Model 2: the missing piece
MUSK'S MISSING PIECE
The (really) big picture: how the new Model 2 fits into Elon Musk’s masterplan
Whatever the Tesla Model 2 is called and whenever it finally arrives, there’s a chance it might finally turn its maker into the last thing Elon Musk thought it wou ld become: a massscale globa l car manufacturer on a par with Genera l Motors or Hyundai at six or seven million cars per year, or more.
Not that Tesla is exactly a minnow now. Its current share pr ice may be half what it was at its peak but it is still more than double that of its nearest rival, Toyota, which makes more than 10 million cars each year. Tesla has just been overtaken by BYD as the world ’s largest EV maker, but the 1.85 million cars it made in 2023 is still an increase of 35 per cent on the year before: growth the legacy car makers can only dream of.
That gap bet ween share pr ice and scale shows the markets think there’s much more growth to come. T hey a lways have. Like other hot tech stocks, Tesla’s seemingly insane va luation has been uncorrelated to its present performance, however strong. The growth of its share pr ice and its sales is despite its spasmodic development as a car maker, and the controversies that swirl around a founder who is about the last person you’ d put in charge of what is now a large-scale industrial enter prise.
MUSK HAS SAID THAT ONCE TESLA ACQUIRES SUFFICIENT SCALE HE COULD SELL HIS CARS FOR COST AND MAKE ALL OF HIS PROFIT FROM THIS OTHER STUFF
But the launch of the Model 2, or whatever Elon chooses to call it, may be the moment when that gap starts to close: when the various strands of Tesla’s business, which have developed so unevenly until now, finally start to align, just as the globa l geopolitica l picture shifts decisively in its favour too. When CAR first started talking to Musk back in the late noughties he had no desire to build cars at scale and to quality, which he knew was a nea r-impossible task f rom a standing start. Instead he was sure that an established car maker wou ld buy him out. But prett y soon they cou ldn’t a fford him, and before the end of this decade Tesla might be exactly the kind of whale he once thought wou ld swallow his minnow.
There are four strands to the Tesla stor y in the Model 2 era, the first of which is product. Despite its scale, Tesla still doesn’t have a rational model range, or conventiona l product c ycles in which these models get replaced ever y four or five years. Instead it still sells the Model S – now a beyond-pensionable 12 years old, and which already looked a bit like a lot of other cars when it launched – a longside the Cybertruck, easily the maddest-look ing veh icle f rom a mainstream car maker. ‘When Tesla finally makes a palatable three-row SUV and a pick-up that look s like a Model 3,’ investor and
