Tesla Master Plan, Part Trois — 1
“…that’s not just how Tesla will change the world. That’s how Tesla will own it.”
You may have seen the recent article on How Tesla could buy Uber. It outlined Musk’s vision of a perfected autopilot allowing Tesla owners to list their car on a ride sharing service during the day, turning a single parent home into a multi-income household. The most startling realization was that Tesla wouldn’t need to buy them and could still win.
What begins here is a three-part series on exactly that. Tesla Master Plan, Part Trois. We’ll be looking at the next 50+ years of hypothetical global conquest, the steps needed to get there, and the resulting social, political, and economic change. Like Hari Seldon, steps in the plan are based off events and changes in the architecture of society — not specific dates in time. I also will not be discussing Hyperloop as, while scientifically sound, has no historical baseline for projections
I have had many careers in my short 27 years here but first and foremost I build and execute strategy. This is a roadmap for whoever is bold enough to drive it. Let’s go.
Telsa so far
In the founding days of Tesla, Elon Musk sent the following “Master Plan” to his investors. In short it was as follows:
1. Build sports car
2. Use that money to build an affordable car
3. Use that money to build an even more affordable car
4. While doing above, also provide zero emission electric power generation options
5. Don’t tell anyone.
The Model 3 is slated to ship at the end of the year and Tesla recently put a price on its Solar Roof (which integrates with its PowerWall and Powerpacks for a completely off the grid at home charging/generation ecosystem). It’s safe to say they did it. So, like any self-respecting, monologue-ing super villain, Musk published the Master Plan, Part Deux:
1. Create stunning solar roofs with seamlessly integrated battery storage
2. Expand the electric vehicle product line to address all major segments
3. Develop a self-driving capability that is 10X safer than manual via massive fleet learning
4. Enable your car to make money for you when you aren’t using it
With the Olympic hand-off between the two plans it’s time to expand the product line. Tesla has a sports car, a sedan, an SUV, it’d be natural to expect a pickup truck next. They’re incredibly popular the world over for their versatility and would be the last nail in the coffin of the “electric vehicles can’t do that”. I don’t doubt we’ll see one but get a load of this:
That’s right. An electric semi-truck which the Pixar fan in me desperately wants to name Sam. When can we expect it? In the 30 second clip below Musk talks about the working prototype he’s already driven!
Anyone who’s ever driven or ridden in a Tesla knows the Stark difference between it and inferior auto-tech. Zero gas means zero drivetrain which means zero piston delay between the pressing of the peddle and the car lurching forward. You’re driving an RC car.
*Queue 6-year-old sense of accomplishment.*
The same is true of the semi-truck. It will provide more torque, more acceleration, more towing power than any previous truck. The obvious fuel efficiency will decrease the cost of moving freight drastically and the most talented and consistent truck drivers will be lining up to drive the future across the country. Think it won’t be a large pool of talent?
Economic Impact
In 1978 the most popular job throughout the United States was a Secretary. Today it’s truck, delivery, and tractor drivers.
Forgetting your vision of an Interstellar-esq autonomous farm the immediate economic impact of an electric semi-truck will be the increased productivity and enjoyment of the most popular job, in the largest economy in the world (22.4% of global GDP). Americans are addicted to ecommerce and it’s delivery can’t be outsourced to cheaper labor…unless you have autopilot.
The cost of labor for truck drivers can’t easily come down due to regulations on drivers. The same reason radar monitors in WWII would glaze over when squadrons flitted across the screen is the same reason we require drivers and lifeguards to take regularly scheduled breaks. But what happens when they only need to supervise? What happens when autonomous vehicles become 10X safer than a human driver?
We’ll lose the most popular job in the country.
It won’t happen all at once. Tesla will start by automating the routes between major shipping distribution hubs. Southern California, Lehigh Valley NJ, Dallas, Toronto, Chicago, and Savannah will all get Tesla semi hubs with plenty of Supercharger Stations connecting them.
But Daniel, Tesla can’t compete with established trade and shipping deals between Norfolk Southern, FedEx, UPS, and DHL!
It doesn’t need to.
Licensing Per Battery
Currently Tesla has licensed its battery technology and electric powertrain system to some of the major automakers in the United States including Toyota and BMW and then opened up fair use of its patents to any and all who wished to use them. The major auto manufacturers see the signs of an electric future and began incorporating the tech into their own product lines. But they’ll still need to buy batteries.
In the meantime Tesla can operate like Boeing or Airbus and lease Tesla semis to major shipping companies and retailers. Why lease? Because the resale value of an electric semi is too good to leave on the table. The negative wears on a powertrain are far less than a normal vehicle. Tesla could lease the semis for less than the market equivalent for diesel semis but more than their internal models demand. They keep the assets (with low depreciation) on their books, trade lump sums for steadily growing MRR, and have direct ownership of all data AND hardware.
Unsurprisingly some analysts at Morgan Stanley have already run the numbers on exactly this. Check it out here.
The Gold Standard of Safety
Tesla’s long-term positioning here is to create the Gold Standard of autopilot. By combining both Computer Vision with Radar Detection it will have ingrained redundancy and millions of miles more in testing with the Tesla Semi fleet than the earliest competitor — even if FedEx pulls a BMW and tries to create their own (see BMW electric vehicle story). All that data creates a smarter machine-learning system with each turn of the tire that immediately can be pushed out to every other vehicle in Tesla’s product line. The same leasing play that works for the semi can work for the autopilot system retrofitted to civilian vehicles.
This will only happen when autopilot is 10X safer than a human being. And while humans can always be counted on to make irrational decisions I see this happening far sooner than most care to believe. Why? Because it saves the one resource we can’t buy more of.
I lost eight friends throughout high school to drunk and reckless driving. As a parent, you might not want to allow your child to drive, though you still would like them to have a car. If your family can be safer, if the data is there, if your commute can become a time for work, if you’ve been trusting our commerce delivery with it for years, would you choose to not drive unless you had to?
At 14:56 in the TED Talk Musk says we’re on track to see a fully autonomous drive from LA to NY by the end of 2017. I am ready for this world.
Admittedly there is a political aspect here where politicians aren’t willing to change their minds with new evidence. Coincidentally these are likely to be the same people who aren’t convinced of evolution with overwhelming evidence but, thankfully, are highly susceptible to lobbying groups like Mothers Against Drunk Driving. All it will take is one fatal accident of a drunk teen in a Tesla where autopilot could have saved them and we will see autonomous vehicles accepted en masse.
Social and Political Impact
This change will not only uproot all of global logistics. It will change social and political and economic architecture for generations to come. By 2050, the urban population will increase by 75% to 6.3 billion, from 3.6 billion in 2010. As the nexus for most public transportation the likelihood that city dwellers will have a driver’s license continues to fall. Bus, subway, cab, TAC ride — when you do need a car it drives itself. If a car will always drive safer than you can why would you ever get a driver’s license? Why would you ever need one?
If a significant portion of Americans don’t have a driver’s license, voter registration laws must change. At this point the political environment becomes decidedly more liberal ushering in greater support for desperately needed Global Warming legislation — legislation which Tesla is uniquely positioned to benefit from.
By then the TAC program will have been live for decades, providing an additional source of income for every Tesla owning household. Commutes can now be longer. Your vehicle drops you off at your office each morning and then picks you up each evening. We’re living a frictionless life. You have your car, and so do dozens of five-star, verified strangers.
Which lends the question, where does it park? We should be asking, does it need to?
