Tesla Motors (TSLA) Shared Mobility Service May be the Ultimate Goal

Tesla Motors Inc (TSLA)

Tesla Motors Inc CEO Elon Musk recently tweeted that later this week, he is hoping to publish part two of the “top secret Tesla masterplan.” Speculations about what he was referring to have been swirling since he wrote that tweet. Some analysts believe it to be Musk’s attempt to divert attention from the Model S crash and the investigation relating to the autopilot system of the EV maker, but Morgan Stanley believes otherwise.

Tesla Motors Inc (TSLA) Model 3 Silver
Source: Tesla Motors

Tesla Mobility – is it coming?

As per Morgan Stanley analyst Adam Jonas, the auto industry is currently being transformed to a “public transport utility” from a model of privately owned vehicles. Jonas notes of the commercial opportunities in 600 billion hours of driver and passenger time, and the 10 trillion miles that are traveled every year.

In a report dated July 12, Jonas talked about the same speculation he has had for some time which is – Tesla Motors Inc aims to transform itself into a transport company from being just an automaker. Jonas believes the automaker is positioned uniquely to benefit from such a business model because of Tesla’s expertise in machine learning. Also, Jonas notes that the electric carmaker is not exposed to the systems legacy that other automakers are exposed to, such as unconnected cars and internal combustion technology.

By 2018, the automaker will release its own mobility service, believe the Morgan Stanley analyst. He is quite sure of this as “a substantial portion” of his $245 price target comes from his valuation of the not yet announced Tesla Mobility. Jonas said investors should consider things, like who owns the fleet, the timing of the ramp, the level of automation for the vehicles, financing for the fleet, and other details, if he is right about mobility being the ultimate goal of the automaker.

Musk’s tweet meant to divert attention?

Musk’s tweet about the secret master plan came at a time when the automaker is in need of good press. Recently, the automaker is surrounded by reports of the May 7 Model S crash that reportedly had its autopilot system engaged. Three crashes in which the autopilot feature was in use have come to light, and one of those accidents is under investigation by regulators.

Also, Tesla Motors Inc was in the news for its seemingly wild bid for SolarCity. The news attracted loads of censure from both analysts and investors. Unsurprisingly, the EV giant also missed guidance for deliveries for the second-quarter again.

Is Musk’s credibility waning, questions Therese Poletti in a post on MarketWatch. Poletti notes that Musk clearly deserves respect for all that he has done, but adds investors should pause after all of the negative developments that have been uncovered over the last couple of weeks.

Poletti says the automaker is failing to reach its own expectations while attempting a risky, potentially unwise acquisition. “Yet the company and its CEO act as if they are made of Teflon, and don’t need to have the types of checks and balances that corporations use to avoid disaster,” Poletti notes.

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Aman is MBA (Finance) with an experience on both marketing and Finance side. He has work as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, playing PC games and cricket.


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