We are covering or planning to cover Tesla Motors Inc. (NASDAQ:TSLA) secret master plan. Elon Musk has hinted at the “secret master plan” for a few days already but earlier today he finally gave a deadline – around 8 PM EST – right now it is almost thirty minutes later and so far nothing. Musk did say around 5 PM (PST not exactly) and said that Tesla’s blog site – so far no updates or any news from any Tesla medium.
Post should go live on Tesla website around 5pm
— Elon Musk (@elonmusk) July 20, 2016
— Elon Musk (@elonmusk) July 20, 2016
Will be working at Tesla on Autopilot & Model 3 today, then aiming to pull an all-nighter and complete the master product plan
— Elon Musk (@elonmusk) July 19, 2016
Elon Musk has been under a lot of pressure over questions relating to investor disclosures, Tesla’s bid to purchase SolarCity Corp. (SCTY), missing estimates and announcing it on Sunday July 4th weekend, Hyperlook lawsuits and more all just in the past few weeks – so whatever the plan is it is supposed to be something BIG.
We reported last week that Morgan Stanley analyst, Adam Jonas, thinks that Musk’s secret plan is a transport company. Specifically, Jonas speculated “on-demand mobility service that complements Tesla’s skills in electric and autonomous vehicles.” However, even though Morgan Stanley has business relationships with Tesla there is a “Chinese wall” and Jonas could be totally off. So whatever it is we will have that news soon, stay tuned.
What do you think the secret master-plan is?
Its up and only an hour later here is Elon Musk’s “master plan” which we have been waiting weeks for…
The first master plan that I wrote 10 years ago is now in the final stages of completion. It wasn’t all that complicated and basically consisted of:
- Create a low volume car, which would necessarily be expensive
- Use that money to develop a medium volume car at a lower price
- Provide solar power. No kidding, this has literally been on our website for 10 years.
The reason we had to start off with step 1 was that it was all I could afford to do with what I made from PayPal. I thought our chances of success were so low that I didn’t want to risk anyone’s funds in the beginning but my own. The list of successful car company startups is short. As of 2016, the number of American car companies that haven’t gone bankrupt is a grand total of two: Ford and Tesla. Starting a car company is idiotic and an electric car company is idiocy squared.
Also, a low volume car means a much smaller, simpler factory, albeit with most things done by hand. Without economies of scale, anything we built would be expensive, whether it was an economy sedan or a sports car. While at least some people would be prepared to pay a high price for a sports car, no one was going to pay $100k for an electric Honda Civic, no matter how cool it looked.
Part of the reason I wrote the first master plan was to defend against the inevitable attacks Tesla would face accusing us of just caring about making cars for rich people, implying that we felt there was a shortage of sports car companies or some other bizarre rationale. Unfortunately, the blog didn’t stop countless attack articles on exactly these grounds, so it pretty much completely failed that objective.
However, the main reason was to explain how our actions fit into a larger picture, so that they would seem less random. The point of all this was, and remains, accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good. That’s what “sustainable” means. It’s not some silly, hippy thing — it matters for everyone.
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. 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.
Here is what we plan to do to make that day come sooner:
Integrate Energy Generation and Storage
Create a smoothly integrated and beautiful solar-roof-with-battery product that just works, empowering the individual as their own utility, and then scale that throughout the world. One ordering experience, one installation, one service contact, one phone app.
We can’t do this well if Tesla and SolarCity are different companies, which is why we need to combine and break down the barriers inherent to being separate companies. That they are separate at all, despite similar origins and pursuit of the same overarching goal of sustainable energy, is largely an accident of history. Now that Tesla is ready to scale Powerwall and SolarCity is ready to provide highly differentiated solar, the time has come to bring them together.
Expand to Cover the Major Forms of Terrestrial Transport
Today, Tesla addresses two relatively small segments of premium sedans and SUVs. With the Model 3, a future compact SUV and a new kind of pickup truck, we plan to address most of the consumer market. A lower cost vehicle than the Model 3 is unlikely to be necessary, because of the third part of the plan described below.
What really matters to accelerate a sustainable future is being able to scale up production volume as quickly as possible. That is why Tesla engineering has transitioned to focus heavily on designing the machine that makes the machine — turning the factory itself into a product. A first principles physics analysis of automotive production suggests that somewhere between a 5 to 10 fold improvement is achievable by version 3 on a roughly 2 year iteration cycle. The first Model 3 factory machine should be thought of as version 0.5, with version 1.0 probably in 2018.
In addition to consumer vehicles, there are two other types of electric vehicle needed: heavy-duty trucks and high passenger-density urban transport. Both are in the early stages of development at Tesla and should be ready for unveiling next year. We believe the Tesla Semi will deliver a substantial reduction in the cost of cargo transport, while increasing safety and making it really fun to operate.
With the advent of autonomy, it will probably make sense to shrink the size of buses and transition the role of bus driver to that of fleet manager. Traffic congestion would improve due to increased passenger areal density by eliminating the center aisle and putting seats where there are currently entryways, and matching acceleration and braking to other vehicles, thus avoiding the inertial impedance to smooth traffic flow of traditional heavy buses. It would also take people all the way to their destination. Fixed summon buttons at existing bus stops would serve those who don’t have a phone. Design accommodates wheelchairs, strollers and bikes.
As the technology matures, all Tesla vehicles will have the hardware necessary to be fully self-driving with