Tesla shares plummeting as Elon Musk's new Master Plan falls short of expectations

Elon Musk’s much-anticipated third Master Plan for Tesla Inc. disappointed investors by failing to provide any clear details on the company’s long-awaited next generation of electric vehicles.

The four-hour presentation was big on Musk’s goal of building the next phase of Tesla’s development around a sustainable energy future by moving into goods like heat pumps, but light on any new car details, particularly a cheaper EV like the $25,000 model teased more than two years ago.

While the 51-year-old CEO stated a new facility in Monterrey, Mexico will construct the next generation of vehicles, he did not provide a timetable, instead adding a “proper product event” will be held later.

Tesla’s vice president of vehicle engineering, Lars Moravy, was similarly ambiguous, responding to an analyst’s inquiry with merely, “We’re gonna go as fast as we can.”

The longer the event lasted, the more investors seemed to lose hope.

Tesla shares plummeted as much as 6.8% to $189 in after-hours trade.

Prior to today, the stock had risen from a two-year low reached in early January, gaining over $310 billion in market value and restoring Musk to the top of the Bloomberg Billionaires Index.

Musk began the gathering by detailing his vision for a global move to electric cars, fueled by $10 trillion in global expenditure on sustainable energy development.

“Earth will move to a sustainable energy economy,” he said. “And it will happen in your lifetime.”

He also used the occasion to highlight Tesla’s rich reservoir of managerial talent, in response to allegations that he has ignored the carmaker since his $44 billion acquisition of Twitter.

At one point, he was joined on stage by 16 additional executives, many of whom are unfamiliar to investors.

Rebecca Tinucci, the company’s head of global charging infrastructure, for example, addressed the stage to discuss the company’s Supercharger network and the “Magic Dock,” which allows drivers of other EVs to charge at Tesla stations.

There was also a considerable emphasis on cost cutting. In its own efficiency drive, the EV manufacturer intends to lower the footprint of future production sites by 40%.

Zach Kirkhorn, Tesla’s chief finance officer, has promised to slash production costs in half for the company’s next-generation vehicles.

While the emphasis on cost-cutting was “encouraging,” Edmunds managing director of insights Jessica Caldwell said Musk “failed to put the cherry on top — an actual look at a lower-priced Tesla, if only conceptually.”

With the expanding variety of EVs on the market, that would have been a wise approach to tempt future purchasers while “growing even more investor love for Tesla,” she noted.

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

Additional significant takeaways from Tesla’s Investor Day:

• Musk confirmed that Tesla will build its next auto plant in Mexico, near Monterrey, but didn’t provide any fresh details except 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 plant in Corpus Christi, Texas.
• Musk said AI stresses him out and that there needs to be a regulatory authority to make sure this “quite dangerous technology” is operating in the public interest.
• Tesla has now made 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 monthsto get to the 4 million mark.
• Powertrain Engineering leader Colin Campbell said Tesla’s next drive unit will use a permanent magnet motor that doesn’t use rare earths, sparking a plunge in Chinese rare-earth miners’ shares.

Heat pumps are one product that Tesla might develop into.

Heat pumps, according to Musk and Drew Baglino, his senior vice president of powertrain and energy engineering, could drastically reduce home and office heating expenses, making them one of the “low-hanging fruit” of the shift to sustainable energy.

In addition, the business intends to provide unlimited overnight home charging in Texas for $30 per month, mirroring the shift in mobile-phone billing.

The corporation also emphasised its expanding capacity to swiftly set up production facilities. It intends to begin production at the Corpus Christi lithium refinery within a year.

“That’s the target,” Baglino said.

Tesla has stated that the Cybertruck will be available this year, with commercial manufacturing beginning in 2024.

The new business vision intends to capitalise on the rise of the US electric car market leader from a niche player to a mainstream automobile maker. Tesla has announced two strategy plans in 2006 and 2016.

Musk released his initial Master Plan more than a decade ago, outlining Tesla’s go-to-market plan of developing an electric sports car first, followed by a succession of more affordable vehicles.

The business has followed through on that goal with the Roadster, Model S, and now the Model 3 saloon, which begins at roughly $43,000.

Ten years later, while Tesla was purchasing SolarCity, Musk released Master Plan, Part Deux.

Musk was the chairman of the solar-panel installer operated by his relatives. Solar roofs with battery storage, a larger car portfolio, and self-driving technologies were all mentioned in the proposal.