A 1,500-word manifesto that Elon Musk unveiled last week, outlining his plan to expand Tesla Motors Inc.’s electric-vehicle line and to build “stunning solar roofs,” may end up costing the company tens of billions of dollars to carry out.
Musk, Tesla’s chairman and chief executive officer, gave the estimate on Tuesday after a tour of the company’s battery factory under construction in Nevada. He quickly added that he doesn’t plan on spending billions more right away.
“Over time, this must necessarily be true,” he said. “Don’t quote me saying I plan to spend tens of billions right now because that would be incorrect.”
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Musk took heat from investors last week after delivering a “master plan” that was seen as long on vision and short on details about how he’ll finance his ideas for merging Tesla with rooftop solar installer SolarCity Corp., developing an all-in-one solar and battery solution, and offering electric buses and trucks and autonomous ride-sharing fleets. It followed what was already a rocky month for Tesla, which has been on the defensive about its driver-assist technology following a fatal Florida crash.
A key manufacturing executive recently left for Facebook Inc. and Tesla’s stock plunged in June on news of the potential $2.86 billion takeover of SolarCity.
Tesla’s shares rose 0.9% to $231.60 at 10:54 a.m. in New York. SolarCity fell 0.5% to $27.29.
Musk said he was “frustrated” by the media coverage from the crash in Florida and that Tesla’s Autopilot technology has made the company’s cars safer. Earlier on Tuesday, Mobileye NV, the maker of chips and software for driverless cars, said its cooperation with Tesla wouldn’t extend beyond its EyeQ3 product. Parting ways with Mobileye was “inevitable” and not surprising, Musk said at the battery factory.
Tesla’s “gigafactory” — which it’s building with Panasonic Corp. — is the linchpin of the company’s plan to cut the cost of making batteries that power its electric vehicles, including the forthcoming Model 3 sedan. Musk has sped up the factory’s production to meet his goal of making 500,000 cars by 2018. That means the plant will need to be making batteries for cars by the end of this year.
Musk said Tuesday that he was confident that Tesla would start making the Model 3 by next summer. Tesla may require a “modest” capital raise, but the Model 3 — which was “fully engineered” as of a few weeks ago — could generate $20 billion in revenue a year once it reaches full production, he said.
For a QuickTake explainer on the road to cleaner cars, click here.
About 14 percent of the gigafactory was finished as of Tuesday, the company said during the tour. A construction crew of about 1,000 was on site, working to meet Musk’s expedited targets. When completed, it’ll occupy a valley surrounded by scrub brush-covered hills and boast the largest footprint of any building in the world, covering the size of about 107 football fields, according to Tesla.
The company’s $5 billion facility will churn out batteries for both Tesla’s cars and for energy storage systems designed to complement rooftop solar panels on homes and businesses offered by SolarCity, where Musk serves as chairman. Musk said he sees growth in Tesla’s stationary battery production surpassing that of its cars.