industrial policy right so I would just say I maybe I would put it this way the current administration feels like their plan for energy dominance is to double down on the petri state you know which whatever but so like let's imagine this path continues and what what feels very hopeful in a lot of what you're saying Tristan is that you know an organization can take the long view like like you guys have you know LG has decided to invest Tesla has invested you know in the past and you know Sam you may go spin up something abroad but over if you're taking like the long view of of how things you you'd want to do things in your organization like is there a consensus amongst you guys that you know that is the right thing to do for your organizations like to do it locally or I'll give you my contrarian not just year one but like you hopefully around for 20 years all right so I'll give you I'll give you my take on on touring which is let's straight up like until you're at the volume where you can do it vertically it doesn't like it doesn't make sense at a certain point but once you bit like let's imagine I'm just shipping 50,000 units a year oh hell yes it makes tons of sense and the benefit though is once you actually have that demand then you don't have to go deal with VCs anymore you can go to a bank and and you can go do you can finance things just like LG does with these facilities they're building out and so I think that's something that's really I think it's it's really important to be like getting out of the Silicon Valley goggles mindset of like okay I need to get to the next milestone that then a VC firm can go and and fund me to go build like a giant US facility and it's like no I think the answer is banks and making sure that you can get you start from demand and hold the demand on it if that is true does that mean we can win in the US progress towards an electric state do more manufacturing home without like in a bottoms-up fashion like without a top-down industrial policy absolutely I think so and I I was saying this you before like there's actually more overlap between the petro state and the electric state than people think like there's an incredible amount of power electronics batteries and everything else in actually you know horizontal drilling and fracking like they that thing is of like remote operated battery-powered drill head like you know that's operating at like crazy temperatures and then there's power electronics on top to like run the pumps and there's a lot of overlap and a lot of opportunities to push things forward I also like to say like never let a crisis go to waste right so right now we have this crisis on on you know time to power and growth of the power sector for AI which everybody is excited about well from my perspective is somebody that develops power electronics technology fantastic you know we need to do this we need to do it fast like obviously we're going to make it in the US because for political reasons and for sheer like logistical reasons that's the fastest way to get it done and now we've like built that additional expertise you know in the manufacturing supply base in my team in my customers about what's great about you know modern power electronics for any energy solution you know and then if that's there for whatever the energy solutions may be it's even more ready to go in the electric state direction or in the renewable energy direction in the long run and then you know something I meant to say before the master test the master plan part three what did it say it asked the quick and answered the question is it technically feasible do the resources exist and is it like financially sustainable to go a hundred percent sustainable energy in the economy like that was the question the answer was yes and then the question is is like will we and and I think as as Don mentioned like the data all says we already are it's just a question of like can we accelerate in that direction and every one of these interesting developments where there's a whole bunch of investment into the electric sector electricity sector in the US is like a critical opportunity to have the right outcome happen like we can't have rates go up like that would be horrible we need the rates to not go up for everybody in this room don't let the rates go up because if they do it's going to retard all the transitions no matter what we do with component costs magnetics power electronics batteries if the actual delivered cost of electricity goes up faster than the pace of inflation or significantly faster than the pace of inflation all this is going to slow down even in China it would because they can't subsidize it forever so it is an imperative to all of us to to not let these crises go to waste we have to end up with even the lower electricity rates than we had before this growth started that's the ambition I would say okay so actually what you use the word imperative I want to circle back to something that you said in your sort of opening which is the question I've actually had on my mind this whole time which is when does it become necessary right to pivot towards an electric state for the US when we're in this like yeah we're entered like and that's what I mean and not even like in a in a sort of like flippant way is like doubling down on the petro state like it works pretty fucking good to be honest like we've been dominant for a hundred years because of it so it's like it's not you know unfortunately I wish it weren't true it's not crazy to say that that's like a bad strategy right but Sam sort of offered up the view that you know there's a point like within an organization like locally that there's like a necessary point where you're like I have volume of course I go you know on trend because it's just made by business better and I think Don yesterday referenced that we now see the graph of China's deployment and you're like this feels like a sputnik moment and so I understand how like locally within an organization you could have a necessary a it's necessary to onshore now but like are we already there on the macro level that you know it can you know in a in a sort of nonpartisan way say like doubling down on the on the petro state is a bad strategy and we must move in this direction yeah I think this is quite right as you know what it