Tesla released its Q1 report to shareholders yesterday. The numbers were pretty good. The company lost less money last quarter than analysts expected. There was a lot of happy talk about GAAP and non-GAAP accounting, gross margins, and other niceties that make bean counters wriggle with excitement. Tesla shares were up significantly in after market trading.
Lots of people find Elon’s irrepressible optimism and bold projections (he says there will be a human colony on Mars in 20 years) a bit hard to swallow. He can be a little smug at times, which is probably why he used to get beaten up regularly in school. Bullies even put him in the hospital for a week once, according to a biography written by Ashlee Vance.
There are plenty of people who would like to see him fall flat on his face. They revel when Model X production is delayed 6 months by parts shortages. News of recalls and customer complaints make them smile. The analysts continue to insist Tesla stock is grossly inflated because people believe in Musk’s promises and ignore reality. That’s why Tesla is one of the most shorted stocks in history.
Musk has said all along that the purpose of Tesla Motors is to drag the world kicking and screaming into the post-fossil fuel age. Pollution from burning hydrocarbons is poisoning our environments and threatens the very survival of mankind. Critics have hooted that changing the world by building cars only wealthy people can afford is the height of absurdity. But they don’t see what Elon Musk sees.
For him, building road rockets like the the Roadster, the Model S with Ludicrous Mode, and the Model X with its insanely complex falcon wing doors is just good marketing strategy. Musk understands that for society to change, attitudes must change. The customers the company caters to today are the movers and shakers of the world, the people who define what the rest of the population thinks. There opinions carry more weight than those of Joe Dinner Pail, the poor schlep who lives paycheck to paycheck. (Like certain bloggers who shall remain nameless!)
Eventually, everyone will want an electric car, but only when the top tier of society decrees that electric cars are acceptable. That has already happened. The Tesla Model S is outselling such luxury cars as the Mercedes S Class, BMW 7 Series, and Audi A8.
Elon Musk has been telling people that Tesla will be making 500,000 cars a year by 2020 and “millions” some time after that. Most scoff at such grandiose statements. But after yesterday, they will scoff no more. Based upon the incredible response to the Model 3 after it was introduced to the world on March 31, Tesla has changed its plans. It has moved the target date for selling 500,000 cars forward by 2 full years. It will happen by 2018, not 2020, it told investors yesterday.
Additionally, given the demand for Model 3, we have decided to advance our 500,000 total unit build plan (combined for Model S, Model X, and Model 3) to 2018, two years earlier than previously planned. Increasing production five fold over the next two years will be challenging and will likely require some additional capital, but this is our goal and we will be working hard to achieve it.
The Model 3 is poised to be the Model T of the 21st century. It will change everything. To make that happen, Tesla has already made plans to make the Gigafactory where it will manufacture the batteries for the Model 3 even bigger. It is already scheduled to be the third largest building on Earth. It will be so big, astronauts on the International Space Station will be able to see it with the naked eye. Now, it’s going to get even larger.
Can you imagine the reaction in the boardrooms of auto makers around the globe this morning? Tesla has just flung down the gauntlet. If you don’t build the cars people want and the world needs, we will. We will build them all if we have to. And if you go out of business as a result, sorry about that. That’s capitalism. It killed off the British East India company and the Conestoga wagon industry when they became irrelevant and it’s going to do the same to you.
Mark it on your calendars. May 4, 2016. The day Elon Musk and Tesla changed the world. Things will never be the same.
Source and photo credits: Tesla Motors