Elon Musk’s master plan: Tesla to diversify into energy, trucks and buses

25 Jul 201685 Shares

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Tesla to move into solar power, buses and trucks, and take on players like Uber in the sharing economy

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The future of transport, energy and the economics of vehicle ownership is to be turned on its head forever, and one man is to answer for it: the enigmatic Elon Musk, founder of Tesla and SpaceX, who has finally revealed his long-awaited master plan.

In his second master plan in 10 years – appropriately enough, entitled Part Deux – Elon Musk presented his vision for the future of the company.

As well as merging Tesla with SolarCity to sell integrated energy generation and storage, Musk plans on expanding into other forms of ground transport, like trucks and buses.

‘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’
– ELON MUSK

He plans to continue to spearhead the advance of autonomous driving technology.

And he wants to change the dynamics of vehicle ownership in the 21st century, pioneering a new sharing model where owners can make money from their cars when not in use.

Musk’s plan in a nutshell:

  1. Create solar roofs with seamlessly integrated battery storage.
  2. Expand the electric vehicle product line to address all major segments, including trucks and buses.
  3. Develop a self-driving capability that is 10X safer than manual via massive fleet learning.
  4. Enable your car to make money for you when you aren’t using it.

Start with low expectations

Elon Musk

Elon Musk at the Web Summit in Dublin in 2013

Musk revealed that he actually had low expectations for Tesla in the early days and, rather than risk the money he made from PayPal, he made an expensive, low-volume car, the Tesla Roadster.

The success of this gave him the wherewithal to push into medium-volume cars like the Model S, then higher-volume cars like the Model 3. There are even plans afoot for a compact SUV that will be a new kind of pickup truck.

‘In addition to consumer vehicles, there are two other types of electric vehicle needed: heavy-duty trucks and high passenger-density urban transport’
– ELON MUSK

“Without economies of scale, anything we built would be expensive, whether it was an economy sedan or a sports car. While at least some people would be prepared to pay a high price for a sports car, no one was going to pay $100k for an electric Honda Civic, no matter how cool it looked,” Musk reasoned.

He admitted he expected to be attacked in the early days for making cars for rich people, but now he has proven the economies of scale.

“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.”

Next on the horizon will be the gathering and storing of solar power, which Musk pointed out was contained in Part Uno of his master plan.

The combination of Tesla and Solar City, he explained, will enable the company to create a smoothly integrated and beautiful solar-roof-with-battery product that empowers the individual as their own utility.

Immediately on the horizon, however, is the ramping up of production of Tesla vehicles and a move into new areas like trucking and public transport.

“What really matters to accelerate a sustainable future is being able to scale up production volume as quickly as possible,” Musk said. “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 five- to 10-fold improvement is achievable by version 3 on a roughly two-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 addition to consumer vehicles, there are two other types of electric vehicle 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.”

No avoiding a self-driving future

Despite recent accidents, Musk is determined to push the boundaries on self-driving vehicles.

“As the technology matures, all Tesla vehicles will have the hardware necessary to be fully self-driving with fail-operational capability, meaning that any given system in the car could break and your car will still drive itself safely. It is important to emphasise that refinement and validation of the software will take much longer than putting in place the cameras, radar, sonar and computing hardware.

“Even once the software is highly refined and far better than the average human driver, there will still be a significant time gap, varying widely by jurisdiction, before true self-driving is approved by regulators. We expect that worldwide regulatory approval will require something on the order of 6bn miles (10bn km). Current fleet learning is happening at just over 3m miles (5m km) per day.”

Quoting NHTSA figures, Musk said automotive fatalities increased by 8pc to one death every 89m 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.”

Sharing the wealth: the future economics of vehicle ownership

Musk envisioned a future where car owernship will be affordable for everyone through a model where people – who really only use their cars 5-10pc per day – can earn revenue by sharing their vehicles when not in use.

He also revealed that he has ride sharing apps like Uber and Hailo in his sights.

‘In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are’
– ELON MUSK

“When true self-driving is approved by regulators, it will mean that you will be able to summon your Tesla from pretty much anywhere. Once it picks you up, you will be able to sleep, read or do anything else en route to your destination.

“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. This dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla. Since most cars are only in use by their owner for 5pc to 10pc 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.

“In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are.”

Tesla image via Shutterstock

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com