Tesla saw a minor sell-off after its battery day with its share price falling to a low of $351.30. Revolutionary innovations were expected at the long-awaited meeting of Tesla shareholders followed by Battery Day in Palo Alto, California. In the days that followed, the stock fell. But why were market participants so disappointed by Battery Day?
No Cheap Tesla In The Foreseeable Future
Both the stock market and Tesla fans have expected the presentation of a new Tesla model to the general public. An electric car that opens up the large market for the first time with a strong price/performance ratio and makes vehicles that were previously rather in the upper price segment more accessible.
The only new Tesla that has been announced and will be available in the foreseeable future is the new Model S Plaid. The new high-speed car impresses with 1100 HP, a range of 520 miles, and a top speed of 200 mph. It can already be pre-ordered online and will be delivered from the end of 2021. With the price of 140,000 dollars, however, it did not meet the expectations of Tesla shareholders.
At the event, a cheap Tesla for 25.000 Dollars was announced. This is more in line with what the stock market and fans imagine a model suitable for the broad market. Elon Musk presented the new electric “bargain“ from Tesla with the following words: “Tesla will produce a convincing electric vehicle worth 25,000 dollars, which is also completely autonomous“. The catch here is that the car should be on the market in 3 years at the earliest. This delay disappoints investors.
As the name suggests, Battery Day was mainly about progress in battery technology. Elon Musk presented the new cell design called “4680”. This is a strong improvement over the old construction method. The new cells are expected to provide a 16 % higher range. It consists of a simpler tabless design and is therefore much easier to manufacture. Additionally, the new simplified structure prevents overheating.
As far as the chemistry of the batteries, Tesla will continue to rely on lithium. Furthermore, they will start using raw silicone with a special coating added. This should further increase the range. Additionally, thanks to the use of nickel, Tesla will be able to dispense with cobalt in the production of cathodes in the future.
The electric car company has often been criticized in this regard. It is well known that cobalt is mined under sometimes inhumane conditions. With all the progress made, there is one crucial catch again: all new products and innovations can only be mass-produced from 2022 at the earliest. Even before the event, Elon Musk announced this in a tweet and lowered expectations. Accordingly, Tesla shares fell by almost 6% in post-trading.
Misguided Expectations From Tesla Shareholders
Anyone who watched Elon Musk on Battery Day could clearly see that he announced the news in an authentic way. When explaining technical subtleties and engineering details, he often went into raptures and called them “truly revolutionary”. Tesla has presented many small and medium improvements. These will develop more and more over the next few years and also make a difference in competition with other car manufacturers.
Investors, however, expected something else. Instead of long-term and steady development, they obviously expected short-term visible achievements. A new car for the mass market and an improved battery that will go into mass production immediately. The discrepancy between scientific reality and economic thinking became clear at this point.
It remains exciting to watch how the Tesla share develops in the near future and how it is accepted on the stock market.
I accumulated some Tesla shares during the pullback due to 1 simple reason. Elon Musk.
On the 22nd of September, after Elon Musk tweeted the above, I shared my prediction in my Premium Subscription group.
Fast forward to 28th September, It was announced that Tesla entered into a binding agreement to purchase lithium ore mineral from Piedmont Lithium Limited, a publicly-traded lithium company that’s based out of Australia. Lithium ore is a core component that’s used to produce the battery cells used to power current electric vehicles.
When investing in Tesla, you are not buying into any financial figures that they are presenting. You are buying into the story of Electric Vehicles being the future and Elon Musk leading the way there. If you believe in Elon Musk and his abilities to lead and innovate, then you can invest in Tesla with no fear, regardless of the volatility in the market.
As always, you can take a look at my portfolio updates to see my current positions! P.S. I’m running a telegram chat group for you guys to share and discuss investment-related topics so come on in! I’ll be there too! You can join the chat here: https://t.me/joinchat/D4iHeEVapnGC1lWcFEupVw
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