Tesla's Battery Day and the Future of the Electric Car

On Tuesday September 22, Elon Musk held Tesla’s annual “Battery Day” event, which is an meeting for shareholders, where he made some big announcements for the future of the company. His announcements included a new, more powerful Model S, getting rid of cobalt in future batteries, and a new cathode plant in North America. The announcements that generated the most buzz though were a brand new “biscuit tin” battery, and a plan for putting a $25,000 car into production.

Elon Musk detailed plans for Tesla to begin to manufacture its own batteries. When Tesla moves the production of batteries in house, rather than sourcing from Panasonic, they will be able to produce cars faster, more efficiently, and at a lower cost. This will help lower the price of Teslas. This new battery that Tesla is going to start producing, their “biscuit tin” battery, is a new kind of battery cell. It will use lithium-ions, be cylindrical in shape, and is expected to give Tesla cars a 16% increase in range due to a five times increase in energy. Musk outlined that the lower battery cost will make his $25,000 electric vehicle dream come to fruition. He is confident that they will be able to design and manufacture a $25,000 car in the next three years with this new battery technology. However, this isn’t the first time this figure has been mentioned. In 2018, Musk stated that a $25,000 car from Tesla would be possible within the next three years. When he stated again on Tuesday that it would take another three years, investors weren’t happy. After battery day, Tesla’s stock went down, and it took $50 billion off its stock value.

Tesla’s new battery plans detail a much more specific plan that Tesla will be able to reach the target of the $25,000 car than they had in 2018. If this new project is successful for Tesla, it will revolutionize the car industry by creating an electric vehicle that the average person can actually afford. However, Elon Musk and Tesla have a track record of overpromising. Historically investors have loved the high innovation that comes with promising big things. But, If timelines continue to get pushed out like they have with the $25,000 vehicle, investors might lose faith in the company. The stock is currently valued so highly that it makes Tesla one of the most valuable car companies despite only delivering a fraction of the cars that established car companies deliver every year. If investors start to lose faith in Musk’s overpromising tendencies, this could lower the stock significantly in the future.