Tesla, the electric vehicle giant, experienced a striking 2020 having to navigate the coronavirus pandemic, halting factory production, and witnessing a stock surge of 740%. After a rocky 2019 and nebulous timeline for the future, Tesla and its ‘Technoking’ CEO Elon Musk have expanded their ambitions to accelerate the world’s transition to sustainable energy. The company’s impressive sales growth and one-man twitter account have aggressively promoted new technologies for 2021 and beyond, but some investors remain skeptical of the company’s agenda.
Tesla’s cosmic outlook invites contenders from both the automotive industry and Wall Street, as the past decade showcases the challenges of electric vehicle manufacturing and expansion into foreign markets. As Tesla navigates the volatile future of transportation, we have the backseat view into how they got there, and where they are heading next.
A Brief History
Since 2009, Tesla has produced innovative vehicles such as the Roadster, Model X SUV, and Model S Sedan. They launched the Supercharger Network in California in 2012, which allowed owners to charge their car for free. Then, on May 8th, 2013, Tesla reported its first quarterly profit of $11 million, which catalyzed the company’s quest to broaden their product line.
In 2016, Tesla acquired the solar panel installer SolarCity for $2.6 Billion, and created a Tesla branded solar power roof. During a conference call following Tesla’s Q3 2020 earnings results, Musk said that “Solar Roof is a killer product. This will become obvious next year [in 2021].”
In 2017, SpaceX, Musk’s Space Exploration company, launched the Falcon Heavy Rocket along with a red Tesla Roadster into space. This milestone signaled SpaceX’s future goal to enable the colonization of mars and decrease space transportation costs.
In 2018, Tesla’s legal troubles began when Musk tweeted on August 7th that he planned on taking Tesla private “at $420.” The SEC charged Musk $20 million with securities fraud and he stepped down from Tesla’s Board of Directors until 2021.
In 2019, Musk outlined plans to make Tesla’s first electric pickup “Cybertruck” and a $35,000 Model 3 car, and began production of Model S cars at the newly built Giga Shanghai factory. Tesla’s exemption from China's 10% tax on car sales enabled them to cut prices and enter a market that will predictably buy $10 million worth of electric vehicles by 2025.
Tesla reached a year-to-date low stock price of $178.97 in June 2019, and had a layoff of 7% of employees in March. Yet, their stock slowly rebounded in the second half of the year with stronger-than-expected Q3 earnings. This wave of momentum continued into 2020, bringing Tesla into newfound fame as the most valuable U.S. automaker, with a market value of $86.5 billion on January 10, 2020.
The 2020 Turning Point
After a stark turnaround in 2019, the coronavirus pandemic threatened Tesla’s production growth as a non-essential business. Local officials issued a shelter-at-home order that applied to individuals and businesses, yet Tesla remained open and allowed worried employees to stay home and use their time off if they wanted to be paid. However, after mounting criticism, Tesla shut down its Fremont, CA factory, and reopened two months later with “minimum basic operations.” The slowed auto sales in the U.S were offset by Giga Shanghai sales, as well as online direct-to-consumer purchases.
In mid-July, construction started on GigaFactory Texas, which will house production of the Cybertruck, Model 3, Model Y, and Semi starting in May 2021. Tesla is expanding Giga factories to different continents to increase lithium ion battery production and ship cars to consumers faster. While California still retains major operations, Musk moved to the lone-star state to focus on Giga Texas and SpaceX, with plans for new products at factories like Giga Berlin which began production in July 2020.
Musk revealed other projects during Battery Day on September 22nd, 2020. This included plans to manufacture an in-house “tabless” battery that would be 6 times more powerful than anything on the market, which may shift future relations with Tesla’s current provider Panasonic, as Tesla increases its need for high performance batteries. Musk also revealed new upgrades to the Model 3 Sudan called Plaid mode, coined after the 1987 Star Wars parody “Space balls,” where a spaceship goes so fast that the streaks of light become plaid. This function can accelerate the car from zero to 60 miles an hour in just two seconds, making it the fastest accelerating production car.
Musk concluded the event promising the release of a $25,000 Tesla electric car that would be available by 2023. This sentiment echoed earlier promises of a $35,000 car, which was proven ineffective in the long term, and lasted for only a few months.
When Tesla’s fiscal year ended, their share price had risen 743%. They came just shy of their 500,000 car target for the year at 499,550 deliveries. Musk conveyed this progress by tweeting, "buying a car in 2019 that can't upgrade to Full Self-Driving is like buying a horse instead of a car in 1919."
Tesla’s Future
With a current market cap of $628 billion and cumulative profit for over four consecutive quarters, Tesla joined the S&P 500 index, with their stock considered one of the most volatile of its members. On February 8, 2021, they announced a $1.5 billion purchase of Bitcoin in an SEC filing and will start accepting bitcoin payments for products “subject to applicable laws and initially on a limited basis.” This mirrors past concerns of Musk’s social media influence, after he supported cryptocurrencies Bitcoin and Dogecoin on Twitter, and subsequently increased their prices.
While the growth from Tesla’s energy sector and automotive business has broadened their reach into new AI capabilities, Musk’s broad vision for the future of automation is still distant. During the Autonomy Investor day in April 2019, Musk claimed that fully autonomous self-driving would be “feature complete” by the end of the year, but human oversight and regulatory approval is still currently needed. Tesla outlined this goal in the “Master Plan, Part Deux,” released on July 20th, 2016, which explored the company’s objectives.
During their fourth-Quarter results call on Jan 27th, 2021, Musk referenced the ability for Tesla to begin money-generating “robotaxis,” where private owners could offer their car out to rent, for passengers to then “hail” using a smartphone app like Uber.
This goal is part of Musk’s multi-planetary approach to further progress in both SpaceX and The Boring Company, his tunnel construction company. Their plans include shuttling passengers through traffic-reducing underground tunnels using Tesla Model 3s and Model X’s on a “tram,” with plans to operate autonomously in the future.
But as EV sales increase and electrification moves to the forefront of the U.S. auto industry, Tesla could face new competition from established automakers like General Motors, who plan to shift entirely to electric vehicles by 2025. This news parallels heightened concern over greenhouse gas emissions and recent statements by President Joe Biden during a briefing on January 27th, 2021, saying that “we’ve already waited too long to deal with the climate crisis. We cannot wait any longer.”
Tesla’s Giga Shanghai factory has bolstered this progress as China is the largest buyer of EV’s globally and produced more than 60% of the world’s graphite in 2019, which is a key material in the manufacturing of lithium-ion batteries for EV’s. But with the simmering trade feud between the U.S. and China, future growth may be reevaluated.
The pervasive aspirations of Tesla and Elon Musk are vast, as the unconventional CEO fortifies his social media rhetoric and rapidly expands Tesla’s product line. With new product unveilings still not in production and shaky promises for an autonomous system, we seem to have more unanswered questions than not. During a TedTalk in 2013, Musk stated that “Sustainable energy will happen no matter what. If there was no Tesla, if Tesla never existed, it would have to happen out of necessity.”
Tesla proved that the drive toward sustainable energy is inextricably linked to prolific technology advancement in the automotive industry. While flying cars won’t be in our rearview mirror anytime soon, the increase of semi-autonomous driving, battery storage, and reduced EV prices may bring these futuristic ideas closer to a reality.