The market value of electric vehicle and storage company Tesla is now $US950 billion, or $A1.3 trillion. That’s big, but if you believe Tesla co-founder and biggest shareholder Elon Musk, it’s still just a fraction of what’s possible.
Musk last week Tweeted about his plans to unveil Tesla’s “Master Plan Part 3”, and this week he gave more hints about what this might mean.
“Main Tesla subjects will be scaling to extreme size, which is needed to shift humanity away from fossil fuels, and AI,” Musk Tweeted. Adding that it will include not just Tesla, but also SpaceX and The Boring Company.
Which, of course, has sparked all sorts of speculation about Musk’s and Tesla’s intentions, and how that might involve a meeting of the minds, or at least the balance sheets and the various technologies included in Spacex, Starlink, Tesla and the Boring Company.
There is no indication on when Part 3 will be released, and Musk’s next public duties will be to deliver later today the first Tesla vehicles produced at Giga-Berlin, the first Tesla factory in Europe.
But as Morgan Stanley’s Adam Jonas remarked in a note to clients, it has been nearly six years since “Part 2” of Tesla’s master plan was released in mid 2016, when Tesla was just a $US30 billion company that had yet to make a profit and was not even self funding.
Jonas says while Part 1 might be considered as part of the “proof of concept”, and Part 2 about scaling it and developing the network, Part 3 will be about mass industrialization and “connecting the dots” of various markets.
According to Jonas, this might include a Tesla plane, or at least a vertical take off vehicle. “This is a matter of not ‘if’ but ‘when’,” he says. “In our view, the chance that Tesla does not ultimately offer products and services to the eVTOL/UAM (urban air mobility) market is remote.”
See: Tesla lithium metal battery breakthrough may lay path for Tesla plane
The plan might also include a revolution in EV manufacturing that could lead to a $US15,000 basic Tesla, and it could also mean a complete rethink of the EV battery supply chain.
See: Why Tesla may roll out a $15,000 electric car by 2025
“Tesla has been assembling assets/tech/people to put them in position to potentially unveil a vertically integrated battery supply business that resets the industry cost curve,” Jonas writes. And he says other legacy car makers might be happy to buy the batteries from Tesla.
Tesla is also working on technology that could make a car’s body out of a single piece of casted aluminum alloy. Imagine a plane-style ‘fuselage’ into which Tesla can ‘inject’ its structural battery pack.
“Over time, we see scope for Tesla to introduce vehicles with a starting point as low as $US15,000 or less in order to penetrate key emerging markets like India,” he says.
Then there is Tesla’s ambition to use the EV like Apple uses an iPhone: Sell the basic device and add on any number of potential revenue additions, what Jonas calls “mobile real estate”.
And then there is autonomy. This has been a key point of Musk’s plans. He insists that it is just about there and has been charging customers up to $10,000 to install the software for Full Self Driving. Jonas is more skeptical about this, and does not dial it into his valuations.
But he does say that Tesla will look like no other car company ever has.
“If Tesla’s share price were to multiply from here, we believe it will have rather little to do with the core business of making and selling cars in the traditional model so familiar to auto analysts.”
Giles Parkinson is founder and editor of The Driven, and also edits and founded the Renew Economy and One Step Off The Grid web sites. He has been a journalist for nearly 40 years, is a former business and deputy editor of the Australian Financial Review, and owns a Tesla Model 3.