Product, Service & Design Innovation
Musk Envisions Tesla at Center of Sustainable Energy, Urban Transit, Sharing Economy

Billionaire industrialist Elon Musk is doubling-down on the ambitious vision he laid out in August 2006. In a blog post, Musk recently revealed his “Master Plan, Part Deux,” which extends beyond a corporate strategy for his electric car company Tesla, covering the breadth of the sustainable energy chain from generation and storage, to electrification of several types of vehicles, to the sharing economy.

About 10 years ago, Musk noted that his four long-term goals for Tesla were to: 1) Create a low volume car, which would necessarily be expensive; 2) Use that money to develop a medium volume car at a lower price; 3) Use that money to create an affordable, high volume car; and 4) Provide solar power. In part, this first ‘Master Plan’ was intended to demonstrate that Tesla was thinking far-beyond the luxury sports car market from the beginning, but that starting there was a necessity since, as Musk explains, “no one was going to pay $100k for an electric Honda Civic, no matter how cool it looked.” That plan “is now in the final stages of completion,” prompting Musk to outline the next four aims of Tesla’s strategy.

Energy

The first of the new goals is to integrate energy generation and storage. Musk aims to “create a smoothly integrated and beautiful solar-roof-with-battery product” that will allow individuals to generate their own energy, and scale the technology throughout the world.

It was on this basis that Musk defended his idea to horizontally integrate Tesla and SolarCity, the solar power company led by his cousins and in which he is both a major investor and chairman. He explained that Tesla is ready to scale its ‘Powerwall’ energy storage (battery) systems and SolarCity is ready to provide “highly differentiated solar,” thus by bringing the companies together, he believes they can better create one seamless experience for ordering, installation and service.

Analysts and investors have questioned the need to blend the companies, arguing that they can work closely in their current forms. Indeed, Tesla has already been working with SolarCity on battery systems. The proposed $2.8 billion acquisition of SolarCity will increase Tesla’s debt load and further delay profitability – the company has only had a single quarter without a net loss since going public. The company’s second-quarter results for 2016 are expected to be released next week.

In the meantime, Musk will inaugurate Tesla’s sprawling ‘Gigafactory’ battery plant in northern Nevada tomorrow (July 26).

Electric Vehicles

Currently, Tesla offers premium sedans and SUVs, and is developing the compact SUV Model 3 and a “new kind of pickup truck,” to address the consumer market. Musk explains that Tesla engineering is focusing heavily on designing its factories to rapidly scale up production, which he believes is essential “to accelerate a sustainable future.” The company is working to boost vehicle production 10-fold.

At the same time, he asserts that two other types of electric vehicle are 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,” Musk wrote. In the future, he expects autonomy will allow Tesla-designed buses to be smaller and better match the acceleration and braking of other vehicles than traditional heavy buses, which could improve traffic congestion. The design will accommodate wheelchairs, strollers and bikes.

Autonomy

Driverless vehicle technology will continue to be an area of focus for Tesla despite recent concern and an ongoing federal safety review following two collisions involving Tesla vehicles that were using the semi-autonomous ‘Autopilot’ driving system at the times of the accidents. U.S. regulators are reviewing a fatal crash involving a Tesla Model S owner in Florida in May, as well as a non-fatal crash involving a Model X that happened in Pennsylvania on July 1.

Musk defended the technology, saying, “when used correctly, it 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.”

He added, “It would no more make sense to disable Tesla's Autopilot, as some have called for, than it would to disable autopilot in aircraft, after which our system is named.”

Autopilot is always off by default, and is currently referred to as a “beta” software. Musk insists it is extensively tested far beyond what the term “beta” usually implies, but Autopilot will continue to bear the “beta” label until it is proven to be approximately 10 times safer than the U.S. vehicle average. “As the technology matures,” all Tesla vehicles will have the hardware necessary to be fully self-driving with fail-operational capacity – meaning if any system in a car breaks, it can still drive itself safely.

Sharing

Autonomous vehicles also ties into Musk’s plans for Tesla’s role in the sharing economy. Tesla plans to take on the likes of Uber, Lyft and all the others jumping onto the mobility-as-a-service bandwagon with its own fleet and customer-owned cars.

The Master Plan’s fourth and final main goal is to “enable your car to make money for you when you aren’t using it.” This will be made possible for Tesla owners who add their car to the Tesla shared fleet through a smartphone app. Musk envisions people’s cars generating income while the owners are at work or on vacation.

“This dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla,” Musk wrote. “Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not.”


Overall, Musk asserted that, “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.”

He continued, “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.”

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