Investors thought Tesla ’Battery Day’ was disappointing, but was it?

Investors thought Tesla ’Battery Day’ was disappointing, but was it?

Equities 4 minutes to read
Peter Garnry

Chief Investment Strategist

Summary:  Tesla shares were down almost 6% in the primary session ahead of the big 'Battery Day' announcements despite Nasdaq 100 futures were up 2%. Investors were left disappointed as no major news or breakthroughs were announced but instead a lot of expectations for the future. Tesla announced it will move towards halving battery costs and thus deliver a mass affordable car at a $25,000 price point but not until 2023. Beneath the headlines the company did announce many small details and improvements around its battery that over time will give more range, lower production costs and cut cobalt out of the equation. Tesla demonstrated that they are among the leaders in the EV race but the big breakthrough announcement never happened.


Tesla shares were down 7% in extended trading yesterday, adding to the 5.6% decline in the primary session, as investors digested the news from the hugely anticipated “Battery Day” which had been hyped over the past week not at least thanks to Elon Musk’s showmanship on social media. The immediate take-away were promises of a new more affordable car with a price point of $25,000 in three years and that Tesla would drive down the cost of the battery. Headlines suggests nothing new or major breakthroughs for Tesla that can really move the needle. It could turn out to be time for a hangover for Tesla loyal investor base. But beneath the disappointing headlines many small details were revealed.

Source: Saxo Group

Highlights of the ‘Battery Day’

Elon Musk started with the classic hype over Tesla achievements and that he believed in self-driving technology although he was been too positive before. He also talked about the difficulties of ramping up production of EV prototypes and sometimes it is related to software as in the case of Volkswagens ID.3. Nikola is another case of where the company has still not moved from prototype to actual production.

Musk also talked a lot about solar as an important secondary segment for the company and that the production volume would mean that Tesla what from now on communicate in terms of TWh instead of GWh. Besides solar energy storage was also emphasized in relation to a transition to a less carbon intensive society. Our view is that the energy business of Tesla is the least appreciated by investors but in fact holds the potential to lift the operating margins over time.

He introduced a new cell design called 4680 which is good improvement over the old design and will allow for 16% more range. It uses a tabless design which simplifies manufacturing and reduces overheating when being supercharged. There had been a lot of speculation about dry electrode method before the ‘Battery Day´ but the technology is not ready although Tesla indicated that they could get it to work. More promises as investors are used to by now.

On the chemistry side a few things were announced. It will continue to use lithium and expect it to better than what graphite can achieve, and Tesla will begin to use raw silicon adding a special coating which again will improve range. The cathode will be nickel going forward removing cobalt from the equation and thus allowing the industry to distancing itself from the horrible cobalt mining conditions of today.

Finally, Tesla announced that it will begin recycling in-house at the Gigafactory in Nevada allowing new batteries to build from old battery material. Overall, many small improvements that multiple over the years will make a difference in the competition against the other carmakers. But in the short-term we believe investors were disappointed and focus will be back on deliveries, and not to forget uptake in its energy business.

Quarterly Outlook

01 /

  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Capital Markets UK Ltd. (Saxo) and the Saxo Bank Group provides execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation. Access and use of this website is subject to: (i) the Terms of Use; (ii) the full Disclaimer; (iii) the Risk Warning; and (iv) any other notice or terms applying to Saxo’s news and research.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer for more details.

Saxo
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo is a registered Trading Name of Saxo Capital Markets UK Ltd (‘Saxo’). Saxo is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871. Registered in England & Wales.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.

©   since 1992