Wall Street Chokes on Tesla Motors Inc (TSLA) Future Vision

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Tesla Motors Inc CEO Elon Musk released a new plan, Master Plan, Part Deux, on Wednesday. It seems that the company’s most-awaited plan has failed to impress auto analysts and Wall Street investors, who responded largely with skepticism, according to a report by The Detroit News. The company wants to become more than just an electric cars maker. It is planning to grow into a sustainable energy leader, foraying into auto mobility service, building mass-transit electric buses, and developing solar-powered batteries.

Tesla Motors Inc (TSLA) Gigafactory

Tesla Master Plan

Reuters reported that Musk’s plan include where he wanted to take the electric car maker, but didn’t provide complete details on how he planned to get there.

“It’s beyond us how much fundraising Tesla will need to carry out this master plan,” Barclays Capital analyst Brian Johnson wrote in a note. “The plan is like before – or like much of what Tesla does – long on exciting visions of the future and short on financial details.”

Musk said: “Starting a car company is idiotic and an electric car company is idiocy squared.” He added that “civilization will collapse” in the absence of a sustainable energy economy.

Musk also noted that Tesla is working on “heavy-duty trucks and high passenger-density urban transport,” which are expected to be unveiled in 2017.

Tesla made an offer to acquire SolarCity a deal valued at up to $2.8 billion. There were mixed views about Musk’s plan to combine the electric-car and solar-energy companies, in which he is the largest shareholder.

Tesla believes that a combination would provide significant benefits to shareholders, customers and employees of both companies. The acquisition would transform Tesla into “the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers,” from solar panels and home storage batteries to electric vehicles.

What Analysts Say Master Plan

Tesla Motors Inc plans to expand its vehicle lineup into all major segments including pickups, SUVs, mass-transit and heavy-duty trucks. The company’s plans also include its consumer vehicles “working as autonomous taxis when the owner isn’t driving,” according to The Detroit News.

“The main thing that was missing was any type of commitment to shareholder return or to actually become profitable,” noted Dave Sullivan, who is manager of product analysis at AutoPacific. “If you have shareholders, you have an obligation to them. … There was no discussion on how to become profitable.”

Tesla’s heavy duty truck and bus announcement was a surprising thing for UBS analyst Colin Langan. “We question if it can handle the added complexity of varying platforms when it is currently having issues with only two models,” Langan said.

Efraim Levy from S&P Global Market believes that Tesla’s new master plan will “create a short-term cash flow sink hole.”

“While we think Tesla’s new master plan may build a long-term technological monument, we think it will create a short-term cash flow sink hole,” Levy wrote in a research note. “Musk’s new plan changes the investment thesis from an automotive technology leader heading to the mass market with self-driven sustainable profitability, to a company that will continue to dilute value for existing shareholders.”

Shares of Tesla Motors Inc closed down 3.44% on Thursday. No analysts had changed their price targets or ratings on the company’s stock.

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