Tesla Motors, Inc. (NASDAQ: TSLA) CEO, Elon Musk, announced last month that a “major new Tesla product line” would be revealed on April 30th. He specified that it won’t be a car.
Many hope that the product will bring further prospects to the already flourishing solar market. A battery that draws from roof-mounted solar panels and powers an entire house fits that description.
On a conference call in February, Musk announced that Tesla plans to roll out a battery designed to provide power for days at a time for households and businesses alike.
He also said that production would begin in the next six months or so and that the product will be unveiled within the next couple months.
If this home battery disrupts the established technology standard in the same way as the Tesla Model S did, it has the potential to turn Tesla into one of the most powerful companies in the world.
Before you shake your head in disbelief, take the solar market’s recent growth into account. In 2011, the total capacity for solar panel installations was 1,922 megawatts. Three years later, that number has more than tripled to 6,201.
And if expectations meet reality, Tesla could go on to become a formidable solar stock in the expanding solar market.
Cheap Internet From Space
Unlike his plans for solar-powered home-sustaining batteries, Musk hasn’t kept his Martian ambitions a secret. It’s known that he hopes to be a leader in the push to turn humans into a two-planet species.
Cue Musk’s latest project: a planet-wide network of low-orbit communication satellites with the purpose of providing high-speed, low-cost Internet to roughly 50% of the total population who still have poor access to the Internet.
The currently nameless venture would require hundreds of satellites to orbit the Earth at an altitude of 750 miles, significantly lower than traditional communications satellites, which operate from 22,000 miles above the Earth.
The shorter distance between the satellites and the Earth would mean less distance for the electromagnetic signals to travel and would result in far faster internet speeds than existing satellite technology currently offers.
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Given Google Inc. (NASDAQ: GOOG)‘s foray into internet via fiber-optic cable with Google Fiber, that level of tech is expected to be the the next benchmark in high-speed internet.
Since the speed of light is 40% faster in the vacuum of space (which is where Musk’s network of satellites will operate) than it is in terrestrial fiber, perhaps this space internet venture is superseding the next level of tech before it’s even implemented.
Granted, it will be at least five years before the network gets off of the ground, but the potential to upend a generation of in-demand infrastructure before it has a chance to be established shouldn’t go without recognition.
While the satellite network will provide a solution to a vital need on Earth, it’s ultimately intended to be a revenue source for funding of a Martian settlement to be built by SpaceX.
Meanwhile, On Earth
According to Musk, Tesla will spend “staggering amounts of money” just this year. The Nevada lithium-ion battery factory alone will cost about $5 billion, of which only about $110 million has been spent so far.
TSLA’s projected share price between 23 analysts ranges from $65 to $400. That’s an unprecedented spread, valuing the company at anywhere from $8 billion to $50 billion. What this should tell you is no one really knows what’s going to happen, but that shouldn’t surprise you.
Tesla has always been a long-shot company. In all likelihood, the products that will either make or break the company haven’t been invented yet.
We’ve had glimpses of affordable electric vehicles but they’re generally impractical, with a range of less than 100 miles and lengthy charge times.
Predicting sales of the next generation of mass-market EVs now would be like trying to predict the success of the Apple Watch several months ago.
No matter how you look at it, betting on or against Tesla is a risk and we won’t know which side is going to come out on top for at least a few years.
If Tesla grows according to “plan,” it could be worth as much as Apple Inc. (NASDAQ: AAPL) in 10 years, but that’s a big “if.” At least for the next couple years, analysts seem optimistic about the company’s growth.
Bear in mind that any and all of Tesla’s recent issues have little or nothing to do with its long-term strategy.
In only three months, showing once again that they are a company that knows how to get things done, Tesla completely restructured its flagship car. The Model S got a second engine, all-wheel drive, and semi-autonomous driving, all without slowing down production.
With the battery factory reportedly moving ahead of schedule, 2,000 rapid-charging stations being built worldwide, and the mass-market Model 3 remaining on schedule for 2017, buying TSLA or not is dependent on your perspective.
If you believe that EVs are the future, as I do, Tesla has a defensible, multi-year, multi-billion dollar competitive advantage that is growing every day. Choose wisely.