is I think the reason that you just happen I heard it's quite often in the US right so before this I'm all suited up because I was in Wall Street pitching our our story and that the counter arguments always like it's been going well for a hundred and something years it's it's it's a Kodak argument right everything was well at Kodak until it wasn't and it doesn't hold much the truth if you actually look at the underlying driver so you see that this is not actually holding any water and so I think this is the the main challenge for United States is that somehow the United States believes it's a petro state I actually don't believe it is I mean by all academic sort of definitions of a petro state it's not the exports of the US and fossil fuels is not a huge source of profit it's doesn't it's not like tech for instance if the US is anything it's a tech state not not a petro state and if you're a tech state today why not become an electro tech state afterwards this is we have this idea in the US that we're at this petro state and we're anchoring ourselves to the ideas and mental models of the the oil and gas business when it comes to energy and that's limiting our degrees of freedom on how we can think about the future and that for me is very reminiscent of just Christians since innovators dilemma it's one of the things that I fear most is that we're actually seeing this now at a sort of geopolitical scale not an innovators with an empire dilemma that the things that made us very big in the US are actually what are the most at putting us at most risk so so Mark and Jason had this take like some like over 10 years ago called like software is eating the world and like I think the argument here is like the US is a software country in some sense like we stopped innovating the physical world in like the 80s or whatever and software then kind of took over as one of the engines of economic growth now electricity is the only real form of energy you can directly control with software thanks to power electronics embedded compute etc and so I think some of this is actually there's an argument that we're just going to let software take the wheel now and these are the technologies that let software move the rest of the world and so I think that's that's another framing of this versus the like petro estate versus electric state thesis which is software is already in the world we just have to admit it admit that it also can you know move the world as well um there's a second point to this though which is like there's a really weird thing I've noticed and I've been trying to like unpack it and maybe you haven't answered this much are why is there why is there only one dude who's actually built kind of like like large industrial scale businesses with this like new electric stack in the United States why is it only one guy and why is trying to have many businesses that like this that only that have like you know founders that you've not even heard of um and I think there's actually a policy reason for this which is like we essentially made it so you have to be just disagreeable enough to like bust through all of the various barriers that you could get that will get in your way and get things totally screwed up and you know I think I think people have different opinions about the person I'm referring to but basically the point the point I'm getting what is this like he must be not not be named but again but the point is the point is the dude ships and like and and and and and he's done this multiple times in multiple businesses from like tunneling to spacecraft and like and and and the weird thing is it's like why where are the other Elon's and so I think that there's and then China appears to be able to have a regulatory system a financing system etc that allows I think I think Noah Smith came up with this term which is a sub-ealon or maybe I came up with this I'm not sure we we can debate that but basically why why can't a sub-ealon build a legendary electric tech stack business right and I think the answer is in this this go if you follow me on Twitter you'll see I'm big into housing politics and stuff like that but basically we we enshrine the physical world in amber after the oil crisis to try to like constrain growth and make people feel better with themselves and like that's got to change are you saying he's just an aberration then or or do you think no I think it's like I think you name you're up here I mean I can you be one of these guys or what I would prefer if the regulatory state was a little bit easier to let you build these things but basically but I do think that it's very it's a very important question to ask that and also an important question for policymakers to be like well if you are an anti-menopalist from the left well you should make it easier for other people to compete with Elon right like I just okay I do have some thoughts yeah who is the one shipping you know just by the way 150,000 people at that company workroom really hard yeah I think it's a cultural thing it's not just politics politics reflect the culture right and and I've been in China I'm a number of times amazing and you know there's absolutely a cultural you know belief that investing in development and development means you know production and and and manufacturing and distribution and logistics and and transportation and and all of these facets of the built environment like that's a there's a cultural appreciation for how that can improve the lives of of other people in China and the same is true in Vietnam right now if you've been to Vietnam recently I was just there I think it is possible to get there in the western countries but they've also had it really good you know the post-World War boom pre-energy crisis was great for all of these nations people have a good life and it's a little bit harder to kind of like move the needle towards yeah we mean we do need more development but you know we are seeing in places in fact you just said it Italy yeah chronic unemployment Spain yeah also and they're re-industrial they've historically been industrialized nations that are like we need to re-industrialize we need to do it right and like parts of the US too like southeast so I think and and areas like Michigan like where LG is building their facility right and many facilities in the