Tesla Motors Inc (NASDAQ:TSLA) has been troubled lately, with TSLA stock down almost 15% from its April highs and the company wading through much-publicized death of a driver using the “Autopilot” feature on its Model S sedan. But to hear founder and CEO Elon Musk tell it, there’s a secret Tesla plan that will trump all of these bad headlines.
In a post on Twitter, Elon Musk announced he’s “Working on Top Secret Tesla Masterplan, Part 2. Hoping to publish later this week.”
Many experts think the Tweet references a 10-year-old post on Tesla’s corporate blog that Musk previously penned, titled “The Secret Tesla Motors Master Plan (just between you and me).” But the irony (aside from the fact that the previous post wasn’t that secret at all, of course) is that Musk failed miserably at his original “master plan” … so investors in TSLA stock may not want to have too much faith in Part 2.
When you look at the original posting, Elon Musk set out a vision for Tesla Motors that included a successful high-end electric vehicle as a bridge to mass market EVs for all. At the end, he simply sums it up as:
- Build sports car
- Use that money to build an affordable car
- Use that money to build an even more affordable car
- While doing above, also provide zero emission electric power generation options
The pivot from the initial Tesla Roadster to the Model S sedan was a very successful move as step No. 2. However, whether it was the pressure of being a public company or just a change of thinking, TSLA stock decided instead to first follow up its Model S with the Model X SUV — hardly a mass-market vehicle that was more affordable, and hardly an instant success given its complicated history and a full two years of production delays.
As for zero-emission electric power generation options … well, that remains kind of a pipe dream.
However, Tesla stock holders may see some synergy here after the recent acquisition of Solar City (NASDSAQ:SCTY) in an all-stock deal. The idea of power generation as a part of the Tesla vision has been evident in everything from the Gigafactory battery facility to the Powerwall home energy storage solution, and tying solar into the equation could truly be a way to focus on “zero emission electric power generation” as per the original master plan.
TSLA Stock Needs to Deliver … NOW
Of course, much has changed in the narrative about Tesla since a few years ago.
Elon Musk has gone, in the eyes of some, from a masterful innovator to a petulant CEO who thumbs his nose at detractors, TSLA stock holders and the media alike. The tone-deaf response to the fatal Autopilot incident, including petty sniping at a well-respected business reporter and pooh-poohing events as “not material,” would be bad enough. But adding fuel to the fire are seemingly unattainable expectations for growth stoked by Musk’s own promises of 500,000 vehicles produced by the end of 2018.
Given this as context, it may be worthwhile to be more than a little skeptical of any so-called “Masterplan” from Tesla Motors Inc right now. There are serious questions about whether the company can deliver on its current vision, let alone whether it can reclaim the mantle of disruptor and wow investors with promises of a high-tech utopia down the road.
For TSLA stock holders, the future is now. And while Elon Musk clearly only has to answer to himself thanks to his titles and his massive stake in the automaker, he would be wise to remember that he still needs Wall Street’s confidence if he wants to keep raising capital in secondary offerings and making all-stock deals for acquisitions.
Before tilting at more windmills, Musk needs to seriously reflect on the last 10 years and whether he has delivered on his original vision for Tesla. If not, it may be time to simply buckle down and get to work rather than create a crazy new blueprint for his business.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at email@example.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not hold a position in any of the stocks mentioned here.
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