Tesla CEO an­nounces ride shar­ing fleet of cars

The Pak Banker - - COMPANIES/BOSS -

Elon Musk un­veiled his lat­est "master plan" for Tesla Mo­tors Inc., de­liv­er­ing a long-term vi­sion that in­cludes an in­te­grated so­lar and bat­tery prod­uct, the ad­di­tion of a pickup, freight truck and bus to its elec­tric ve­hi­cle lineup, and plans for a ride-shar­ing busi­ness.

Musk pub­lished his long-awaited plan on Tesla's web­site partly to ex­plain why the com­pany's pro­posed in­te­gra­tion with So­larCity Corp. will ben­e­fit con­sumers, who could ef­fec­tively be­come their own util­ity. So­larCity, a rooftop so­lar panel in­staller, will gen­er­ate elec­tric­ity in tan­dem with Tesla's Pow­er­wall bat­tery for the home. Tesla, mean­while, will look be­yond pas­sen­ger ve­hi­cles to pub­lic tran­sit and cargo ship­ping.

"In ad­di­tion to con­sumer ve­hi­cles, there are two other types of elec­tric vehi- cle needed: heavy-duty trucks and high pas­sen­ger-den­sity ur­ban transport," Musk, Tesla's chief ex­ec­u­tive of­fi­cer, wrote in the blog post Wed­nes­day. "Both are in the early stages of de­vel­op­ment at Tesla and should be ready for un­veil­ing next year. We be­lieve the Tesla Semi will de­liver a sub­stan­tial re­duc­tion in the cost of cargo transport, while in­creas­ing safety and mak­ing it re­ally fun to op­er­ate."

Musk, 45, out­lined "Part Deux" of his view of Tesla's fu­ture even as much of the master plan he set for the com­pany nearly a decade ago re­mains a work in progress. As laid out in Musk's "Se­cret Tesla Mo­tors Master Plan" in Au­gust 2006, Tesla has in­tro­duced more af­ford­able elec­tric cars and pro­vided zero-emis­sion elec­tric-power gen­er­a­tion op­tions. Still, Tesla has re­ported a sin­gle quar­terly profit along the way, and buy­ers who paid $1,000 to pre-or­der the $35,000 Model 3 have been told de­liv­er­ies will be­gin in late 2017. An­a­lysts are skep­ti­cal about Tesla's abil­ity to add even more prod­ucts to its lineup given its his­tory of prod­uct de­lays and cash burn. Tesla has bid $2.86 bil­lion to buy So­larCity even as the elec­tric-car maker has more long-term debt -- $2.5 bil­lion than its $1.4 bil­lion in cash and equiv­a­lents. "As is typ­i­cal, Elon Musk has laid out a grandiose plan for the fu­ture with no time frames and few specifics, and no men­tion of how and when Tesla will be prof­itable," Michelle Krebs, an an­a­lyst for Au­to­trader.com Inc., said in an e-mail. "Tesla's lat­est Master Plan in­cludes ex­pand­ing its elec­tric ve­hi­cle prod­uct line to cover all ma­jor seg­ments, when it hasn't been meet­ing pro­duc­tion tar­gets with the lim­ited prod­uct line it has now and in the next cou­ple of years."

Tesla aims to make 500,000 cars by 2018, though it de­liv­ered just 50,658 ve­hi­cles in 2015. The com­pany missed its sec­ond-quar­ter de­liv­er­ies pro­jec­tion by about 2,600 ve­hi­cles and said ear­lier this month that full-year re­sults may be slightly below its pre­vi­ous fore­cast for 80,000 to 90,000. Be­sides the Tesla Semi truck and the bus, Musk said the com­pany will con­tinue to pur­sue self-driv­ing tech­nol­ogy so that cus­tomers will be able to use their cars to gen­er­ate in­come while at work or on va­ca­tion. A car cheaper than the Model 3 is un­likely to be nec­es­sary be­cause Tesla will ul­ti­mately op­er­ate its own fleet of ve­hi­cles, he said.

In in­te­grat­ing So­larCity, Tesla would be able to of­fer a sin­gle or­der­ing ex­pe­ri­ence, in­stal­la­tion, ser­vice con­tract and phone app, Musk wrote. Tesla shares plunged more than 10 per­cent when the So­larCity ac­qui­si­tion pro­posal was first an­nounced June 21, but have since re­cov­ered. An­a­lysts crit­i­cized the deal, point­ing to Musk's role as chair­man and largest share­holder of both com­pa­nies.

"We con­tinue to see a

di­vided in­vestor base, with one camp bought in on the com­pany's vi­sion and another fo­cused on cash needs to ful­fill that vi­sion," said Colin Rusch, a New York-based an­a­lyst at Op­pen­heimer & Co., who rates Tesla shares the equiv­a­lent of hold.

Tesla's plans for the semi and pickup trucks, au­ton­o­mous ve­hi­cles and so­lar and en­ergy stor­age sys­tems "will not sur­prise many in­vestors," Rusch wrote in a re­port Wed­nes­day. Musk wrote that Tesla will con­tinue to press on with par­tially au­ton­o­mous-driv­ing tech­nol­ogy. A cus­tomer us­ing Tesla's Au­topi­lot sys­tem in Florida was killed in a crash in May, prompt­ing an in­ves­ti­ga­tion by the Na­tional High­way Traf­fic and Safety Ad­min­is­tra­tion that's on­go­ing.

The Se­cu­ri­ties and Ex­change Com­mis­sion may also in­ves­ti­gate the com­pany for not dis­clos­ing the crash be­fore its sec­ondary stock of­fer­ing in May, the Wall Street Jour­nal said this month. Musk also re­cently lost a top ex­ec­u­tive in Rich He­ley, for­merly Tesla's vice pres­i­dent of prod­uct tech­nol­ogy, to Facebook Inc.

Musk's call to ex­pand Tesla's busi­ness be­yond pas­sen­ger cars amid all of these chal­lenges is the lat­est brash pro­posal from an ex­ec­u­tive known for his un­con­ven­tional ap­proach to both the au­to­mo­tive and en­ergy busi­nesses. The semi-truck busi­ness is be­ing led by Jerome Guillen, a for­mer Daim­ler AG ex­ec­u­tive who re­cently re­turned to Tesla after a leave of ab­sence, Musk said late Wed­nes­day on Twit­ter.

"A bus and a semi-truck: that was a shock­ing piece to see," Dave Sul­li­van, an an­a­lyst at Au­toPa­cific Inc., said by phone. "Those seg­ments have tra­di­tion­ally been very dif­fi­cult seg­ments for elec­tric ve­hi­cles. It's a chal­lenge for any com­pany, not just Tesla. And it's a sig­nif­i­cant step away from mak­ing pas­sen­ger ve­hi­cles."

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