Tesla Unveils Second Master Plan, Aims To Break New Ground

Tesla Motors, Inc. (NASDAQ:TSLA) revealed the much-awaited second master plan that mainly focuses on the company’s ambition to expand its portfolio to cover all major vehicle segments. The automaker will also focus on introducing car sharing and solar energy-based battery systems and developing self-driving capability. With this, Tesla expects to offer a wider range of products and services, and thereby branch out from being just an electric car and battery producer.

Tesla unveiled its first business plan in 2006 when it started selling its first vehicle –Tesla Roadster. This plan outlined Tesla’s intention to use the profits generated from the sale of its initial car models to support the development of cheaper electric family cars.

Tesla’s first car, Tesla Roadster, was an expensive vehicle. The automaker emphasized the need for electric vehicles in order to preserve fossil fuels. The cost was high as the vehicle did not benefit from economies of scale. At present, the company produces the luxury sedan, Model S, and a luxury crossover, Model X. It will start selling the lower-priced Model 3 from next year.

Tesla will be launching two other types of electric vehicles, heavy-duty trucks named Tesla Semi and high passenger-density urban transport. Both these vehicles are in the early stage of development and are expected to be launched next year. The automaker believes that Tesla Semi will reduce cargo transport cost and increase safety. Low-cost vehicle Model 3, future compact SUV and the new pickup truck will help Tesla to address the demands of most of the consumer market.

Tesla considers that advancement of self-driving technology will lead the size of buses to shrink and bring about a change in the role of the bus driver to that of fleet manager. The automaker also plans to add fixed summon buttons for its buses to existing bus stops to help customers who do not have a phone. Moreover, the design will facilitate the use of wheelchairs, strollers and bikes.

The master plan also stresses upon the importance of Tesla’s offer to acquire solar installation firm, SolarCity Corp. (NASDAQ:SCTY) . Per Tesla, the goal of creating an integrated solar-roof-with-battery product cannot be achieved if Tesla and SolarCity remain different companies. Tesla is set to scale Powerwall and SolarCity is ready to provide differentiated solar. Thus, the merger will be beneficial for Tesla.

Tesla also focused on the Autopilot self-driving system. It believes that the system, when fully developed, will be 10 times safer than manual driving. All future vehicles of the automaker will have full self-driving capability. Tesla’s Autopilot is currently in beta stage. The company assured that the system undergoes extensive internal validation before delivery to customers.

Tesla further believes that as the self-driving technology matures, the Tesla vehicles will be having the necessary hardware to support it. The automaker considers that even in situation where the operational capability fails, the vehicle will drive safely due to the system.

Tesla’s master plan also revealed that it is looking forward to entering the ride sharing business. Tesla vehicle owners can join the Tesla share fleet through a mobile application. This will help them to generate an income when they are not using the car. The company also intends to operate its own fleet service, thereby competing with other ride sharing companies including Uber and Lyft.

Tesla currently carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Some better-ranked automobile stocks include Spartan Motors Inc. (NASDAQ:SPAR) and U.S. Auto Parts Network, Inc. (NASDAQ:PRTS) , both carrying a Zacks Rank #2 (Buy).