Tesla Stock Loses $50 Billion After “Battery Day” Presentation
The automaker’s promises of a cheaper Tesla battery in three years’ time appeared to underwhelm investors.
Shares in Tesla Inc. fell by 7% on Tuesday in the wake of CEO Elon Musk’s promises of a radically cheaper new electric car battery for self-driving Tesla vehicles – which is not likely to arrive for three years.
During a presentation on Tuesday, which Musk had touted as “Battery Day”, Musk and other Tesla executives pledged to slash battery costs in half through the use of new technology and processes, delivering an “affordable” electric car. Costs would be cut so radically that a self-driving $25,000 car would be possible, but only “in about three years’ time”.
The announcement, which did not contain any mention of Tesla’s speculated development of a “million-mile” battery or a specific cost reduction target to beat petrol-based vehicles, prompted disappointment and preceded a sharply negative shift in investor sentiment.
The resulting stock slide wiped out $50 billion of value in the company, with shares closing 5.6% down and then falling a further 6.9% after hours.
“Panasonic and other suppliers were hit with Tesla planning to make its own battery,” commented Neil Wilson, senior markets analyst at Markets.com. “Nevertheless, given all the anticipation around a potential game-changer in battery technology, investors were a little underwhelmed by the news.”
Musk had sought to downplay expectations for the event on Monday, stating in a tweet that some of the technologies to be revealed “will not reach serious high-volume production until 2022.”
Tesla shares have gained 407% since the start of 2020, drastically above the 2.6% gains seen by the S&P 500 index this year.