Tesla's Musk Rolls Out Revised Master Plan

The automaker hopes to broaden its focus in the years to come, adding solar generation, taxi services, buses and trucks to its long-term product offering.
By Lou Whiteman ,

Tesla Motors (TSLA) - Get Report late Wednesday delivered its much-anticipated revised master plan, broadening the company's focus away from just automobiles and toward becoming a one-stop shop for various green energy endeavors.

Company CEO Elon Musk for more than a week has teased that an update to his 2006 manifesto laying out his vision for Tesla was on the way. The announcement comes as Tesla is moving toward a definitive agreement to acquire SolarCity for $2.8 billion, a deal which was panned by Wall Street when it was suggested last month, and could be timed to try to win over skeptical investors.

Tesla in Musk's new plan hopes to broaden its focus away from just cars and toward other transport segments, including heavy-duty trucks and buses. The CEO also includes solar-charging battery packs, self-driving taxis and advanced autonomous driving in his long-term vision for the company.

Musk said both a bus and a commercial truck are in the early stages of development and should be ready for unveiling next year.

The CEO said the goal of the company is "accelerating the advent of sustainable energy" toward the betterment of humanity.

"By definition, we must at some point achieve a sustainable energy economy or we will run out of fossil fuels to burn and civilization will collapse," Musk wrote. "Given that we must get off fossil fuels anyway and that virtually all scientists agree that dramatically increasing atmospheric and oceanic carbon levels is insane, the faster we achieve sustainability, the better."

The plan specifically mentions SolarCity, which like Tesla counts Musk as a major shareholder. The CEO said that Tesla needs to "create a smoothly integrated and beautiful solar-roof-with-battery product that just works," but adds, "we can't do this well if Tesla and SolarCity are different companies."

Tesla went public with its intention to bid on SolarCity prior to a definitive agreement because of Musk's cross ownership and considerable overlap between the two boards. Skeptics of the deal were quick to point out that SolarCity is also highly leveraged and losing money, with some fearing the Tesla offer is a bailout that might threaten the automaker's balance sheet.

Musk counters that there are solid business reasons to put the two companies together, saying that now that Tesla is ready to scale its in-home battery product "and SolarCity is ready to provide highly differentiated solar, the time has come to bring them together."

While the master plan by design is full of long-range goals, the company has more immediate challenges ahead including its attempt to bring its lower-cost Model 3 to market in the next year. Musk is pushing Tesla to deliver 500,000 vehicles by 2018 and 1 million by 2020, up from about 50,000 in all of 2015, while continuing to build out a global network of retail locations and charging stations. Tesla is also building a massive battery manufacturing facility in the Nevada desert and is attempting to grow its business supplying commercial and residential battery systems.

The automaker in recent months has also come under regulatory scrutiny for its Autopilot feature, which offers steering assistance and other advanced aid but comes short of full autonomous driving. Musk in his plan admits that full autonomous driving will take some time to perfect and win regulatory approval, but made his case for why Tesla believes it is necessary to push advanced features out as quickly as possible.

"The most important reason is that, when used correctly, it is already significantly safer than a person driving by themselves," Musk said. Having the systems on the road now also increases the speed in which they can develop, with Musk anticipating worldwide regulatory approval will require something on the order of 6 billion miles worth of fleet learning.

Tesla's original master plan was unveiled about 10 years ago. In it Musk laid out a plan to use its initial Roadster vehicle to refine technology and raise funds for a second, more mainstream vehicle, which would then be sold to fund development of still-cheaper options. That is roughly the course that the company has followed, bringing out the Model S and then the Model X after the Roadster and now working on developing the more affordable Model 3.

The original plan also referenced the idea of buying SolarCity, stating that Tesla in the future would "provide zero emission electric generation options."

Loading ...