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Musk offers four-part vision for Tesla’s future

Elon Musk wants Tesla Motors to be at the center of a sustainable energy economy – and the electric vehicle maker’s proposed acquisition of SolarCity is a big part of that plan.

Musk, the entrepreneur who is the chairman and biggest shareholder in both Tesla and SolarCity, issued his promised update to Tesla’s decade-old master plan late Wednesday, spelling out a four-part vision to turn Tesla into a broad-based renewable energy business.

In that vision, a central role will be played by SolarCity, the solar energy systems installer that plans to open the biggest solar panel factory in the Western hemisphere next year.

Musk’s goal, which he previously has discussed in relation to the SolarCity merger proposal, centers around the creation of good-looking rooftop solar arrays that are paired with batteries that allow users to store power during the day and use it at night or at other times when the sun isn’t shining.

That gives Buffalo a central role in meeting Musk’s vision.

Musk has spoken positively of the new technology that SolarCity will use in the Buffalo factory to produce upwards of 10,000 high-efficiency solar panels each day, after the facility opens next year.

Those high-efficiency panels, using technology that SolarCity acquired when it purchased Silevo two years ago, will help make solar energy more affordable by producing more electricity from fewer modules in a solar array.

The factory, now under construction on South Park Avenue, is the centerpiece of the state’s Buffalo Billion economic development initiative, with New York providing $750 million to build a 1.2-million-square-foot solar panel plant that is expected to provide 500 manufacturing jobs and nearly 3,000 local jobs from SolarCity, its suppliers and service providers.

The creation of “a smoothly integrated and beautiful solar-roof-with-battery product that just works” would essentially turn consumers into their own utilities, generating their own power from solar panels and storing that electricity in the Powerwall batteries that Tesla makes, Musk said.

“Then scale that throughout the world. One ordering experience, one installation, one service contact, one phone app,” Musk wrote in a blog post he tltled, “Master Plan, Part Deux.”

To do that, Musk argued that Tesla and SolarCity have to merge so the two companies can work closely together to design the most efficient and affordable solar energy and battery systems.

“We can’t do this well if Tesla and SolarCity are different companies, which is why we need to combine and break down the barriers inherent to being separate companies,” Musk wrote.

“That they are separate at all, despite similar origins and pursuit of the same overarching goal of sustainable energy, is largely an accident of history,” he said. “Now that Tesla is ready to scale Powerwall and SolarCity is ready to provide highly differentiated solar, the time has come to bring them together.”

Musk’s manifesto is long on vision, but short on specifics.

He didn’t talk about when Tesla – or SolarCity – will be profitable.

Nor did he spell out timetables for his goals or give any indications of how Tesla might meet them.

And he didn’t discuss how Tesla can juggle an ambitious set of new goals at a time when the vehicle maker already is struggling to meet its vehicle production goal while it also is moving toward a rapid ramp up of production of its electric vehicles and preparing to open the world’s biggest battery factory in Nevada.

“At a high level the document is aimed at explaining how (Tesla’s) actions fit into a larger picture of accelerating the advent of sustainable energy,” Deutsche Bank analyst Rod Lache wrote in a research note. “The document is relatively short on details, and it does not contain any economic or financial objectives.”

Musk’s new master plan is focused squarely on the long term, much as the original version was in 2006 when he envisioned the production of an expensive, low-volume electric car (the Roadster) that would lead to a second medium-production model (the Model S and Model X) that ultimately leads to the creation of an affordable, high-volume electric vehicle (the $35,000 Model 3 that is set to begin production next year).

The final piece of that 2006 vision was for Tesla to provide solar power. “No kidding, this has literally been on our website for 10 years,” Musk wrote in part two.

The point of all this was, and remains, accelerating the advent of sustainable energy, so that we can imagine far into the future and life is still good. That’s what “sustainable” means. It’s not some silly, hippie thing – it matters for everyone,” Musk wrote.

“By definition, we must at some point achieve a sustainable energy economy or we will run out of fossil fuels to burn and civilization will collapse. Given that we must get off fossil fuels anyway and that virtually all scientists agree that dramatically increasing atmospheric and oceanic carbon levels is insane, the faster we achieve sustainability, the better,” he wrote.

Solar energy is just one part of Musk’s vision.

He also wants to:

• Expand Tesla’s product line to include trucks and buses.

• Continue to develop Tesla’s Autopilot system to create self-driving vehicles that are 10 times safer than the average U.S. car is today.

• Create a new model for ride-sharing, with the development of self-driving vehicles allowing car owners to make money by adding their vehicles to Tesla’s ride-sharing fleet when it’s not in use.

Adam Jonas, a Morgan Stanley analyst, said Musk’s vision is an expensive one.

“The expansion of business scope announced last night is very significant, likely requiring substantial deployment of capital and potentially many years of upfront losses to see to fruition,” Jonas wrote in a research note. “Absorbing the losses at SolarCity while funding its further expansion could likely add a further investment burden on top of all that. These are big markets and we understand they require large capital investments, time and execution risk to address.”

But for Musk, it’s all about the vision for a sustainable energy economy.

The master plan, Musk said, is his road map “to make that day come sooner.”


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