Wall Street's hottest take on Tesla's 'Top Secret Master Plan' is out

Elon Musk. Photo: Kevork Djansezian/Getty Images.

Over the weekend billionaire Elon Musk tweeted he’s about to release a “Top Secret Master Plan (Part 2)” for Tesla, his electric car company.

So naturally, Wall Street started speculating wildly as to what this could be. No one likes secrets, you see.

And there is perhaps no one on Wall Street more equipped to muse on Musk than Adam Jonas over at Morgan Stanley. On Tuesday morning, he published his take on what the plan might be.

In one sentence, Tesla is about to move from being a simple car company to being a commercial transportation company.

Here’s the key part of Jonas’ note you need to see:

“The auto industry is in the early metamorphosis from privately-owned model to a public transport utility. Exploiting the commercial opportunities embedded in 10 trillion miles annually (1.7 Light Years), 600bn hours of driver and passenger time (68 million years) and the associated content and data (for sale or analysis) may be worth a significant multiple of Tesla’s current addressable market for car sales.

We believe that Tesla’s unique advantages in machine learning and lack of exposure to legacy systems (internal combustion tech, unconnected cars) provide it with an opportunity to tap into largera nd faster growing markets ahead of its competitors.”

Like Musk, Jonas is thinking huge right now. We’re talking fleets and fleets of vehicles (either self-driving or not, who knows) to cover some of the biggest problems in commercial transportation. Maybe it will focus on the pesky “final mile” issue — that final step before a product gets to you from a fulfillment center. Maybe, as Jonas speculates, we’re talking about an intercity network.

Who knows? It’s a secret.

But here’s what we do know. This will cost a bunch of cold hard cash, just like everything else. And that’s not really what Tesla has right now.

The company is burning about $700 million a quarter now that its ramped up production of the Model 3. Tesla’s potential (if investors approve) new solar company, Solar City burned $650 million a quarter over the last year.

Both companies are consistently over-promising and underdelivering. Musk said on his Q4 2015 earnings call that Tesla expected to be free cash flow positive starting in Q2 2016. That doesn’t seem likely, and neither company has proven that it has a return on capital.

On the other hand, we have no idea how long Musk plans to ramp up to a potential Tesla Mobility company (that’s what Jonas is calling this thing). We have no idea if he’d partner with the government, if Tesla would even own and operate the fleet entirely, how Musk would price this service, or if it would be entirely automated.

But man, this is a great story to take to the stock market if you want to raise cash to get the dream going. And the stock market loves a good story.

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