Musk’s Tesla master plan disappoints, no details on new cars

(Bloomberg) – Elon Musk’s much-touted third master plan for Tesla Inc. fell flat with investors after he failed to provide concrete details about the company’s long-awaited next-generation electric car.

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The four-hour presentation detailed Musk’s vision of building the next phase of Tesla’s growth around a sustainable energy future, moving to products like heat pumps, but briefly detailing every detail of new vehicles — particularly a cheaper EV like the $25,000 model , which is marked more than two years ago.

While the 51-year-old chief executive officer confirmed that a new plant in Monterrey, Mexico will build the next generation of vehicles, he gave no details on the timetable and said a “proper product event” would take place later. Lars Moravy, Tesla’s vice president of automotive engineering, was similarly vague, responding to an analyst’s question with, “We’ll go as fast as we can.”

The longer the event lasted, the more investors seemed to lose heart. Tesla shares fell as much as 6.8% to $189 in after-hours trading. As of today, the stock had soared from a two-year low it hit in early January, had a market value of around $310 billion, and returned Musk to the top of the Bloomberg Billionaires Index.

Read more: Tesla’s $310 billion surge raises the bar for Musk’s master plan

Musk kicked off the event by outlining his vision for a global EV transition fueled by spending $10 trillion on global sustainable energy development.

“The earth will move towards a sustainable energy economy,” he said. “And it will happen in your lifetime.”

He also took the opportunity to showcase Tesla’s extensive leadership talents – a response to criticism that he has neglected the automaker since its $44 billion Twitter acquisition. At one point he was joined on stage by 16 other executives, some of whom are largely unknown to investors. For example, Rebecca Tinucci, head of global charging infrastructure, took to the stage to talk about the company’s Supercharger network and the “Magic Dock,” which allows drivers of other EVs to charge at Tesla stations.

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Another focus was on reducing costs. In its own quest for efficiency, the EV manufacturer plans to reduce the footprint of future production facilities by 40%. Chief Financial Officer Zach Kirkhorn pledged to halve production costs for Tesla’s next-generation vehicles.

Jessica Caldwell, executive director of insights at Edmunds, said that while the emphasis on reducing costs was “encouraging,” Musk “didn’t put on the icing on the cake — an actual look at a cheaper Tesla, if only conceptually.” That would be given the growing supply of EVs has been a smart move to lure future buyers while “investors love Tesla even more,” she added.

“Musk’s clear path to a sustainable-energy Earth is admirable, but investors might have preferred if Tesla had outlined a clear path to sustainable profits in a high-growth market,” Caldwell said in an email.

Other key takeaways from Tesla Investor Day:

• Musk confirmed that Tesla will build its next car plant in Mexico near Monterrey, but gave no new details other than that the next-generation car will be built there.

• Drew Baglino, Tesla’s senior vice president of powertrain and energy engineering, confirmed that the company has broken ground on a lithium refining facility in Corpus Christi, Texas.

• Musk said AI is stressing him out and that there needs to be a regulator to ensure this “rather dangerous technology” is operating in the public interest.

• Tesla has now built 4 million cars. It took 12 years to build the first million Teslas, then 18 months to get to 2 million, 11 months to get to 3 million, and then seven months to hit the 4 million mark.

• Head of Powertrain Engineering Colin Campbell said Tesla’s next power unit will use a permanent magnet motor that uses no rare earths, sparking a slump in Chinese rare earth miners’ shares.

One product that Tesla could expand is heat pumps. Musk and Drew Baglino, his senior vice president of Powertrain and Energy Engineering, said heat pumps could drastically reduce heating bills for homes and offices, calling them one of the low-hanging fruits of the sustainable energy transition.

The company also plans to offer unlimited overnight charging in Texas for $30 a month, a move that reflects the transformation in cell phone billing.

Read more: Tesla takes over side of cellular plans with $30 home charging

The company also touted its growing ability to get production facilities up and running quickly. The goal is to start production at the Corpus Christi lithium refinery within 12 months.

“That’s the goal,” Baglino said.

Tesla has again said that the Cybertruck is coming this year and that series production is expected in 2024.

The company’s new vision aims to build on the growth of the US electric vehicle leader from a niche player to a mainstream automaker. Tesla’s two previous strategic plans were unveiled in 2006 and 2016.

Musk released his first master plan more than a decade ago, outlining Tesla’s go-to-market strategy of building an electric sports car and then a line of more affordable cars. The company realized that vision with the roadster, the Model S, and then the Model 3 sedan — its most affordable vehicle, which starts at around $43,000.

Ten years later, Musk released Master Plan, Part Deux when Tesla acquired SolarCity. Musk served as chairman of the solar panel installer run by his cousins. That plan spoke of solar roofs with battery storage, an expanded range of vehicles, and self-driving technology.

(Updates to add details on Rare Earths in Key Takeaways.)

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