Sustainable Knowledge

The 2nd of August 2006 Elon Musk wrote on Tesla’s blog page the following post: “The Secret Tesla Motors Master Plan (just between you and me)” where he lays out the plan for the decade. He starts explaining the background of the company and his role, but the main part was the plan with four objectives:

Build a sports car

As we know, that was the Roadster, and the objective of this was to show that electric cars could be better in all aspects than its ICE (internal combustion engine) counterparts, he did not want to build just a weird looking car that was good enough, he wanted to make electric cars cool. All this, in order to raise money to invest in the next step of the plan and to start creating buzz around the company.

Use that money to build an affordable car

Building anything in high quantities is not an easy task, and cars require even more investment and knowledge. This is why he chose to build a sports car first, which leaves higher margins and the low volume makes them easier to manufacture. All the money earned from the Roadster was then used to build the manufacturing capabilities for the Tesla Model S, the five-door sedan. This car was a huge success in terms of engineering, marketing and sales (to the extent the manufacturing capabilities and available market). It was awarded car of the year by Motor Trend magazine and received many other awards, to this day most electric cars being released today can’t even compete with this car released 8 years ago, in range, efficiency or performance, that says a lot about what they achieved.

Use that money to build an even more affordable car

That was the Tesla Model 3, which started being sold in 2017 and has become the number 1 selling electric car in the US and many parts of the world, with a starting price of $36,200 in the US (before subsidies or government incentives), being ahead of the competition in most relevant aspects of the car: performance, efficiency, charging infrastructure, software, etc.

While doing above, also provide zero-emission electric power generation options

Which they have been through the company SolarCity, which used to be a separate company but merged with Tesla in 2016 because it made more sense financially and strategically. They had been installing solar infrastructure through differents business models (leasing, rental or selling) since 2006.

At the time this post was published they were being laughed at, and they were criticized for many years, analysts always predicted that they would never achieve it and most news on the media was negative about Tesla. But now the tide is turning and important personalities that used to “bully” them are now on board with the project. They have over 1.000.000 cars on the road and they are dominating sales in all segments they are present.

On July 10th 2016, the “Master Plan, Part Deux ” was released, in the same fashion, the first one was done 10 years earlier. I really like how he starts the post stating Tesla’s mission:

“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.“

The four main elements of the second part of such master plan are:

Create stunning solar roofs with seamlessly integrated battery storage

From the solar company, the biggest breakthrough, and, what is possibly the future of solar for houses, is Tesla Solar Roof, where the solar panels are built into the roof tiles using the entire roof surface. When building the house is a no brainer, especially version three, in terms of costs if you live in a relatively sunny area. But the excitement is for the future when they ramp up production and lower the cost of this technology. This, combined with the Powerwall provides a solution to stabilise the grid in the future while allowing people to become energy independent or reducing significantly their carbon footprint.

Expand the electric vehicle product line to address all major segments

Nowadays, Tesla addresses two relatively small segments, in which they are industry leaders, premium sedans and SUVs, the post talks about the Model 3, a future compact SUV (now we know that he was talking about the Model Y) and a new kind of pickup truck (the recently presented Cybertruck, which was truly a new kind). I would like to add to this that last week, Elon announced, while in China, that they would probably develop and manufacture a car there, rumours say that it would be a car focused mainly on developing countries, but this would be another market segment to tackle.

To achieve this massive challenge, they have focused their efforts on designing the machine that makes the machine, turning the factory itself into a product, because to accelerate the sustainable future that they hope to achieve, they must first be able to scale up the production volume up as quickly as possible. A great example of this is how they build Shangai’s Gigafactory in 10 months, from a muddy field to a production factory, and using 65% less capital expenditure than the US counterpart, thanks to this they are around 6 months ahead of schedule in production in China and Model Y cars.

There two other huge segments they are going to disrupt, heavy-duty trucks and high passenger-density urban transport. The Tesla Semi has not been in the news lately because they don’t need it to be since it is not a consumer vehicle and companies are already on board (UPS, FedEx, Wallmart, DHL, Pepsi and others have already ordered), but is going to completely revolutionise logistics in the near future. The urban transport vehicle Elon talks about it’s still a mystery but possibly is connected with the Boring Company and its tunnels.

Develop a self-driving capability that is 10 times safer than manual via massive fleet learning

This is clearly about Tesla’s Autopilot software, thanks to the training of an Artificial Intelligence which is being feed the data from eight surround cameras, twelve ultrasonic sensors and a forward-facing radar of over 1.000.000 cars (and growing at a fast rate). Currently is able to drive itself in most situations but require the supervision of the person, and with each update is improving. Other companies are trying to achieve this but with the use of other technologies like LIDAR, and a training fleet hundreds of times smaller, and the AI race is about having enough training data, so Tesla will most likely win such race towards self-driving.

Enable your car to make money for you when you aren't using it

This is the RoboTaxi network, thanks to the self-driving hardware present in most Teslas currently on the streets, and the many more to come when the self-driving AI and regulation are ready, through and OTA (over the air) update, a massive fleet of cars will be able to provide a service like the one Uber or Lyft are providing now. This will be at much cheaper rates since the highest cost of these services is the driver. For the company is pure profit once is deployed since the client paid for the hardware, but the client will earn money while it is not using the car.

I really hope they are able to carry out the plan, if they do, they will no doubt become one of the most valuable companies on the planet, 13 years ago they told us what they intended to do and they did everything on the master plan, and nowadays most things are going accordingly to plan and even exceeding expectations or being ahead of schedule… But honestly, I can’t wait for the Master Plan Part Three in 2026.

References:

https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me
https://www.tesla.com/blog/master-plan-part-deux

Tesla's (not so) secret master plan