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How Tesla Will Survive – Elon Musk’s Master Plan

How Tesla Will Survive – Elon Musk’s Master Plan


Tesla didn’t invent the electric car. That
actually happened back in 1891. Instead, it did something a lot more interesting: it made
the electric car cool. When Tesla unveiled the Roadster back in 2006, it began a wave
of change in the auto industry that still continues today, with virtually every major
automaker now sporting a plan to roll out EVs at volume in the coming years. In 2010,
Tesla became the first publicly traded automaker to emerge in the U.S. in 54 years, and has
delivered incredible returns to shareholders since, building one of the most loved car
brands in the world. Without a doubt, Tesla has changed the face of the car industry.
But how does it make money? In short, it doesn’t. Throughout its history
as a public company, Tesla has never been profitable on an annual basis, and has only
recorded a few profitable quarters in its history. However, Tesla has rapidly grown
its revenue, booking $21 billion in annual sales in 2018. That’s up nearly 7X in the
past five years, and up 183X since it went public. Today, Tesla generates 93% of its
revenues from automotive sales, and around 7% from energy generation and storage. 
How has Tesla accomplished such staggering growth? It had a plan. Tesla’s master plan
entails four steps. No. 1: create a low-volume, expensive, high-end vehicle. No. 2: then use
that money to develop a medium-volume car at a lower price. No. 3: use that money to
create an affordable, high-volume car. No. 4: provide solar power. Over the course of
about a decade, Tesla carried out each step of its master plan one by one,
beginning with the production of its low-volume, high-end Roadster sports car in 2008. Four years
later, Tesla began deliveries of its luxury Model S sedan. Tesla then began deliveries of its
Model X luxury SUV three years later, after several delays. Three more years after that,
Tesla finally introduced its mass-market Model 3 sedan. In January 2019, the Model 3 passed
the Model S to become the top-selling electric car in the history of the United States.
Meanwhile, in 2016, Tesla merged with SolarCity, completing the fourth prong of its master plan and
positioning the company to sell its Powerwall energy storage units along with SolarCity solar panels and
Tesla vehicles, allowing customers to power their home and vehicles
entirely via solar power. Despite Tesla’s incredible growth over the
past decade and completion of its master plan, threats still loom on the horizon. Traditional
automakers are aggressively entering the electric vehicle market, particularly on the high end
that Tesla has dominated until now. Audi, Porsche, Mercedes, Jaguar, and others are
releasing new electric vehicles of their own. Simultaneously, Tesla began losing the benefit
of U.S. electric vehicle tax credits at the beginning of 2019. As competition enters the
U.S. market with the benefit of the full EV tax credit, Tesla’s already unprofitable business
will face increasing margin pressure. This may impact its ability to continue investing
in future growth in a highly capital-intensive business like auto making. Tesla will need
to find a boatload of cash over the next few years in order to finance its already announced
and highly anticipated upcoming projects, like the Model Y, the Tesla semi,
new Tesla Roadster, solar roof, and construction of the Chinese Gigafactory. 
In addition, Tesla faces regulatory scrutiny from the SEC, tracing back to CEO Elon Musk’s
fraudulent tweet that the company had funding secured to go private at $420 per share.
That incident, plus another tweet that incorrectly stated future production estimates,
has regulators watching Musk and Tesla very closely. At best, the back-and-forth with regulators is
a distraction at the point when the company is trying to secure its dominance in the EV
market before competitors are able to enter. At worst, it could eventually rob the company
of its CEO and the personification of its brand, potentially derailing
its incredible growth story. Time will tell whether Tesla can overcome
these and other significant challenges facing the company today and somehow achieve
consistent profitability. Regardless, it’s indisputable that Tesla has accomplished its goal
of accelerating the move to sustainable transport. Thanks for watching! If you have a company
you’d like to see us break down, mention it in the comments section below, and be sure
to like the video and subscribe to get more videos like this from The Motley Fool.

Comments (62)

  1. Wow I was actually first. Huh. Well, good info. Keep it up!

  2. No .. Elon Musk is just there to kill shareholder value…

  3. Can you break down BYD Vehicles?

  4. Tesla will have the loads of cash it needs. Because I will give it to them.

  5. Great video. Thanks!

  6. A future $20 stock building crap cars that could be good if they knew how to build cars – but they do not – no more gov't support and great car builders join the fray – market just not big enough at these price points.

  7. Can you break down dean foods df

  8. TESLA could sell FIAT 420 Billions in Pollution Certificates !

  9. Please research Blackberry

  10. Actually, Tesla did invent the electric car as we know it today, based upon the company's platform.

  11. It's going to be 2021 before big auto can even have any meaningful charging infrastructure, have a vertically integrated battery production, level 3 autonomous driving…. Tesla has them all right now.