Midwest like absolutely there parts of the US that are that are gimme gimme when I went and built the megafactory and later which is in the Central Valley of California the like it was red carpet everybody was like what do you need let's build this thing so you just have to find that cultural alignment and you can get things done so maybe just for the sake of argument I'd like to disagree with you Sam and see where we'll end up because I think actually we have had many Elon Musk's here in in in the US but they've just been hidden in companies that actually built in China like I think this this book Apple in China I'm not sure how many people have read it it's excellent so when you look at the investment of Apple in China we're talking about 1.5 Marshall plans per year in terms of investment in China if China is an electric state today surely it is that because we made it that we put a lot of effort into it with a lot of money into it and so I think I think it's true Elon Musk is unique in the fact that he does it in the US but I think we've a lot of does know how on how to scale up and how to you know set just unreasonable standards on on hardware manufacturers and keep pushing them and pushing them pushing them that is a lot of America know how do we can apply it home but we just chose to apply it abroad yeah I agree I agree with this as someone who literally was one of the Americans telling like teaching a Chinese company on how to build VR headsets for for many years and and one of the things that's really interesting was like it's all the software to find hardware stuff that the US has historically been great at and honestly a lot of it's like we're kind of doing tech transfer to teach them how to do this sort of stuff and you can I think Apple's fantastic example Apple gets extremely talented people right out of college puts them get some business class flights to Shanghai or or Shenzhen or wherever they're going and they end up at the factory for 12 hours a day like well caffeinated and and like they're and by the way that the iPhone the process engineering the like oversight of that that is vertically integrated done by Apple and the abstraction layer is they is united airlines is how they get those people in but it's almost identical to what you talked about which is like the I think they're the number one customer of united airlines but basically where a traveling team of factory builders goes to each site and builds up a factory Apple does this per program with like the iPhone team comes in and they go get Foxconn ready and they go get Pegatron ready and they go and do the process engineer they basically design the product with the production facility and I think this is the fifth infinity stone so the four technologies the fifth one is the noile on how to click them together and how to sort of this sort of soft knowledge of how to click these Lego blocks together and that's another one that we had and gave away right and I think it's well it's a different level it started for reasons that are no longer true it's like oh labor is cheaper and we need a lot of labor like now all these lines are automated and like they could be anywhere and and and a lot of the reason why it goes to the same place is because there's a consistent supply base that's super nimble and responsive that's done this many many times but you just have to make the decision enough times to do something different that you end up with the same ecosystem in a new place and you know I think LG is leading the way other people are doing it along along with LG on the battery side you know in power electronics you know my former employer we did a lot to bring it back to North America I'm going to continue to do it I'm building a factory in North America for our first product I think you just have to make that conscious decision and it becomes a compounding ecosystem over time I mean just add on to that I think that there's the myth and there's the reality right and there's oh going to China is the way to do it and that's the way it's always been done and that's what we will continue to do that that's the myth right we need to re-invest re-look at the assumptions in that one and say no actually it makes sense to come stay stay here I mean like we're investing yeah battery manufacturing but we're also investing the broader ecosystem in the broader the broader supply chain you know we're we're working with Aaron on on a bunch of really cool stuff but like how do you make sure that you just have to recheck those assumptions and go back to first principles and say is this still true and it is not true things do change you can't just take the lazy approach and say well that's what the last guy did so I'm going to do the same thing and I'll be successful right I like you just question be curious question and go do the right thing I think Tim Cook said like labor is not cheap in China anywhere these like incredibly skilled workforce is right and sorry sorry go ahead Sam well the other part of this too is I think the actual asset is being able to prototype with the production process yeah and where if you can prototype with the production process you actually can like you're basically playing for keeps your prototyping is now it can't leave the lab and actually scale and being able to figure out ways to do that like that is the thing that's important versus where you actually choose to manufacture yeah okay so I feel hopeful that enough organizations can make this decision independently I think we've we've certainly aligned on that especially because time just ran out I have to take one big left hand turn just to just carry this on a bit longer but there is one sort of like structural reason that we I actually don't see inserted in this conversation also I just want to like leave it as a as a question for people to live with I mean we can talk about it a bit but I don't I'm certainly don't think we're going to solve this but there is this concept called the Triffin dilemma which is like I think even originated back with Keynes like economic principle that if you are the global reserve currency what that means is you have to fund dollars out into the system and but you do that by buying goods that strengthens your currency against those exporters makes it very hard to export and so maybe