Tesla’s Future: “Part Deux” in Progress
2021 was an interesting year for businesses in every industry. Supply chain struggles and heavy demand for goods touched nearly every industry but especially the automotive industry. Auto-manufacturers could not keep up with demand due to issues in the supply of materials and parts forcing them to limit their production or temporarily close plants. However, despite these challenges the electric vehicle manufacturer, Tesla Inc., was able to deliver 87% more vehicles in 2021 compared to its 2020 deliveries (Kolodny, 2022). This outstanding growth in vehicle deliveries is very notable as the company has had consistent large strides in production and revenue growth over the last few years. Tesla’s ever-growing production of electric vehicles shows the demand for electric vehicles is growing at an alarming rate. In addition, Tesla’s production numbers during industry-wide supply chain issues show the company can rapidly adapt its manufacturing to alleviate supply strain. Other auto-manufacturers have noticed the electric vehicle demand and have planned production of their own electric vehicles or promised to transition to electric in the years coming up (Kolodny, 2022). While these manufacturers are in the beginning stages of electric vehicles, Tesla is far ahead of the competition with four available models, a nationwide charging network, and a controlled supply chain for production. Presently and historically, we can see that Tesla is a growing leader in electric vehicles. However, although we can see where the company is and was, it is also important to consider where the company is going. What is Tesla’s plan going forward?
Tesla’s plans moving forward are actually not shrouded in mystery or locked away in some vault at one of Tesla’s giga-factories. In fact, the company is actually very transparent about its plans for the future and wrote about them back in 2016. The company’s CEO, Elon Musk, detailed Tesla’s master plan in a blog post on Tesla’s website aptly named “Master Plan, Part Deux” since the first master plan was already written and discussed in the early days of Tesla (Musk, 2016). In essence, Tesla’s plans for the future can be broken down into three segments or main goals: integrate energy generation with storage, expand their electric vehicle product line, and achieve full self-driving with their vehicles (Musk, 2016). Each part of the master plan contains a little more detail into what will be done and how it will be achieved.
Regarding the first goal concerning energy integration, the master plan focuses on integrating home-solar. For Tesla, this means the company wants to create a streamlined easy-to-use solar roof & battery package that can easily be installed. Once this is achieved, the company plans to bring this package to scale just like they did with their electric vehicles (Musk, 2016). Upon achievement of scale, this part of the master plan will be completed meaning Tesla will have to decide whether or not to expand upon the energy generation & storage aspect of their business.
Regarding electric vehicle expansion, Tesla currently offers four different vehicles but these vehicles are all in only two major market segments in consumer vehicles: sedans and SUVs. Moving forward, Tesla wants to address heavy-duty trucks, involving both pick-up trucks and cargo trucks, and high-density urban transport (Musk, 2016). Meaning, the company would be making vehicles more oriented for commercial use. Since both the Tesla-semi and Cybertruck have been announced but are not being produced, it is safe to say Tesla is still working on this aspect of their future.
Regarding the full implementation of self-driving vehicles, Elon Musk wants to achieve a software system that is 10 times safer than the average human driver before implementing or claiming full self-driving. In addition, Musk notes that it will take 6 billion miles or more once full self-driving is achieved for regulators to approve of the software (Musk, 2016). However, once true autonomy is able to be implemented, Tesla wants to enable a feature for its vehicles that would enable owners to rent their cars out while they are not using them. Enabling this feature would allow more people to afford a Tesla and possibly nullify the need for manufacturing a cheaper consumer vehicle. In addition, the achievement of fully self-driving vehicles opens the door for Tesla to offer or provide autonomous services that no other company could. Full self-driving vehicles are something Tesla has been working on and in the most recent earnings call, Elon Musk emphasized the importance of full self-driving in Tesla’s future.
Tesla’s master plan outlines its goals for the future but with no timeline. Given that the master plan was written in 2016, we have the benefit of viewing where Tesla is now and can predict where it will be going for the rest of 2022 and on. Currently, the largest development expected to occur in 2022 is the opening of Giga-Berlin and Giga-Austin (Ewing, 2022). These are factories expected to help produce more electric vehicles in the U.S. and directly produce electric vehicles in Europe. This is the largest expected event for Tesla this year and Tesla’s previous actions have mainly been toward vehicle manufacturing. Thus, Tesla’s near-term achievements appear more geared toward expanding their electric vehicle lineup. Therefore, in the coming years, Tesla may be prioritizing expansion into commercial vehicles over its energy integration or autonomy goals.
Tesla’s performance in vehicle manufacturing and production in the last five years has been phenomenal. So it makes sense that their goals for the coming years would be related to manufacturing. In fact, in the January 2022 earnings call for quarter 4 of 2021, Elon Musk made multiple statements that clarified Tesla’s objectives in the future. Musk clarified that supply chain issues seem to be remaining persistent for the year and because of this Tesla will not be releasing any new vehicles this year as it would result in the production of fewer vehicles due to manufacturing complications. Reiterating Tesla’s short-term focus on manufacturing and then adding to their vehicle lineup. Next, Musk elaborated on the potential utility full self-driving has and his excitement toward it. His excitement towards full self-driving could indicate this is the most prioritized goal in Tesla’s sights after manufacturing and vehicles.
In the long-term, it is clear by Elon Musk’s master plan that Tesla may branch off into solar products and establish an autonomous vehicle network. Each segment of the master plan is a gargantuan task to achieve on its own and it could take many years before the plan is fully realized. Although electric vehicle demand is ever-growing and Tesla continues to grow at a similar pace, it is not too frivolous to say that Tesla will achieve its future goals, it is only a matter of how quickly they will be able to do it.
Works Cited:
Ewing, Jack. January 8th, 2022. Why Tesla Soared as Other Automakers Struggled to Make Cars. The New York Times. https://www.nytimes.com/2022/01/08/business/teslas-computer-chips-supply-chain.html
Kolodny, Lora. January 2nd, 2022. Tesla Delivered 936,172 electric vehicles in 2021, with fourth-quarter setting a new record. CNBC. https://www.cnbc.com/2022/01/02/tesla-tsla-q4-2021-vehicle-delivery-and-production-numbers.html
Musk, Elon. July 20th, 2016. Master Plan, Part Deux. Tesla. https://www.tesla.com/blog/master-plan-part-deux.
