Elon Musk delivered a Master Plan to eliminate fossil fuels, but no news on Tesla’s next-gen affordable EVs. Though markets reacted poorly to a lack of specifics, the company is bullish on its long-term vision to lead the global effort toward a sustainable future.

It should come as no surprise that Elon Musk is very familiar at setting lofty goals. During Tesla’s Investor Day, the company’s CEO took to the stage at the Austin, Texas based Gigafactory to unveil what could be the most ambitious initiative yet. Throughout last night’s presentation, Musk, along with company executives, revealed the third iteration of Tesla’s “Master Plan”, a strategy which would see them take the lead on global efforts to eliminate fossil fuels.

The Master Plan explained

“There is a clear path to a sustainable-energy Earth. It doesn’t require destroying natural habitats… to stop using electricity.”

At a high level, the initiative aims to revolutionise the way we consume energy, with the end goal of creating a “sustainable energy civilisation”, according to Musk. Underpinning this are plans to install heat pumps in homes and industrial buildings that are powered by hydrogen, sustainably fueled aircraft and boats, and of course increased production and adoption of electric vehicles. The plan resembles a whitepaper, more of a best-case scenario if everyone were to get on board on a global scale and embrace renewable energy.

Master Plan 3’s core pillars:

  • Repowering the world’s existing power grid with renewable energy
  • Adopting heat pumps for home, business and industry climate control
  • The electrification of high-temperature heat delivery, plus development of “green” hydrogen for industrial processes
  • Developing sustainable energy to fuel boats and aircraft
  • The continued switch to electrical vehicles

Many analysts, researchers and environmental groups have charted paths out of our current (and impending) climate crisis, with their findings more often bringing about a sense of doom and near-hopelessness due to the sheer scale of the issue and effort required to resolve it. Musk was, however, upbeat and optimistic at not only the overarching, but the cost of the endeavour itself.

“There is a clear path to a sustainable-energy Earth. It doesn’t require destroying natural habitats. It doesn’t require us to be austere and stop using electricity and be in the cold or anything”, said Musk.

The company estimates that the Master Plan would set us back a cool $10 trillion USD, but that this is less than would be spent on fossil fuels over the same timeframe. A large portion ($7 trillion) would be needed just for electrical vehicles.

On that last point, Tesla says that the switch to electricals alone would reduce fossil fuel consumption by up to 21%. But in order to power all these new EVs, we would need to significantly increase energy storage capacities, to 240TWh (from 115TWh). The plan also calls for re-energising the existing power grid with renewable power, which would see a further 35% decrease in fossil fuel use.

What we didn’t see were many details around the company’s future plans for more affordable electric vehicles. On the surface, it may have seemed odd that such grand plans didn’t include concrete details on product line expansion at reduced price points to spur mass adoption of EVs. But given their recent track record of hit-or-miss ‘master planning’, it may have been more rational to simply focus on the fundamentals of what needs to be done (and how to get there), instead of making promises that may further risk the company’s credibility and clog up their just-realised steady manufacturing and production process.

A Tesla car driving down a road that is obscured by a foreground tree.
The company plans to drive the world toward a sustainable future. Source: JP Valery/Unsplash.

Third times a charm

Previous ‘master plans’ detailed the introduction of battery storage and expansion of the company’s line of electric vehicles. The first plan (2006) sought to introduce the Tesla Roadster, then relay its profits into building a mass-market vehicle, followed by “an even more affordable car”, and provide options for zero emission electric power generation. Many deemed the plan a success, as the company was able to implement most objectives, however their latest master plan (2016) was a much bumpier ride. In fact, it nearly took the company to the brink of disaster.

The most recent master plan (2016) was a much bumpier ride. In fact, it nearly took the company to the brink of disaster.

The second plan called for further expansion of Tesla’s electrical vehicle product line, encompassing all major segments, along with the development of self-driving capabilities, solar roofing options (with integrated battery storage) and the ability for consumers to monetise their cars when not in use. So far, the uptake of Tesla’s solar roof product has been slow and is now largely being scaled back, self-driving has been in the news for all the wrong reasons, we have a much delayed and polarising Cybertruck utility vehicle and a robo-taxi concept that never materialised (due in part to safety concerns around immature self-driving technology).

Perhaps the scaled back Master Plan 3 was an attempt to overcome the company’s sophomore slump. Missing were details about the next EV, save for inconspicuous product teases, most notably images of cars draped in white sheets, with one resembling a van and the other a more traditional small-format sedan shape. Investors noticed, as during the Q&A Musk was peppered with questions regarding the company’s future low-cost EV plans. In what was obviously planned for, Musk was able to effortlessly avoid giving away any specifics, replying on one investor that Tesla will “have a proper product event, but we’ll be jumping the gun if we’re to answer your questions.”

Hours later, stock fell more than 5%, this despite the company announcing that it had built 4 million cars, delivered 1.31 million in 2022 and planned to produce 20 million through 2030. Analysts have maintained a buy rating as of this writing, however it would seem the markets were not so impressed by the forward-looking sustainability agenda that was on display.

Big plans require big investment

Ahead of the Investor Day announcements, Musk commented that the event itself had significance for “people and life of earth”. When viewing the company’s future ambitions through this frame, the lack of any new vehicle announcements seems trivial. However, if this plan is to be more than just the latest in a series of public vision statements by businesses and governments, there will need to be some serious capital powering Tesla’s global initiative.

To that end, the companies estimate of $10 trillion USD to reach the future-state of a planet that is sustainably powered by renewable energy looms large over the whole plan. However, it’s important to bear in mind that this is one company’s vision to eradicate fossil fuels, and may not take into account efforts by other groups which are occurring in parallel, or even those which might not have yet begun making an impact.

Fortunately, Tesla’s plans do not seem to represent a significant resource cost in and of itself. Musk stated that the infrastructure required to get the plan in play would require “less than 0.2 percent” of the Earth’s surface, and less than 30 percent of all available nickel. Still big numbers, but not impossible, and far less resources than fossil fuel would command over the same timescale.

Perhaps Musk said it best when he commented about the theme of the event, noting that, “I really wanted today to be not just about Tesla investors who own stock, but really anyone who is an investor in Earth.”