Tesla's master plan receives mixed reactions

Tesla CEO Elon Musk revised and released the company's master plan last week, but analysts are skeptical that Tesla can achieve its lofty goals given the challenges the company faces at present.

Lucas Jackson/Reuters/File
A Tesla sign is seen on a building in New York.

Last week, Tesla Motors CEO Elon Musk issued an updated version of the "master plan" whose first edition he wrote way back in 2006.

It included proposals for everything from an electric semi truck to the development of fully-autonomous cars that could be shared among owners.

As with virtually all things Tesla, the plan has generated quite a variety of opinions.

Among industry analysts, reactions have been mixed.

Some question whether Tesla can achieve these goals, and whether the company will be able to deliver reliable operating profits for its shareholders—finally—even if it does.

At the same time, some analysts don't think Tesla's plan is that remarkable at all, given what other companies are planning in terms of electric cars and autonomous driving.

The new Tesla master plan may lead to impressive long-term developments, but it will create a short-term "cash-flow sinkhole," Efraim Levy of S&P Global Market told The Detroit News.

In the plan, Musk announced development of a compact SUV, a pickup truck, a semi truck, and an autonomous bus—all of which will require large amounts of cash to develop.

Musk also made the previously-announced absorption of SolarCity a major pillar of the plan, but the estimated $3 billion deal hasn't been approved yet.

Following the announcement of the master plan, Tesla shares were down all day Thursday, closing at $220.50 per share, a decline of 3.4 percent.

Musk also didn't specify any real timelines for the launch of most of the products and initiatives discussed in the master plan, noted a post on the investor site Seeking Alpha.

No launch timelines were mentioned for the compact SUV and pickup truck, and Tesla has missed all of its own first deadlines for new-vehicle launches thus far.

Musk did say that the "Tesla Semi" and autonomous electric bus would be revealed next year, but that could just refer to prototypes; he did not say when actual production would start.

Yet despite the immense costs implied and the vague timelines, it's also possible Musk didn't go far enough with his latest plan.

Another major pillar of the plan is the creation of a shared fleet of autonomous Tesla electric cars that can be used for ride sharing.

But the combination of electric powertrains, autonomous driving, and sharing services is already being pursued by established carmakers like Ford and General Motors, Karl Brauer—a senior analysts at Kelley Blue Book—told just-auto in reaction to the master plan.

In the end, it's likely Tesla's master plan will never make sense as a conventional business plan.

"If part one of Elon Musk's master plan was like putting a man on the moon, part two is a lot more like colonizing the galaxy," Edmunds director of industry analysis Jessica Caldwell said in reaction to the plan.

The plan sounds "overly ambitious," given the challenges Tesla already faces in meeting its short-term goals, she said.

"That said, Tesla's goals are far different from that of other automakers because they start and end with completely eliminating the need for fossil fuels," she concluded.

"Its competition, meanwhile, is focused on mobility solutions first, and energy sources second."

This article first appeared at GreenCarReports.

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