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About the Master Plan Part Deux

- By Bram de Haas

Last week Tesla (TSLA) CEO Elon Musk released his Master Plan Part Deux which is a blog post where he attempts to rationalize the crazy plan to buy SolarCity (SCTY). The new Tesla master plan is summarized by Musk himself:

  1. Create stunning solar roofs with seamlessly integrated battery storage.
  2. Expand the electric vehicle product line to address all major segments.
  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.




I'm going to address the four parts of the new master plan one by one and why the plan would have me worried if I were a Tesla shareholder.

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'Create stunning solar roofs'

I find it anything but visionary the top priority of Tesla is to create stunning solar roofs. This suggests (why else make put it at the top of the list of a masterplan) Musk intends to pursue this even if the SolarCity acquisition isn't approved by shareholders.

And why?

Why is this such an important goal? There is nothing about having the roofs of our homes covered with solar panels that screams sustainability. It is terribly inefficient compared to large scale operations and consumes lots of expensive materials. There are many competitors providing the exact same thing and it is spreading Tesla's limited resources awfully thin.

'Expand the electric vehicle product line to address all major segments'

This isn't really anything new, but I'm glad. There is no need for Tesla to veer away from its original master plan and if I were a shareholder I'd beg Musk to stick to the original plan. Get this range of electric vehicles done first please. Note that in the original masterplan Musk saw no objection to selling SolarCity or other sustainable energy company's products alongside Tesla's while they were part of seperate companies. This is in line with the theory Musk is leveraging Tesla's elevated share price to save SolarCity from chapter 11.

'Develop a self-driving capability that is 10x safer than manual via massive fleet learning'

To me it just sounds super disappointing that all Musk aspires to is self-driving capability that is 10x safer than manual when Alphabet (GOOG) (GOOGL) self driving cars have already traveled 1.8 million miles without causing a single accident that could be attributed to them.

'Enable your car to make money for you when you aren't using it'

Another quirky part of the master plan. Why is it suddenly Tesla's goal to enable me to make money with my car? I can do that now by listing it on various websites like Buffalo CarShare, City CarShare, Car2Go, eGo CarShare, Enterprise CarShare, Getaround, Hourcar, Ithaca Carshare, JustShareIt, ReachNow, Turo, Zipcar or CarHopper.

I just don't think enabling me to add my Tesla to the "cloud fleet" should be part of the master plan. When self-driving cars gain critical mass, car ownership will be a highly questionable pursuit to begin with. Tesla should just concentrate on technology where it can really get an edge, like batteries or the range of its electric vehicles. That's the type of stuff where it can credibly gain an edge on competitors and convince the self-driving fleet operators of the future Tesla's vehicles are the right fit for them to buy en masse to serve those seeking transportation.

Tesla would do great to concentrate on providing customers with great range, fast recharging, low transportation costs, reliability and safety. Customers don't need solar panels, they don't need to be able to turn their car in a taxi, and they want cars that are 100x as reliable as human-driven cars.


It doesn't surprise me very few gurus own Tesla, which trades at 31x price to book and 7x sales. It deserves a higher multiple compared to old school auto peers as investors anticipate Tesla ramping up production. I question if a company in this brutul and cyclical industry deserves a 31x price/book value. The ruthlessly competitive industry is already gearing up in the Start a free seven-day trial of Premium Membership to GuruFocus. lion. A good trait to have if it ever falls out of favor with the equity markets.

Disclosure: I own no stocks mentioned in this article.

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This article first appeared on GuruFocus.