Battery Day disappointment batters Tesla

Business | Agencies and Winnie Lee 24 Sep 2020

Tesla faced a stock market reality check yesterday after chief executive Elon Musk said Tesla planned to cut electric vehicle battery design and manufacturing costs so radically that a cheaper car that drives itself will be possible. But the change could take three years.

The automaker's shares opened 6 percent lower as the time schedule disappointed investors.

Musk acknowledged that Tesla does not have its ambitious new vehicle and battery designs and manufacturing processes fully complete. Tesla has frequently missed production targets.

To help reduce cost, Musk said Tesla planned to recycle battery cells at its Nevada "gigafactory," while reducing cobalt - one of the most expensive battery materials - to virtually zero. It also planned to manufacture its own battery cells at several highly automated factories around the world.

Tesla aims to rapidly ramp up battery production over the next years, to three terawatt-hours a year, or 3,000 gigawatt-hours - about 85 times greater than the capacity of the Nevada plant.

Musk also planned to produce a US$25,000 (HK$195,000) electric car by making new batteries at lower cost and with longer range. Musk said that it will take about three years to fully achieve this goal.

Wall Street analysts worried about omissions and hazy delivery deadlines.

"The market is also likely to take it negatively that it will take at least another year to see some of these battery innovations in a real product," one said.

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