2 New, Must-Read Quotes From Tesla Motors, Inc.'s Elon Musk

At the time of this writing, Tesla Motors stock is up about 6% total between the last two trading days. The market optimism follows the company's Friday phone press conference. During the call, Tesla CEO Elon Musk announced three new options for its Model S line: a larger, 90 kilowatt-hour battery option, a rear-wheel-drive-only entry-level version of the vehicle for $70,000, and an option to purchase a Model S with "ludicrous mode." While the announcements themselves were certainly intriguing, it may be some of the other comments Musk made on Friday that are pushing the stock higher.

Tesla's Model X prototype. Image source: Tesla Motors.

Model X and Model 3 update Tesla's upcoming Model X SUV and its more affordable Model 3 are both on track with the company's most recent schedules for the vehicles. Musk gave specific time frames for both vehicles in Tesla's Friday blog post detailing Tesla's new options for Model S:

This is excellent news for Tesla investors. If Tesla really does launch Model X in two months, and it successfully ramps up Model X production by the fourth quarter to near half of where Model S production is now, the company looks likely to hit its guidance for 55,000 vehicle deliveries this year -- 5,000 of which are expected to be Model X.

And it's impossible to overstate the importance of Model 3 to Tesla's future. As the company's first foray into more affordable vehicles, the Model 3 is crucial to Tesla's effort to appeal to a larger addressable market. Furthermore, the timing is key: A launch for Model 3 in "just over two years" would be about in line with Tesla's production ramp at its Gigafactory. While Tesla expects to begin first cell production at the Gigafactory next year, the production will only represent a small portion of the $5 billion Gigafactory's planned total pack output. It's not until 2020 that Tesla expects the Gigafactory to reach production levels of 500,000 vehicle batteries per year.

Rendering of a finished version of the currently under-construction Gigafactory. Image source: Tesla Motors.

Range won't always be an issueSince Model S was first introduced, the max range of the line of vehicles has been increasing. The initial EPA-rated range for Tesla's 85 kWh battery was 265 miles. Adding more efficiency to the vehicle with a dual-motor option last October, Tesla achieved a 270-mile EPA-rated range on the same battery. Now, introducing a 90 kWh option, the max EPA-rated range for the line of vehicles will likely be around 285 miles to 290 miles.

How long can these sort of improvements continue? On Friday, Musk gave investors a look at how Tesla views the trajectory of pack capacity in the coming years.

"On average, we expect to increase pack capacity by roughly 5% per year. Better to wait until you have more time on your existing pack and there is a larger accumulated pack energy difference," Musk explained in Tesla's Friday blog post. The CEO was confident enough in this projection to encourage existing owners to postpone upgrading their batteries "unless usage is on the edge of current range."

Since increases in pack capacity roughly correlate with increases in maximum range, this trajectory would put maximum EPA-rated range for Tesla's batteries around 360 miles in just five years.

During the call, Musk explained that these increases in pack power do not require more volume or weight. The 90 kWh battery, for instance, is the same size and weight but has greater energy density than Tesla's 85 kWh battery.

Could battery-powered vehicles actually have greater range than most gas cars in 10 years?

Both Tesla's schedule for its pipeline of upcoming vehicles and its bullish view of pack capacity improvements in the coming years offer more reasons to believe Tesla's fully electric vehicles are likely to become increasingly compelling. But investors should keep in mind that much of this optimistic outlook for the company is already priced into the stock.

The article 2 New, Must-Read Quotes From Tesla Motors, Inc.'s Elon Musk originally appeared on Fool.com.

Daniel Sparks owns shares of Tesla Motors. The Motley Fool recommends and owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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