Elon Musk just posted his "Master Plan, Part Deux," a mission statement meant to guide the company into the next decade just as his original Master Plan in 2006 has taken the company to where it is today.
The difference between then and now is that many more people have come around to Musk's way of thinking about the future of energy and transportation. More investors buy into his vision for where the world is headed, if not his plans for getting Tesla there. Still, Musk offers a tantalizing roadmap for Tesla as well as some new insight into how he forecasts the future. Here are eight key elements:
1. Tesla solar (not really new)
Musk defended the deal he's pursuing to buy SolarCity Corp. He called it an "accident of history" that the two companies were distinct from the get-go and pointed out that even the original Master Plan in 2006 called for a collaboration with SolarCity to sell panels. Musk said the timing is now right and he wants to combine Tesla batteries with SolarCity panels to make an elegant system "that just works."
It's a big idea, which I describe in more detail here: 'Tesla Solar’ Wants to Be the Apple Store for Electricity
2. Tesla Semi (new)
The company has begun work on what Musk calls Tesla Semi, a freight truck that he says will significantly reduce the cost of transporting cargo. Musk later wrote on Twitter that the program is being run by Jerome Guillen, who oversaw development of Tesla's Model S sedan and who joined the company from Daimler in 2010. The Semi is to be unveiled in 2017.
3. Self-driving mini buses (mostly new)
This is Musk's solution to urban public transportation, which he began to describe to an audience in Norway in April before he checked himself. The mini-bus will also be unveiled next year, though Musk gave no indication of when either of the new commercial vehicles might be road-ready.
4. Model Y and a pick-up (newly confirmed)
In past tweets and public appearances, Musk has hinted about producing a crossover vehicle based on the forthcoming Model 3 platform, as well as aspirations for building an electric truck. Now he's made those plans official. When finished, Tesla's six-car lineup will offer something for almost every major segment of the consumer market. Of note: Musk calls it "a new kind of pick-up truck," whatever that means.
5. Don't expect an economy car (new)
Tesla's original Master Plan called for plowing all free cash flow (and then some) into research and development of ever-cheaper electric cars. In what may come as good news to some investors, that plan seems to have run its course. "A lower cost vehicle than the Model 3 is unlikely to be necessary," Musk writes.
6. Factory as a product (new math)
As Tesla pivots to building its first mass-market car, the $35,000 Model 3, Musk has been talking about the factory itself as a product—"the machine that makes the machine." The Master Plan provides, in a very Muskian sort of way, new insight into how the chief executive forecasts Tesla's future capabilities:
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.
Let's unpack this a bit. When Musk talks about first principles, he's referring to a concept in philosophy, and in math, that when you approach a new problem, you start with what you know to be true and build from there. So Musk seems to have observed a rule of auto engineering that suggests production can improve 5 to 10 fold by 2022.
Musk currently forecasts that in 2018, he'll be able to produce 500,000 cars (up from 50,000 last year). That's a wild ramp-up forecast, but using his first principles approach, it's only the beginning. If he achieves his 2018 goal and the principle holds true, one could imagine the extraordinary possibility of scaling to millions of cars a year by 2022. That's assuming absolutely everything goes right and the demand is there for all those Teslas.1
7. Autopilot and self-driving cars (new benchmarks)
Tesla is pushing ahead with its Autopilot driver-assist technology despite a fatal crash in May that prompted a U.S. safety investigation. Musk didn't address the controversy directly but defended the Autopilot feature. He repeated claims that driving with Autopilot is already safer than driving without it and provided new benchmarks for future success.
Musk had previously said that the company's "beta" label for Autopilot would be removed after one billion miles of road experience—which he expects to happen next year. Now he stipulates that Autopilot must also be 10 times safer than the average U.S. vehicle to move out of beta.
Musk said that for "true self driving" to be approved by regulators worldwide, it would require about 6 billion miles.2 The fleet of Teslas currently on the road clocks about about 3 million Autopilot miles a day.
8. Tesla Mobility (not really new)
Tesla is now officially talking about its plans for ride sharing that would have it competing with services like Uber, Lyft, and city taxis. With the tap of an app, you'll be able to turn your car into a self-driving taxi that will generate money for you when you're not using it. This is one of the reasons that Musk thinks the world doesn't need a cheaper Model 3. If you can make your car work for you when you're not using it, Musk says, "almost anyone could own a Tesla." Of course, that would require the cars to be truly autonomous and for customers to be willing to hand their vehicles over to unsupervised strangers.
The Master Plans offer broad strategies, not detailed blueprints, and Tesla is already facing a lot of challenges. Where will the funding come from for all the new vehicles coming in the next few years: the Model 3, the crossover, the pick-up truck, the Semi, the mini-buses? Now that Tesla is getting into solar, where will that lead: international markets, commercial solar, networked home batteries for shared power? And what if some of the first principles are wrong?
Still, it's a plan that's bursting with ambition: 1) make solar+battery systems work 2) design and produce electric cars to meet almost every need 3) get self-driving cars on the road 4) network self-driving cars together into shared fleets. Musk has written himself a new set of instructions. Let's see if he can follow them.