Tesla’s New Goal: Boldly Targeting Full Global Energy Transformation

Originally posted in Investopedia on 01 March 2023

At its first-ever investor day, the company unveils audacious $10 trillion plan

Say this for Elon Musk: When it comes to setting goals, he doesn’t shortchange himself.

Tesla (TSLA) embarked on a so-called “master plan 3” Wednesday, with Musk, the electric-vehicle maker’s high-profile CEO, playing the starring role at the company’s first-ever annual investor day.

For his part, Musk did nothing to disappoint those expecting bold pronouncements. The goal of the new master plan is nothing less than worldwide energy sustainability.
“There is a clear path to a fully sustainable Earth — with abundance,” Musk proclaimed in his opening remarks. “I’m just often shocked and surprised by how few people realize this.”

Achieving Musk’s goal won’t come cheap: Tesla estimates the investment to accomplish it will total $10 trillion, 70% of which consists of a global shift to electric vehicles.

Master Plan 3

It’s not the first time Musk has swung for the fences. The event at the company’s Gigafactory Texas plant near Austin marked Musk’s unveiling of Master Plan 3 for the company, the latest iteration of a vision that extends his first Master Plan in 2006.

That plan, which included creating a low-volume, expensive electric vehicle whose sales would pave the way for affordable, high-volume cars down the road, hasn’t exactly worked out as Musk foresaw.

However, it eventually did lead to the production of the Model 3, a high-volume seller even at relatively steep price of about $40,000.

Musk’s Master Plan 2 — some call it Part Deux — in 2016 targeted the creation of solar panel roofs and integrated battery storage, development of self-driving capability 10 times safer than manual driving and expansion of its production line across all key customer segments.

Much of the plan hasn’t reached fruition, and the company two weeks ago recalled 362,000 vehicles because of fears that its experimental driver-assistance software, called Full Self-Driving Beta, may cause accidents.

His vision for Tesla is to deliver 20 million cars annually by 2030. Since inception, Tesla has produced 4 million vehicles and currently has capacity to manufacture 1.9 million cars per year.

Earlier this week, the Mexican government announced that Tesla would be building a gigafactory in Monterrey.

Go Big or Stay Home

Nonetheless, Tesla’s forging ahead with an audacious plan that, if achieved, would completely transform the way world procures and uses energy — much the way Musk’s Space X venture aims to revolutionize space travel.

Master Plan 3 has five overarching elements:

  • Repowering the world’s existing power grid with renewable energy
  • Switching to electric vehicles
  • Switching to heat pumps for home, business and industry climate control
  • Electrifying high temperature heat delivery and development of “green” hydrogen for industrial processes
  • Fueling ships and airplanes with sustainable energy.

Despite the projected cost, Musk and Tesla officials said the global transition they envision ultimately will cost 40% less than persistent reliance on fossil fuels.

Underwhelmed Investors

Tesla’s live YouTube stream of the event started a half-hour later than scheduled, further teasing impatient investors and Tesla fans who’ve clamored some time for the company to have an investor day.

But the company’s shares in after-hours trading Wednesday indicated investors may have desired a different message. Tesla’s stock fell 3.5% in after hours trading by 5:22 pm EST.

Those losses extended a 1.4% decline in Wednesday’s regular trading session. Still, the company’s stock has surged 65% this year after plunging by the same percentage in 2022.

Earlier today, Reuters reported Tesla will revamp production of its top-selling Model Y, involving changes to both the exterior and interior of the crossover vehicle.

The company also displayed a “pre-production beta Cybertruck,” an electric pickup truck, at the Investor Day.

Robots Will Come To Roost
Artificial intelligence is the new investment flavor in town and Musk holds some bragging rights. Despite the recall, Tesla has managed commercial production and deliveries of cars with self-driving capabilities.

True to his signature style, Musk did not disappoint in shocking his audience with outrageous comments. This time, to an audience expecting comments an update on more cost-effective models that could potentially be used as robo-taxis, he said that he foresees humanoid robots potentially outnumbering humans in the future.