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

Head of Saxo Strats

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.

Disclaimer

The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.