2017 will be Tesla’s biggest year ever — here’s what’s in store for the company

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The Tesla Model 3.
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YouTube/Motor Trend

Tesla started 2016 as an electric-car maker that had branched out into energy storage.

By the end of the year, Elon Musk’s company has become an automaker, an energy company, the builder of a massive battery factory in Nevada, and a solar company through its merger with SolarCity.

Tesla is also on track to delivery about 80,000 vehicles in 2016, more than ever before.

So it was a big year. But 2017 will be even bigger.

Here are the major things that Tesla has in store:

The launch of the Model 3

Tesla’s mass-market vehicle, which will be priced at around $30,000 after tax breaks and serve up 200 miles of range on a single charge, is scheduled to launch in late 2017. There’s skepticism about whether Tesla will be able to meet that goal, but the Model 3 should be far easier to build than the delayed Model X SUV was.

Make no mistake – this is Tesla most important execution point of the entire year. Bringing in the Model 3 on time will vindicate Musk’s promises, vision, and ambitions. The vehicle will also enable Tesla to start fulfilling the nearly 400,000 preorders that have come in for the vehicle. Interested buyers put down $1,000 each to reserve a Model 3.

The arrival of Tesla’s solar roof

The first important product from the Tesla-SolarCity tie-up will be the solar roof. Effectively, it will turn an entire roof into a giant, durable solar panel. It will also likely be an expensive product. But it will feed into Tesla’s other products – and provide Tesla with a way to free SolarCity from its current leasing model, moving toward selling solar solutions rather than loaning them out.

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Tesla and SolarCity CEO Elon Musk unveils the solar roof.
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Screenshot via Tesla

The development of the Tesla Network

Musk has done a complete 180 on car sharing, likely compelled by Uber’s success and by the advent of ride-sharing and car-sharing schemes from traditional automakers. Up to this point, he’s talked a good game about enabling owners to make money off their Teslas when they’d otherwise be sitting in the driveway – while perhaps not really expecting that the owner of a $100,000 luxury car would want to lend it out and have it come back with a few dents and a bunch of McDonald’s wrappers in the backseat.

But now Tesla will likely start to build out a network, leveraging its vehicles’ software and Tesla Autopilot suite of self-driving features. So look for the Tesla Network to be discussed far more in 2017.

Even more Superchargers

Tesla is changing the way it manages its Supercharger network. It eliminated free access for new owners in 2016, and it introduced an idle fee for owners who leave their vehicles parked too long at a Supercharger station after fully recharging.

The objective is to make the Superchargers the standard for long-distance trips while encouraging owners to do their regular recharges are home. Tesla is likely to expand its worldwide Supercharger network, especially in China, where the company has at times struggled to convince prospective owners that “range anxiety” isn’t a problem with Teslas.

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A Tesla Model S charges at a Tesla Supercharger.
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Thomson Reuters

A joint venture in China

Speaking of China, it’s one of Tesla’s largest potential new markets. But at the moment, the carmaker has to import all its vehicles, which cuts into profitability.

The way to change that is to set up local manufacturing, which in China can be done only through a joint venture with a Chinese firm. Some might worry that this would compromise Tesla’s technology, but the company has already open-sourced its patents, so it’s not much of a concern.

Look for Tesla to get aggressive about a Chinese joint venture in 2017.

The ‘alien dreadnought’ factory and doubling of production

Earlier in 2016, Musk addressed questions about Tesla’s uneven production capabilities by saying he wanted to focus on being one of the best manufacturers in the world. Part of that plan appears to be a radical reinvention of what’s known as “vertical integration” – in essence, a manufacturer making everything that goes into its products.

Henry Ford built his business with this approach, but for the past four decades, vertical integration has been replaced in the auto industry by “just in time,” or “lean,” production, with a manufacturer managing a complex supply chain and running minimal inventories. Toyota pioneered this approach, and it’s been widely emulated.

