More on Tesla: Why Part Deux Will Work

2016 Tesla Model X

Last week, Elon Musk, the founder of Tesla, unveiled his Master Plan, Part Deux, on his website. It lays out his plans for where his futuristic company will go in the next decade.

Now there are those of you out there who are wondering about his Master Plan, Part One, which included the following goals:

  • Create a low-volume car, which would necessarily be expensive;
  • Use that money to develop a medium-volume car at a lower price;
  • Use that money to create an affordable, high-volume car; and
  • Provide solar power.

While Musk doesn’t share his financials and info like actual Tesla sales, he appears to be hitting most of his goals. That doesn’t imply profitability, but it does mean he’s achieving what he set out to do.

Now comes Part Deux, which, to sum up, calls for:

  • Creating a working solar-roof-with-battery product;
  • Scaling up production volume as quickly as possible; and,
  • Making heavy-duty trucks and high-passenger-density urban transport.

Because this is primarily a car site, let’s focus on the second two items in Part Deux’s goals: scaling up production and heavy-duty trucks and urban transport. He needs to achieve the third before the second can become a reality.

To simplify things, Musk is talking about building cargo-hauling trucks and city buses. It’s a brilliant thing to do, because he is targeting two constituencies that are not as risk-averse as consumers: business and government. (They also both have money to spend, and business sometimes offers tax breaks as rewards.)

The government will need to buy inner-city buses to keep with various local, state, and federal mandates to cut back on emissions. It’s passing regulations that will make it spend money to remain in compliance. Not too long ago, it would have also been positioned as a money-saving measure, but low fuel prices have struck down that mandate.

Edmunds director of industry analysis Jessica Caldwell told the Christian Science Monitor she thinks the plan is overly ambitious, but I tend to disagree. After all, lots of businesses, including auto manufacturers, have done well by developing vehicles that meet government and business needs.

Over-the-road trucking, especially if it can become more autonomous, is also another smart direction to head to boost revenue for car production. After all, the industry is reporting there will be a shortage of more than 240,000 drivers in the near future.

The trucking industry is also hampered by stricter hourly rules passed in 2013 that limit how long a trucker can stay behind the wheel. Therefore autonomous trucks that can handle part of the load might be the answer to what will be a pressing need. Unless Amazon achieves lickety-split success with its drones, we’re still going to need lots of trucks to carry all those packages crisscrossing the country.

So Musk has identified two huge potential revenue sources that should prove important to the success of Part Deux. He’s focusing Tesla’s energies in the right direction to show the company should be a thriving entity in less than 10 years.

Plus, there’s all that money that’s going to come from his Gigafactory when it’s completed about 2020, according to this CNNMoney.com feature. But that’s a story for another day.

Is a Tesla a car you’d buy now, or would you wait a few years for more developments?

-kgriffin

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