Interest was high prior to 2023 Tesla Investor Day. The third Master Plan was to be unveiled, and speculation was rampant about what goals Tesla would outline to guide its future for the next 3 or 5 or 10 years. Going into the event, a low-cost Tesla Model C (what we’re calling it for now) captured most analysts’ imaginations. An affordable model within the all-electric catalog could broaden the company’s appeal, head off growing competition, and continue us on our path to planetary zero emissions.
No such announcement was forthcoming at Investor Day. Instead, CEO Elon Musk described a new iteration of the master plan to end reliance on fossil fuels. Noble? Absolutely. High reaching? Definitely. Pragmatic? Not in the least bit.
The consumer desire for a lower priced Tesla is valid on many levels, including its egalitarian, democratizing essence. But is it crucial to determine Tesla’s master planning a success overall? Maybe, but maybe not.
Master Plan 3 — A Context of Systemic Change
Yes, by envisioning a global transition away from fossil fuels, Tesla set a high mark for countries and businesses around the world. More specific to profitability, Musk identified in Master Plan 3 how the company’s electric vehicles, batteries, and energy products served as models for others to follow to achieve the transition to electrifying everything. Moreover, as a mechanism to head off competitors, Tesla quickly initiated price cuts in conjunction with producing vehicles at a higher volume than its rivals.
Tesla has proven that all-electric transportation is viable, comfortable, safe, and desirable. The company has accomplished what others said could not be done — it has changed the discourse around the intersection of climate and the auto industry. Was it visionary to construct Master Plan 3 as a way to illuminate “a sustainable energy economy (that) is technically feasible and requires less investment and less material extraction than continuing today’s unsustainable energy economy?” Sure. It was a bit deflating, though. We wanted more immediate gratification.
Instead of assuming a doomsday demeanor, Musk seemed assured that, while transition from fossil fuels to clean energy would cost $10 trillion, it would still be more affordable that the money applied to the fossil fuel industry over the same period of time.
Musk proclaimed, “Earth can and will move to sustainable energy, and it will do so in your lifetime.”
Scientist Vaclav Smil doesn’t agree that such parameters are productive. Instead, he states that “people don’t appreciate the magnitude of the task and are setting up artificial deadlines which are unrealistic.” While global warming has been making headlines for the past 30 years, Smil notes, “We’ve had these problems ever since we started to burn fossil fuels on a large scale.” People burn fossil fuel unless you provide them with a viable alternative, but Smil muses, “Who will give them something different?”
Maybe that’s where Elon Musk comes in. It’s actually the point he tried to impart at Investor Day, listing Tesla innovations like a reinvented assembly process. A future in which vehicles won’t need rare earth elements. Software updates like a recent one that automatically adjusts air suspension mid-drive. Cutting costs on Supercharger stations by preassembling them so their installation onsite is less expensive per unit.
Fast forward to this week. Ford Motor Co. shares jumped by more than 7% after it announced a deal allowing its EV owners to access Tesla’s charging stations in North America. That was an unexpected way to further Tesla’s master plan.
Looking Back to the Optimism in Master Plan 1
Master Plan 1 was published in 2006. The article, “The Secret Tesla Motors Master Plan (just between you and me),” described a hard-to-grasp future in which EVs would be commonplace on US roads.
“Without giving away too much,” Musk wrote in Master Plan 1, “when someone buys the Tesla Roadster sports car, they are actually helping pay for development of the low-cost family car.” That concept — a metaphorical handshake between Musk and future Tesla buyers — has been at the crux of the company’s cult-like following, its ability to reduce costs by relying on free communication channels over paid advertising, and the mass belief that the auto industry could move away from fossil fuels.
Why were we so entranced by the original master plan, anyway?
The argument that we could “move from a mine-and-burn hydrocarbon economy towards a solar electric economy” seemed revolutionary. We who would follow would be early adopters, joining in the vision of a better world.
Who wouldn’t want “an electric car without compromises?” Musk claimed it would beat a sports car in a head-to-head showdown. That premium all-electric sports car — the Roadster — would then “drive down market as fast as possible to higher unit volume and lower prices with each successive model.” If you bought the first model, you’d be “actually helping pay for development of the low cost family car.”
“Low cost.” “Family.” These key words led those of us who couldn’t afford the first 3 Tesla models to maintain hope and connection to the brand.
If we also purchased “a modestly sized and priced solar panel from SolarCity, a photovoltaics company” and traveled less than 350 miles per week, we would be “’energy positive’” in our personal transportation. It seemed at that point to be a streamlined way to vertically integrate renewable energy generation and storage into residential buildings.
And so it began, with Gigafactories. Today, Tesla boasts Giga Nevada (battery packs), Giga New York (Powerpack batteries as well as solar panels and parts for Supercharger stations), and Giga Texas (company headquarters and an assembly site for models like the current Model Y, with future plans to build Model 3s, Cybertrucks, and Semis there, too).
The Gigafactories in Shanghai and Berlin make Model Ys. Giga Shanghai also builds Model 3s, and it’s expected that Giga Berlin will add batteries and powertrains to its list of products.
Master Plan 2 — Focus on the Source of the Electric Power
“Master Plan, Part Deux” was released in 2016. It spoke of an EV as only as efficient as its power source. That concept of decentralized power, of turning a home into a power plant, seemed ideal and idealistic. Tesla would make panels and entire solar roofs, integrating them with batteries for the home. Scaled battery production would solidify the company and work toward master plan goals of decarbonizing society. As we look back, we know that SolarCity has been only partially successful.
Musk reiterates in Master Plan Deux the need to reject fossil fuels and decrease atmospheric and oceanic carbon levels to achieve sustainability. “Here is what we plan to do to make that day come sooner,” Musk reveals, leading into electrified public transit and goods movement, introducing the Semi, suggesting a Tesla bus might also be in the works. He then delights in explaining Tesla evolving autonomous features that would lead to a global, roving fleet of zero-emission robotaxis.
Such technofuturism has led to disparate results. There have been investigations by the National Highway Traffic Safety Administration (NHTSA), a faked demo video of Tesla’s “full self-driving” capabilities, and the Tesla Semi was delivered at an event on December 1, 2022, but hasn’t had a lot of fanfare since. There’s been hardly a whiff about a Tesla Bus. More recently and dishearteningly, Tesla consumer data breaches and safety complaints were leaked.
As with most things human, we push to be self-actualized and frequently fall short of grand goals. Does that mean we stop hoping and striving? Must we acquiesce to mediocrity or the status quo?
Musk the human and the corporate CEO is rife with inconsistencies and idiosyncrasies. Tesla, with its transformational vision for the future, when considered separately from Musk’s mercurial nature, is quite the well-rounded company. Its vertical integration provides a smooth pathway to future innovation. Tesla enacts a belief system that each decision should be analyzed, verified, cross-checked, and continuously, rigorously scrutinized. It sets itself apart from other auto companies, over and over.
Tesla is an innovative company that pushes its competition toward sustainability, albeit as an existential decision. As Harvard Business Review outlines, through challenging invisible orthodoxies, harnessing underappreciated trends, leveraging embedded competencies and assets, addressing unarticulated needs, and taking a systemic view, Tesla is moving the world toward a sustainable future.
No, we don’t seem to be getting the Model C we want yet, but that will likely happen, and, along the way, we’ll learn how other Tesla innovations may have been more important in the necessary bigger picture toward mitigating climate pollution.
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