  12. How does producing solar cells help with its profitability issues? They should have left that to others to pursue. That was stupid.

  13. Tesla didn't just make the electric car cool but rather made it more practical. And successful…

  14. Competitors are all non starters. The manufacturers are not committed to electrification. Their technology is behind. Their cars sit on the lot.

  15. @ The Motley Fool – TESLA will make money in 2019 and Beyond, the key to this is by Selling the model Y, which TESLA plans to sell more Model Y than Model S/X/3 combined. and that's not all, coming soon is the yet unnamed Tesla Pickup, while NOT for International Customers, the American market should Eat it Up. Tesla will also Launch Tesla Semi for Commerical Customers and the 2020 Roadster for High End High Price Customers where MONEY is no Object. the 2020 Roadster simply outperforms Million $$$ Supercars but cost only 200K, a Steal. Lastly, plans on selling a $25K car in just 3 – 4 years

  16. *The Chinese Gigafactory financing is already resolved, they got loans from local banks.

  17. 0:56 Public only has one L……

  18. Tweet wasnt fraudulent, its never been verified. They settled with SEC cause going into a long court battle would have hurt the company and its stock more than just settling.

  19. I think more detail is important or more perspective. You failed to mention Teslas 10,000% advantage in data gathering and its primary business of providing autonomous vehicles over the next decade. "Fraudulent" as defined by the SEC is over-exaggerated and Musk is the largest shareholder so can control the companies growth from any position as he should.

  20. First, the tweet read CONSIDERING going private, so not remotely fraudulent. Secondly the judge came as close as it gets to kicking the SEC's arse. Get your facts straight.
    You detailed a remarkable track record of innovation, execution and actually delivering. Throughout that time there have been constant prophesies of imminent disaster which, as it happens, have no track record of success at all. You would have to be nuts to bet on an unsuccessful track record.

  21. This is the new era of FUD propaganda. They make a very cool high quality video about Tesla while they throw you key false content like "Tesla already unprofitable business .." The narrator talks very fast. You are fooled by the cool images but your brain records all these subliminal messages to make you change your mind about investing.

  22. What do I have to do to get a Trump rent check

  23. Next video: How Motley Fool makes money? 😂

  24. The first company that can build a big batteries without using nickel and cobalt oil I’ll make it. China’s consumption of nickel has increased a staggering 253% in one year. The demand for big EV batteries has outstripped mining capacity and price have soared 25%. China’s is now building two new mines in Indonesia to meet their own demand. There is not enough class 1 nickel to build a billion 1000 pound batteries. The cost of these batteries will become 60% of the car’s cost and ice cars will be the only ones cheap enough for the masses. Honda and GM have partnered up to build the he next generation of solid state batteries. That’s the prize for EV manufacturers.

  25. Never invest in a company that has a monopoly because as soon as competition enters the market, they lose.
    Yes, there was the bolt and leaf but they didn't have the range. New cars entering the market now have the range and pricing to beat the Tesla. The ipace competes with the high end and the Kona competes with the low end. And then you have other start ups like Rivian (which GM bought a chunk of) and Fiskar which has a patent for a graphene battery (if it works, it'll change the entire industry)

  26. So, to summarize, Tesla's plan now is to "find money." Thanks for your useful information.

  27. The word is slowly getting out. None of the legacy auto makers have prepared for this disruption. Once people drive the future, they will not stay with the ICE cars. The real advantage Tesla has is that it does not have to depend on dealers to make a profit. An online order is there for each car sold. Parts and service provide the only profit for entry level cars. Before the money pit that consumers are driving is paid off they are looking at the next money pit. Within the next few years the electric car will sell for the same price as the ICE car. The winner will be the vertically integrated company that does one thing well… Tesla. The rest are like Kodak.

  28. I had always thought that Tesla's main antagonists were the Fossil Fuel industry (for obvious reasons), the National Automobile Dealers Association, because Elon refuses to sell his Teslas through traditional dealerships, and new car dealers, who don't like that Tesla has found away to avoid their middleman dealerships by selling manufacturer direct. And because Elon won't allow organized labor in his factories, I should include the UAW as well. These organizations are extremely powerful and their very Machiavellian attacks are well organized and well funded. Shills for these organizations now troll en mass the comment sections of every article about Elon and Tesla posting derisive comments. What I didn't realize was that much of the attacks against Tesla are coming from certain unscrupulous financial institutions and their analysts. Ross Gerber did an excellent interview about this and posted it on YouTube. Americans should be aware of just how influential these institutions can be on stock values and how they're being used to hurt TSLA. https://www.youtube.com/watch?v=CBUVfM03amg

  29. This video was pathetic. No mention of Model Y, Maxwell dry cell acquisition, over a billion real world miles of data, but I think most important is gonna be the Tesla Autonomous Fleet. Advanced summon and automatic lane change is a huge leap. Oh S and X now getting upgraded. My comment was longer than this lame video.😒😀

  30. It would help if the motley fool was capable of truth. Hard to find a single point in this article that doesn't sound paid for.

