Musk: Tesla Trucks, Bus Development Underway But Production is Years Out

August 04, 2016 by Jerry Hirsch, @Jerryhirsch

Expect more information about Tesla Motors’ plans to jump into the commercial vehicle business with electric trucks and buses early next year, but you won’t see the vehicles on the road anytime soon.

That’s the upshot from a conference call between Tesla Chief Executive Elon Musk and investment analysts Wednesday.

Musk used the call to detail Tesla’s finances — the Palo Alto electric car company saw second quarter losses climb 59 percent from the same period a year earlier to $293 million. Revenue rose 33 percent to $1.27 billion.

He also discussed future vehicle development, including the company’s plans for trucks and buses.

For now, Tesla is putting most of its resources into getting the Model 3 compact electric sedan into production, Musk said. Expected to be Tesla’s best-selling car, the sedan will have a price of around $35,000, about half of the starting price of the least expensive version of the automaker’s Model S sports sedan.

Getting the Model 3 ready is sucking up a lot of Tesla’s capital expenditure budget.

“I think we want to postpone anything that’s a heavy capital impact until after the Model 3 production is ramped,” Musk said. “We don’t want to stack Model 3 CapEx on top of other program CapEx.”

But that won’t stop Tesla from beginning to design commercial vehicles.

“There’s a long sort of tail at the beginning of a development of a vehicle which involves a lot of time but doesn’t involve a lot of cost,” Musk said. “It’s only when you begin tooling up for production that the cost really ramps up dramatically.”

Musk said Tesla would unveil its truck and bus designs in the next six to nine months, “and then have a better, a more fleshed out plan for when those would enter production.”

Production would likely start within five years because, “I consider like anything past five years as infinity,” Musk said.

The bus, he said, might actually be more like a minibus and would be built on the same platform as Tesla’s Model X sport-utility vehicle.

But Musk doesn’t consider either vehicle to be the next big Tesla project. That’s going to be a small crossover.

“The priority vehicle development after the Model 3 would be the Model Y, the compact SUV, because that’s also a car that where we expect to see demand in the 500,000 to 1 million unit per year level,” Musk said.

Musk addressed other issues during the conference call.

He said the July 1 launch date for the Model 3 is a target rather than a firm deadline.

“I don’t expect us to be at full production on July 1, but I have to drive all suppliers and internal efforts to that date, knowing that some will fall short,” he said.

Any suppliers “that fall short will be cut out of the picture,” Musk said. “And if there are teams internally that fail to execute effectively, we will reorganize those teams.”

Musk said he also believes that fully autonomous vehicles are closer than most people think. Tesla plans to work autonomous features into all of its offerings, including trucks and buses.

Full autonomy is going to come a hell of a lot faster than anyone thinks it will,” Musk said. “And I think what we’ve got under development is going to blow people’s minds.”

Finally, Tesla doesn’t have its eyes on space.

The company just inked a $2.6 billion deal to purchase rooftop solar installer SolarCity. Musk is chairman of both Tesla and SolarCity and is the biggest investor in each. But he doesn’t plan a business combination with SpaceX, his rocket ship company.

“I don’t think there’s a strong product rationale to combine SpaceX and Tesla whereas there is for Tesla and SolarCity,” Musk said. “There’s a little cooperation that happens between the companies, but it’s not that would justify merging them into one entity.”

Tesla's Electric Semi-Truck Con...
Tesla's Electric Semi-Truck Convoy

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