‘Battery Day’ will show Tesla’s lead in battery technology
Tesla will host its annual shareholder meeting tomorrow at 16:30 EST (after the US market close) which will include a “Battery Day”. This has got investors excited to an extent that we have not observed since Steve Jobs’ big product announcements. What can we expect from Tesla? The Japanese media outlet Nikkei reported back in August that Tesla’s partner in battery production at the Nevada Gigafactory has committed in internal documents to invest $100mn in upgrade the manufacturing plant for new cell production. This could mean two things. Either it is an expansion of the existing manufacturing process due to demand or it is a modification upgrade to make it ready for new cell design. We are leaning towards the view that Tesla will most likely reveal a new battery design which will increase energy density, which potentially could unlock a smaller city car with good range, and at a lower price point due to better manufacturing process. In any case, Tesla will likely show the world that it continues to have a lead against the old carmakers in battery technology.
Are banks dying?
Banks are hit hard in today’s trading session with news over the weekend that HSBC could be added to China’s “unreliable entity list” which aims to punish companies that are a security issue for China. The overall sentiment in equities and the economy over the rising COVID-19 cases in Europe are also pulling banking stocks down. The STOXX 600 Banks Index is now only 5% from reaching its absolute low point on record since 1986. We are talking about an industry that continues to be weighed down by regulation, special taxes, and a low and flat yield curve coupled with low loan demand. We remain negative on banks long-term and believe investors should be underweight.