Solar Energy, Safety, IoT and Tesla Uberization : Elon Musk’s Second Chapter @Tesla

Screen Shot 2016-07-21 at 8.26.16 PMIn his recent blog Elon Musk has outlined where he wants to take Tesla over the growth phase of the company. In the start-up phase which Elon refers to as the first master plan, the company’s goal was to create a low volume car and then utilize the funds to develop a medium and eventually high volume car all powered by solar energy. While there has been significant debate on whether Tesla would be able to execute on the grand vision, Elon Musk and Tesla appear to have achieved their goals partially over the last decade. With Model S, X and recently the more affordable Model 3, at least 3 of Elon Musk’s original master plan bullets can be considered to be covered.

Elon’s second master plan aims at continuing Tesla journey’s with more focus on Solar Energy, Safety, IoT and Tesla Uberization. Below are the four pillars that Elon Musk laid out in his blog:

1 – Create stunning solar roofs with seamlessly integrated battery storage

Elon outSolarCity_Impact_Reportlines the importance of integrating energy generation and storage within the automobile through solar-roof-with-battery product that works and also enhances overall customer experience from ordering and installation to ongoing support. The blog seems to be defensive in tone probably because Elon Musk has been under fire from skeptics who are not completely sold on the Solar City acquisition proposal. Musk argues :

 

We can’t do this well if Tesla and SolarCity are different companies, which is why we need to combine and break down the barriers inherent to being separate companies.

2 – Expand the electric vehicle product line to address all major segments

Screen Shot 2016-07-21 at 8.16.44 PM

Musk and Tesla announced the Model 3 earlier this year to address high volume segment needs and the reception has been outstanding with 400,000 reservations in April as announced by Elon Musk at a conference in Europe (source : Reuters). That is a pretty significant number considering that the car was showcased only on March 31st of this year. The challenge for Tesla is in execution and ensuring that delivery deadlines are met appropriately. In his blog, Elon takes the opportunity to address Model 3 production issues :

 

What really matters to accelerate a sustainable future is being able to scale up production volume as quickly as possible. That is why Tesla engineering has transitioned to focus heavily on designing the machine that makes the machine — turning the factory itself into a product. 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.

In the next chapter for Tesla, Musk also outlines plans to develop a compact SUV and a new kind of pickup truck to address wide segment needs of the consumer car market. Tesla also wants to extend its reach to new electric vehicles – heavy-duty trucks and high passenger-density urban transport which per Musk are in development and will be demonstrated in 2017.

3 – Develop a self-driving capability that is 10X safer than manual via massive fleet learning

Tesla is not just a hardware company. The company has done extremely well in combining automobile hardware with modern software capabilities to play in the Internet of Things (IoT) consumer market. With Tesla, not only do you get autonomous driving capabilities but also remote troubleshooting and maintenance of connected cars. However the company has been under tremendous pressure and scrutiny following the Model S fatal crash in Florida in a semi-auto mode. Musk defends Tesla’s Autopilot :

According tpress02_autopiloto the recently released 2015 NHTSA report, automotive fatalities increased by 8% to one death every 89 million miles. Autopilot miles will soon exceed twice that number and the system gets better every day. 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.

In the journey to fully autonomous cars, Elon acknowledges that although Tesla hardware will be ready, software validation and regulatory approvals will take much longer before truly self-driving cars will be deployed. He also mentions that autopilot in ‘beta’ does not mean ‘not ready’ but implies software will ‘continue to improve’.

4 – Enable your car to make money for you when you aren’t using it

Screen Shot 2016-07-21 at 9.26.11 PMIn other words, you can offer your car to the Tesla local fleet which can create an Uber type of system except these cars will be self-driving. Elon says:

You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you’re at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost.

In the second master plan, Elon Musk and Tesla have painted a grand vision with plans to utilize everything – from energy saving technologies to shared economy apps and business models. The key to Tesla’s success lies in effective and timely execution and ensuring that the company only bites in manageable chunks.

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