  31. fair enough, with none bias. thumbs up

  32. The Motley Fool, a Tesla short short. Am following Tesla daily from last 3 years. If any body say in 2019 that Tesla going bankrupt, then don’t listen there next word. GE is in that situation, not Tesla any more. Yes there are hiccups. WV has billions in fine & it’s still in business. Last year 78million cars sold in the world 🌎, you dum asses, Tesla can’t sell 500k-1Millions cars a year. Give me a break.

  33. Great 👍 review

  34. And Fools indeed you are!

  35. Another bullshit Motley fool post. Look don't listen to this garbage. It doesn't matter what the other car manufacturers do in next year or two. They don't have the autonomy data that Tesla has, and they sure as hell don't have the charging infrastructure that Tesla has. Tesla is MAGNITUDES farther ahead of any competition and Tesla is still pulling away. The reason for the lack of profitable quarters is simply because Tesla is reinvesting all of it's money back in to infrastructure and new products. With Model Y due to start production in Q3 there is going to be quit a bit of expense in building additional lines. But not nearly as much as the model 3 lines cost. Then we have the plant in China which will be online this year. Not to mention Tesla Semi, and the upcoming Tesla Pickup. If you are investing in Tesla to get rich tomorrow then you are a fool motley or not. Tesla is playing the long game because they are looking to be here for the long haul. And I truly believe that at least one of the major US auto manufacturers will not survive trying to keep up with them. Perhaps even two of them.

    Look the bottom line her is this, if you listen to anything "The Motley Fool" tells you, you are a fool. FULL STOP!

  36. you forgot to include the extensive network of Tesla charging stations that other manufacturers can use for free, for now….

  37. Chinese come in after bankruptcy and buy everything like they did Volvo!

  38. One advantage of Tesla is how much farther ahead they are on raw data necessary for autonomous driving. They have like 99% of it.

  39. Weird typo at 0:59 – Public does not have two L's.

  40. Model S refresh now

  41. Tesla Performance Model 3 Owner here, Tesla is a fraud.

  42. 0:40 in short BS!!! But it's okay, you're not that relevant to investor as you're a constant FUD and an awful website to read if you want to make investment.

  43. Ag for fucksake another silly clickbait title.

  44. This is just a subtle diss of tesla highlighting the negaitives implyin they in the shit and goin down. Funny how so many shortsellers and channels like this survive on tesla. A company that is trying to secure a future for us yet negative destructive people with no brains actutry to obstruct a pure vision. How sad. Where is humanity.

  45. Sorry buddy but i voted down. You strung the MSM news into a nice video, but… to not understand that the profits they make go into R&D, and yet trot out the line that they are not profitable is kind of misleading. Peace.

  46. No guts
    no glory

  47. TESLA might be "cool" but it is an ultra-risky stock, & that is being kind.

  48. According to a new study done in Germany, when you take into consideration all the energy that was used to produce an electric car, the Co2 emissions are as the same as by the diesel cars. They energy to recycle the batteries were not included. so WTF!!!

  49. 0:58 PUBLLIC ???

  50. What's with the thumbs down? Not a lot of ratings total, but 20% thumbs down suggest something's wrong, but I can't find what? Is it just because this plan has been known for years and is not current enough?

  51. What would you do if you were told you had 10 months to live? Maybe Elon needs to go on a mechanical bull ride.

  52. Polymet mining!!!

  53. We should all buy V8 pick up trucks and light fires . We can all dance to the the song "we didnt start the fire" Tesla is the shit. Use your brains.

  54. I didnt know about tesla until mid 2016 and i am a huge car guy, car videos are sbout %75 of what i watch on youtube!

  55. And you can be sure if Tesla doesn't survive and some automaker buys them out.
    The nicely designed car will go by the way to a boxy looking somewhat aerodynamic generic piece of junk.

    Of course Tesla isn't profitable. They're still in the building and organizational phase.
    It may be a decade from now that they get organized and actually start to operate like a normally organized business, instead of a designer business.

    It's possible that the they'll have to set up regional distributors to private dealers franchises.
    But that also means that they'll have parts for them, other than junkyards and service centers of some sort.
    Ford was already building cars when they designed the assembly line.

    Musk is still trying to please everybody on his assembly line procedures

  56. Hipsters can be hip and virtue signal 24/7….but economics (and physics) won't be denied kids. Sorry.

  57. How about looking into Abiomed.. thank you.

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