Just how well Tesla (NASDAQ: TSLA) has performed for an investor really depends on when they bought into the hype. Should you have bought in following its stock split and blowout earnings in mid-August, you’re likely not a happy chappy as its stock is down almost 10% in September alone. However, that doesn’t tell a fraction of the story of the electric vehicle-maker which is up 831% in the past 12 months and has become the most valuable car company on the planet.
However, even hype master supremos CEO Elon Musk is cautioning investors to temper their expectations at the company’s keynote address at its annual ‘Battery Day’ event tonight.
What can we expect from ‘Battery Day’?
Tesla is actually holding its annual shareholders’ meeting in conjunction with Battery Day, where it will announce details about its own new type of battery cell. We are expecting to hear specifications on at least one new battery, though this doesn’t mean it will be available to launch right away, or even this year.
Normally this event causes short-term volatility for Tesla stock, but contrary to his usual stock manipulative ways, Elon Musk has warned his endless army of fanatics that the effects of any announcements today will not actually be felt until 2022 at the earliest.
Important note about Tesla Battery Day unveil tomorrow. This affects long-term production, especially Semi, Cybertruck & Roadster, but what we announce will not reach serious high-volume production until 2022.— Elon Musk (@elonmusk) September 21, 2020
Having closed up nearly 2% on Monday, Tesla shares fell more than 6% after-hours, presumably due to the pessimistic nature of these tweets.
What’s the issue?
What Musk’s tweet highlights is Tesla’s still-high dependence on suppliers. Since January 2017, the EV maker has mass-manufactured battery cells for its cars and energy storage products at its Gigafactory near Reno, Nevada, with its partner, main battery cell supplier, and co-investor in the facility, Panasonic.
Then more recently, Tesla began sourcing battery cells from CATL and LG, specifically to put in its China-made cars. And, as Musk’s tweets highlighted, Tesla is far from capable of meeting the demand required for mass battery production in concurrence with the number of vehicle deliveries if it is to remain top dog in the EV market.
What Tesla does take into its own hands though is the research and development of higher-performing battery cells. Recently, Tesla has been gunning to deliver more than a 70% improvement in the energy density of their cells, and improved power density too, versus the 2170 cells that they buy from Panasonic. If Tesla figures out how to make and integrate higher performance battery cells into its vehicles, its cars — and someday, trucks — could travel more miles per charge, be lighter weight, and cost the company less to produce.
I guess we’ll just have to wait and see what happens tonight.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.
Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.