Tesla
One of the rumors was that Tesla was going to introduce a million-mile battery.
Since topping in early-September around $500, Tesla is down 30%. Of course, it remains up more than 400% from its March lows, and the stock has all the markings of a leading stock in this bull market.
Highlights From Battery Day
The major headline was that Tesla expects to sell a fully autonomous vehicle for $25,000 in three years due to advancements in battery design and production. Musk tends to be very optimistic with his projections although he has a track record of delivering. So, while the prediction is serious, the timeframe shouldn't be taken literally.
Tesla currently sources its batteries from Panasonic but is planning on shifting to its line of designed and produced batteries which will drive costs lower. In addition to being cheaper, the new batteries are expected to increase the range by 50%.
Even the building of batteries is a gradual process. Next year, the company is shooting to produce 10-gigawatt hours of battery cells, while it currently purchases 100-gigawatt hours. Of course, the need for batteries is going to keep growing as well with increased production. So, it will be many years before the batteries produced by Tesla fully displace other types of batteries.
Therefore, the stock price's reaction to the news also makes sense as it's unlikely to move the needle in the short-term.
The batteries will also be developed and not include more expensive materials like cobalt. Mining of cobalt has been a limiting factor in battery production so far, but its primary source is from the Congo where it's led to tremendous human rights violations and environmental destruction.
CEO Elon Musk also said that the company is targeting a 30 to 40% increase in the number of vehicles produced. This means between 465,000 and 515,000 vehicles compared to 350,000 in 2020.
Musk also commented that his company's valuation might imply that it is very profitable but it's not true as their profit margins are around 1%.
