Think Tesla was audacious in its first decade? CEO Elon Musk’s “Master Plan, Part Deux” calls for Tesla to build electric crossovers, sport utility vehicles, pickup trucks, buses, and long-haul trucks. Electric vehicles, all of them. The plan also calls for Tesla to forge ahead on autonomous driving — no surprise there — and develop a car-sharing program for self-driving Teslas so owners can get some of their money back.
It doesn’t take a rocket scientist to see Musk is pushing a bold plan that requires lots of capital and more breakthroughs in battery cost and efficiency at a time when Tesla is already stretching to meet its goals of jumping from 50,000 to 500,000 vehicle sales by 2018 and Musk is trying to push through a merger of Tesla and SolarCity.
Autonomous big trucks, smaller on-demand buses
In the “Part Deux” master plan (its real name) on the Tesla blog, Musk writes that today “Tesla addresses two relatively small segments of premium sedans and SUVs.” Tesla expands with the $ 35,000 Tesla Model 3 in late 2017, a crossover sized and prized like a Model 3, and then “a new kind of pickup truck.”
Musk says there are “two other types of electric vehicle needed: heavy-duty trucks and high passenger-density urban transport.” He said both are in development and should be unveiled next year. Musk sees them as autonomous vehicles. Others are working on autonomous combustion engine trucks, including Daimler’s Freightliner division (photos above, right). Musk says the Tesla Semi “will deliver a substantial reduction in the cost of cargo transport, while increasing safety and making it really fun to operate.” Fun to operate? Tesla is an upbeat company.
It’s unclear if Tesla would pack in batteries equivalent to the 200-300 gallons of diesel in an over-the-road truck, make them quick-change, or develop huge improvements in battery efficiency.
The Tesla bus would also be autonomous. If so, Musk writes, “It will probably make sense to shrink the size of buses and transition the role of bus driver to that of fleet manager. … [with the buses] 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.”
Tesla’s not-insignificant contribution here is the electrification and automation of the downsized bus, something perhaps sized on the order of a Mercedes Sprinter or Ford Transit. Ford’s Dynamic Shuttle Service concept (photo right) is built around ride optimization software and offers semi-custom destinations, meaning the rider might walk a block or two at each end of the ride, putting it between a city bus and taxi on convenience and price.
The new Tesla plan backs off from a smaller (and cheaper) Tesla EV than the Model 3. “A lower cost vehicle than the Model 3 is unlikely to be necessary,” Musk says. If people want a less expensive Tesla, they can rent it out when they’re not using it.
The Tesla factory: “machine that makes the machine”
To move to a sustainable future, Musk says, Tesla needs to scale up production volume quickly and focus on the “the machine that makes the machine,” otherwise known as the factory. He adds:
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.
Autonomous driving yields safety
Parts of the Tesla plan touch on current controversies, but reshaping today’s problems as waypoints to the longer-term future. For instance, Musk sees the futures of SolarCity and Tesla merging, so the companies should, too. (That’s making some investors nervous.)
Musk defended Tesla’s partial self-driving Teslas now as a useful learning tool helping move Tesla to full autonomy and — when used appropriately, meaning not the stuff you see in stupid YouTube videos — makes today’s Teslas with Autopilot safer than cars without. Autopilot, Musk says, “is already significantly safer than a person driving by themselves and it would therefore be morally reprehensible to delay release simply for fear of bad press or some mercantile calculation of legal liability.”
Musk cautions that the “software validation” for self-driving will take “much longer than putting in place the cameras, radar, sonar, and computing hardware.” He estimates world regulatory approval will take “on the order of 6 billion miles (10 billion km). Current fleet learning is happening at just over 3 million miles (5 million km) per day.” Musk again defended the term “beta” being applied to Autopilot software as “not beta software in any normal sense of the word. … It is called beta in order to decrease complacency and indicate that it will continue to improve.” When Autopilot becomes 10 times as safe as the average US car, the beta label comes. Right now Tesla says Autopilot cars are approaching 2x the safety of the average car. The overall death rate in auto accidents now is about 1.1 per 100 million miles driven.
Master plan in short
Musk opened and closed his 1,500 word plan by comparing it with the first plan, like this:
First Master Plan (2006)
Create a low volume car (the Tesla Roadster), which would necessarily be expensive;
Use that money to develop a medium volume car (Model S) at a lower price;
Use that money to create an affordable, high volume car (Model 3);
Provide solar power. No kidding, this has literally been on our website for 10 years.
Part Deux Master Plan
Create stunning solar roofs with seamlessly integrated battery storage;
Expand the electric vehicle product line to address all major segments;
Develop a self-driving capability that is 10X safer than manual via massive fleet learning;
Enable your car to make money for you when you aren’t using it.
Can Musk make the second decade magical, too?
Analysts were quick to provide feedback. Several noted that it was an ambitious plan at a time when Tesla has challenges engineering new cars and getting quality control improved. Consumer Reports dinged Tesla for quality issues with the Model S even as it continued to say it was the best car they ever tested.
To Tesla and SolarCity, it makes sense to merge the two companies so customers can do one-shopping for a car, solar panels, and battery storage. Whether buyers see it that way is less certain. Not everyone wants solar panels on their roof and apartment dwellers may not have a place to put them.
As happened at the Steve Jobs-run Apple, investors may wonder what happens to Tesla Motors if Elon Musk gets hit by a bus, electric or otherwise. Tesla says it has a deep bench of executives beyond Musk, but it’s always a concern for the markets when a single person represents so much of the company’s image. On the other hand, for most of Tesla’s existence, the investors who were rewarded best were those who bet with Tesla.
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