On Monday, Elon Musk is promising a surprise announcement about Tesla. The reveal will be “unexpected by most,” Musk tweeted last Sunday. Anyone familiar with the electric automaker and its CEO’s cryptic ways will know that this passes for specificity in Teslaworld.
In the past, such teasing talk preceded upgrades such as a new “Ludicrous” mode for electric-car speed freaks or a software upgrade for music aficionados. So, what could Musk be rolling out this time?
Conversations with industry watchers and analysts put good odds on it being related to self-driving technology, specifically so-called Tesla Vision, which leverages computing power to help a vehicle navigate its surroundings based on inputs from cameras and radar.
Tesla Vision news would help steer the company away from the questions surrounding its original Autopilot self-driving system, which federal regulators continue to investigate in relationship to a number of Tesla crashes worldwide.
Musk recently announced an upgrade to Autopilot, but he has hinted at a coming quantum leap.
On a call with investors earlier this summer, Musk said the next generation of Tesla autonomy “will blow people’s minds; it blows my mind (and) it’ll come sooner than people think.”
Quite the promise considering the growing number of automotive and technology companies feverishly working on autonomous driving, including Google, Uber, Volvo, Ford, Audi and Mercedes-Benz, to name a few.
But Musk is a master “of creating hype, and often delivering on it,” says Frederic Lambert, managing editor of electric car news site Electrek, which recently conducted a reader poll asking for guesses about Monday’s news.
Some 40% of respondents said they were expecting an Autopilot update, while 18% said Tesla Glass (a project allegedly focused on information-projection technology), 16% said Model Y (the company’s rumored cross-over sedan), and 15% said Model 3 Part 2 (Tesla’s forthcoming mass market sedan as yet has no interior).
A negligible number (4%) felt Monday’s announcement would have to do with a Tesla truck, something Musk listed in his comprehensive treatise on his company’s future, “Master Plan, Part Deux.” Long distance trucking is considered by some to be ripe for self-driving tech, and Uber has bet $670 million on it through its recent acquisition of Otto.
Karl Brauer, analyst with Kelley Blue Book, says Musk needs to drop some truly impressive news in order to keep the company’s high-flying shares (TSLA) at their current $200 mark, especially considering the stock’s volatility over the years. Tesla hit a high of $280 in July 2015, and a low of $150 last February.
Investors’ continued optimism over Tesla is anchored to Musk’s claim that it will soon go from being a niche (50,000 units a year) to mainstream (500,000 a year) manufacturer on the back of its $35,000-and-up Model 3.
“The single most valuable announcement Elon could make would be anything that would make that (500,000 unit) claim stick,” says Brauer. “That could be news that they’ve reached some sort of production-line breakthrough (to deal with ongoing delivery challenges) or that they’re ready to produce all their own batteries (at Tesla’s in-progress Gigafactory in the Nevada desert).”
Brauer points out that where Tesla once was truly unique in the electric car space, it will soon face competition up- and downstream.
Vehicles such as Porsche’s Mission E sedan would compete with the luxurious $100,000 Model S and X, while General Motors’ new $37,500 Chevy Bolt, which should begin production next year, may be capable of luring consumers away from the Model 3.
“Tesla’s been alone in that space for a long time, but it won’t be true next year,” says Brauer.
Monday’s mystery event isn’t the only bit of Tesla news barreling down the highway.
Tesla is expected to announce its third quarter earnings on Oct. 26, two days before a solar roof-panel event being held here that is meant to showcase the potential synergy between Tesla and its acquisition target, solar panel installer SolarCity.
Despite the vertically integrated appeal of the purchase — Musk has described Tesla stores as a place to buy solar panels, Powerwall electricity storage packs and electric cars — the cost of absorbing SolarCity coupled with Tesla’s own growing pains have given investors pause.
“The ambition of the entire platform is immense, but there’s a lot of execution that has to happen to fulfill the promises made to the Street,” says Colin Rusch, senior research analyst with Oppenheimer.
That said, Rusch remains bullish due to Tesla’s first-mover advantage in the premium electric-vehicle space, with a brand that has become synonymous with cutting edge technology despite occasional glitches (as with the upward-opening “falcon doors” on its Model X SUV).
Monday’s announcement may well be made on a conference call given that media so far have been given no indication there will be a live event at the company’s Palo Alto headquarters. Either way, Rusch is convinced the update will feature incremental news, either Autopilot upgrades or more details on the Model 3.
But what he really wants to hear more about is how the ambitious Musk plans to fund the bold visions that have boosted Tesla’s valuation to $29 billion, almost two-thirds that of venerable Ford Motor.
While a capital infusion would seem to be a given considering the proposed tenfold ramp-up in production, Musk last Sunday took to Twitter, his preferred mouthpiece, to specify that neither Tesla nor SolarCity would be raising funds in the next few quarters through either debt or equity deals.
But, says Rusch, “by the end of 2018, they’ll need to raise a couple of billion.”
When that happens, bet on Musk breaking the news with another trademark tweet.