you know a take on you know SpaceX and Tesla being successful is that those companies were so innovative in doing something so unique that they could overcome this dilemma right but when it comes to vapes which actually do strengthen the ability to you know as part of the electric tech stack like you get to build a workforce around that right and something more commoditized like that it actually is very challenging just to overcome this like deficit that we're running against right and not to mention that our reserve currency status was cemented in the 70s when we decided to introduce the petrodollar and that oil had to be bought in in dollars right and so sort of if we can do it I mean it will if you guys have any quick takes we'll see but do we have to disrupt ourselves as the global reserve currency if we're to be successful here and if the petrodollar state had a petrodollar then where is the electric dollar is there going to be one we have I mean we have zero minutes so let's just I think the take is plenty of time brainstorming is going to be more powerful than people think I think for some of this stuff because it's like okay if you can go build a facility in Vietnam you can build a facility in Italy you can build a facility in UK of all places there's actually some really interesting you know you can you can solve some of these issues like you know within your kind of alliance sphere versus having to necessarily solve them on shore but then the other point like what Drew mentioned is like these factories are like lights out factories so it's like if you just straight up you could produce the stuff on site and like the equipment could be built somewhere else you can essentially have the advantage of importing most of the machine equipment for that and but frankly that's what happens with a lot of us this facility today so I think I think there's a lot of nuance to this where it's like assuming naively that everything will be vertically integrated on shore is probably not ever going to be correct um that's that that's my main take on that and then the electro dollar thing I mean isn't like there's there's all the crypto people wanted to be Bitcoin but like I would argue I would argue that there's kind of this like I'm not sure I'm not sure how this is going to actually end up but the the thing that I'm seeing with with with energy and AI is like energy and compute being the kind energy and thinking basically being like one thing and that being in some sense the value here versus like oh I mind a Bitcoin and it's special and actually we're seeing even today like Bitcoin mining firms are pivoting to doing AI data centers more profitable because when intelligence is worth more than than the coin but yeah that's but actually that's just a shadow currency for how affordable is the energy right like the cost of intelligence is going to go with the cost of energy and like that's just back to the first imperative like how do we make the cost of delivered electricity which is how you're going to get to uh intelligence as low as possible um and then we can export intelligence to the world right like that seems like a cool idea um and a cool pathway to go down again don't let any crisis go to waste right like how do we how do we take that fact that intelligence is on we're about to have God as somebody said earlier like okay let's make sure God is renewable energy powered and as affordable as possible and man we're in a good position so okay so our friends and hacker house and SF are like the high priest of this God apparently because they help create it yeah unfortunately I was not invited so I'm doing so all we've gotten is there is it's probably there's a weird convergence of power and intelligence we don't really know it's going to come out of that but maybe just a yes no do you do you guys want uh the US dollar to stay the reserve currency I will say I'm a no I will say um we need to balance our budget if we're going to make any major changes I just start there but I mean is that is that can I pin you on a yes or a no I I don't have an opinion I think that if we were going to change how the currency markets work the USS if you're on out of balances budget like you can't have one without the others yeah yeah Sam my view is that my view is like a fundamental nature of the US empire which is the kindest empire in human history is probably the best way to put it is is that is that we are the global reserve currency and in some sense the world's police force among other other things we set that up after kicking everyone's ass in World War II I think it's a good idea to maintain that um so it's a yes it's a yes yeah Tristan I mean I mean yes but you got to do it in the right way I think there's a needle to thread and you can do it right or you can do it wrong and it's it's it's what might always all these questions are always much more complicated than yes or no it's just a matter of figuring out how to do it and I will argue that the petro dollar is now the electoral dollar already because I've been many companies before LG where I was buying a lot of batteries and not once did I buy a battery in in Chinese that's good all right Don well I mean I'll yes or no it hardly matters I think it's not up to us right now if you see what's happening in gold over the last couple of weeks in China stocking up it's it's going to be up to emerging markets that are really not a lot of cash to develop they're going to pick whoever they want to pick as reserve currency and so we can fight or not fight for that but in the end it this is going to be forward over real tech and real adoption of whether this is going to be Chinese electro tech or US LNG that's going to determine whoever the reserve currency is so this is not a conversation of whether we want to keep the currency close to us is a conversation of do we win the technology and then the markets of the future yeah and it's it has been waning over time that at least that much is it's you're right yeah anyways that was I just had to add down a hot take on the day so I was just stirring the pot you know but anyways this is a true yes or no will we be an electric state in 50 years yes yes and the tanks will we woke rest in 100% yes hell yes all right that's how we're we're going to be great thank you guys so much