Tesla nickel comments; no mention of partnering so far "Tesla is aiming to be the best manufacturing of anything on earth," said Musk. He thinks every car company will have electric cars and autonomy. He sees manufacturing excellence as a long-term, competitive advantage.
The manufacturing presentation included changes to coating battery components as well as assembly. The goal is to cut the investment required by 75%. The overall impact is an 18% reduction in battery cell cost.
Tesla plans to add an additional 100 gigawatt hours of internal battery capacity by 2022 and 3 terawatt hours, which is 3,000 gigawatt hours, of internal battery capacity by 2030.
Tesla has about 63 gigawatt hours of battery capacity available today. With the added 100 gigawatt hours, and no growth with its partners, Tesla could manufacture about 1.6 million vehicles in 2022, up from around 500,000 in 2020.
Chemistry: 17% Cost Improvement
At this point in the presentation, Tesla management was getting into more scientific weeds. Silicon-based anodes were proposed with stabilized surfaces using "elastic ion-conducting polymer coatings." That is a mouthful.
The anode improvements generate a 5% cost reduction.
For the cathodes, another part of the battery, Tesla is focused on using more nickel and less cobalt to save cost as well as improving cathode manufacturing. The cost improvement envisioned in 12%.
Vehicle Integration: 7% Cost Improvement
The final portion of the presentation talked about manufacturing improvements in battery pack design and integration. Musk likened the change to when aerospace companies began designing fuel tanks in the shape of airplane wings.
For Investors
The total cost reduction contemplated sums to 56%. That would make batteries around $50 per kilowatt-hour and enable Tesla to sell a $25,000 vehicle profitably.
Barron's recently wrote anything below $100 a kilowatt-hour for battery costs and enough battery capacity to produce 2 million cars by 2025 would represent a win for Tesla with Wall Street. By those metrics battery day was a success.
Predicting the short-term direction of the stock, however, isn't easy.
Recently, however, it's only made sense to bet on higher stock prices. Tesla shares have been on fire in 2020, rising 407%, far better than comparable returns of the S&P 500 and Dow Jones Industrial Average as well as stock in traditional automotive companies.
Gains have left Tesla as the world's most valuable car company by a wide margin. That is one reason battery day is important. Investors want to be sure Tesla's competitive advantage in battery technology is sustainable.
Battery day matters for the entire automotive industry too. Many auto makers are planning for an all-electric future meaning battery costs and capacity are an existential issue for the sector.
Tesla stock was down 7.1% in after-hours trading.