The "Tesla Master Plan, Part 2" was published this evening in typical Elon Musk fashion: with great panache and a substantial time delay. The future of Tesla (NASDAQ:TSLA) is painted as a dramatic reformer of society's energy usage, causing fossil fuels to lie dormant in the ground once more and allowing for a society of sharing, where public transportation and personal vehicles are commanded remotely. A business plan it was not, and unfortunately the "Master Plan" raised more questions than it answered.
Energy's future: a commodity no more?
According to the Master Plan, energy in the 21st century will no longer be a commodity; the combination of Tesla and SolarCity will allow for "highly differentiated solar". How, one asks? By making a smoother ordering and installation experience. Just imagine how difficult it would be to do this without acquiring SolarCity; joint ventures can be such a hassle! Anyway, one might wonder why SolarCity is the chosen one, rather than, say, First Solar or Sun Power? Who cares, it's just "an accident of history" that Tesla and SolarCity were split to begin with!
I, for one, don't want my solar power from some corporate farm in Arizona; I'd greatly prefer it in small bespoke batches, crafted in my community from locally sourced sunlight directly above my house. Of course I'd be willing to pay more for that! Sign me up.
Perhaps the only revelation of the master plan was a hint of a Tesla Semi. Just think of all those logistics companies drooling over a brand new piece of hardware with unknown reliability! They've already proven to be so receptive of liquified natural gas engines, and would most definitely welcome another huge disruption. I, for one, would love to be the manager informing truck drivers of a switch from diesel to Tesla Semi; who wouldn't want to spend another hour on the road at a supercharger station somewhere outside of Omaha waiting for your big rig to get juiced up?
Will Tesla become a shared commodity?
Did Tesla demand hit the wall? (Montana Skeptic seems to think so.) If it hasn't already, rest assured it will in the future, when self-driving vehicles will reduce the need for individual vehicle ownership by 10-20x. Don't believe me? Read the Master Plan again. With Model 3 sales already cannibalizing Model S/X orders, what do you predict will happen when one Model 3 can do the job of 10 (or 20)?
Is profitability a naughty word?
Most businesses are concerned with making profits and returning capital to shareholders. Tesla prides itself on not being bankrupt (paragraph 2). Where most businesses like to reduce the share count (giving owners a greater piece of the earnings pie), Tesla prefers to dilute faster than a homeopath with a bottle of wolf's bane. Shouldn't a business plan consist, at least in some small measure, of a path to profitability? Tesla's Master Plan would disagree.
If the Tesla blog post reads as more of an advertisement than a business plan, that's because it is; a wise choice when you're going to be looking for investors to buy more of your shares sometime in the near future, and you know just how to cater to their desires. I guess after reading and contemplating the Master Plan, my take on the long thesis remains the same: buy Tesla stock, keep the company cash flow positive, and contribute to a sustainable future.
Just don't expect to make a lot of money along the way.
Disclosure: I am/we are short TSLA.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.