Musk seems to want to go back to vertical integration. His idea is to transform Tesla’s factory in California so significantly that you wouldn’t recognize it – it would resemble an “alien dreadnought.” Musk thinks that to achieve Tesla’s bold target of 500,000 vehicles delivered annually by 2018, a lot more automation will have to enter the picture.

He’s kept his ideas about this under the radar, but expect them to burst into view in 2017.

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Tesla’s factory in California.
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Benjamin Zhang/Business Insider

More Autopilot

Autopilot was being improved mainly through software updates, but in 2016, Tesla began to push the envelope on hardware.

The company now thinks of hardware and software releases as being similarly iterative, with “Hardware 2” now being installed in new Teslas.

As the big story in the car business has shifted from electric cars to self-driving vehicles, we can expect Tesla to double down on its Autopilot advantage, even as it continues to deal with the aftermath of a fatal Autopilot-related Tesla crash in May 2016.

A new Roadster

Tesla has been hinting that it will update its first vehicle, the no-longer-available Roadster, with a new model. I’d expect 2017 would be a good year to begin showcasing some possible designs. This would energize the Tesla base and, for what it’s worth, add a proper sports car to the lineup – which, if all goes according to plan in 2017, will include the Model X SUV, the Model S sedan, and the Model 3 in a sedan and maybe a crossover version.

The Model Y

Speaking of a crossover Model 3, it’s rumored to be called Model Y.

We already know what the Model 3 sedan will look like, and Tesla’s goal all along has been for the Model 3 to be a platform on which different types of vehicles can be built. As we get close to a Model 3 launch in 2017, we will almost certainly start to see designs for, and perhaps even a prototype of, the Model Y.

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The Model 3, under wraps.
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Screenshot via YouTube

The Tesla pickup

And why not? As long as we’re expecting a new Roadster and the Model Y, how about a Tesla with a bed in the back?

A capital raise

Musk has said that Tesla won’t need to raise new capital by selling stock in 2016, but the cost of absorbing SolarCity for more than $2 billion and taking on billions in SolarCity debt could undermine his resolve. Tesla has managed to burn less cash in 2016 than expected, but cars are a capital-intensive business, and the money won’t do Tesla any good if it can’t launch the Model 3 on time.

Additionally, Tesla can use and has used Wall Street like an ATM. With the stock back above $200 a share, it would be foolish for the company to avoid a capital raise in 2017 – it could use the money.

The volatility returns

Tesla has always been a volatile stock – shares have risen from around $17 after the 2010 initial public offering to over $200 at the close of 2016. But sometimes the volatility has been … more volatile. Wild swings of $100 a share over a month or so haven’t been uncommon.

That hypervolatility settled down somewhat in 2016, but with the pressure on for Tesla to hit what will probably be deliveries guidance of about 200,000 vehicles in 2017, launch the Model 3, and integrate the SolarCity financials, the stock could jump around a lot on every little bit of news.

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President-elect Donald Trump.
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Mark Wallheiser/Getty Imges

The Trump factor

Musk has reportedly joined President-elect Donald Trump’s business council, but as I’ve written, there are no two brains on earth that are more different.

Beyond that, however, a Trump White House and executive branch may not be all that receptive to Musk’s grand vision of accelerating humanity’s departure from the fossil-fuel era. It also remains to seen whether federal incentive to support electric cars will continue under Trump, not to mention clean-energy initiatives pressed forward by President Barack Obama.

‘Master Plan, Part Trois’?

It took Musk 10 years to update his original “Master Plan” with last year’s “Master Plan, Part Deux.” But the world seems to be moving faster now – and Tesla could quintuple in size by 2018. So Musk may undertake more frequent updates.

Maximum Plaid?

When Tesla introduced Ludicrous Mode for its Model S, a feature that yields supercar-beating acceleration, Musk joked that the only thing faster would be “Maximum Plaid.” Both terms are references to Mel Brooks’ 1987 “Star Wars” spoof, “Spaceballs.”

Ludicrous Mode keeps getting more ludicrous, so 2017 could be the year to unleash Maximum Plaid.