Meh

Tesla stock falls 10% because Battery Day didn't live up to the hype

Snacks / Wednesday, September 23, 2020

Who turned off Ludicrous mode?... On August 17, Tesla stock surged 11% on anticipatory Battery Day hype. Yesterday, it plunged 10% because the event was more e-yawn than Elon. Some analysts were expecting Elon to unveil game-changing tech, including a battery capable of 1M miles. Besides announcing orders for the $140K Model S Plaid, Tesla mostly just announced... its goals:

  • A $25K Tesla capable of driving fully autonomously. That's ~$13K cheaper than its current cheapest model. ETA: 3 years.
  • Production of 20M Tesla vehicles/year. That's more than all passenger vehicles sold in the US last year. In 2019, Tesla sold...367K vehicles. ETA: 2030 (via an Elon tweet).
  • A “million mile” battery that could last an EV's entire lifetime. ETA: who knows.

Energizer Bunny, 50% off... The main theme here is cutting down the cost of batteries, which are the most expensive part of EVs. In 2019, the average car battery cost $15K. If Tesla wants to crank out that $25K model in 2023, it'll have to deliver on its ambitious goal of halving the cost of batteries in 3 years. Elon's promises don't always materialize (if they did, we'd have 1M self-driving Tesla robotaxis on the road now).

Tesla’s stock price assumes perfection for the next 10 years... Tesla is the most valuable car company in the world thanks to its soaring stock price. But Toyota and VW each delivered ~30X more cars than Tesla did in 2019, when it delivered 50% more vehicles than it did in 2018. To deliver 20M by 2030 assumes Tesla would have to keep growing at that fast rate for 10 years. Hyper-fast growth, especially in manufacturing, is usually not sustainable for that long — so it's unlikely. But if Tesla pulls it off, then its current $350B valuation will be worth it.

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