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Tesla Inc unveiled a roadmap to build a $ 25,000 car by 2023 and eventually 20 million cars a year, part of a highly anticipated presentation that did not feature the Elon Musk enthusiasm investors expected.
The cheapest car will come from cutting the cost of batteries in half, the chief executive said at an event on Tuesday, based on a series of innovations including using dry electrode technology and making the battery a structural element of the car. car.
Those long-term, incremental advances contradicted expectations for a huge leap forward, which Musk himself seized on in the weeks leading up to his company’s first “Battery Day” event, then backtracked on Monday.
Shares of Tesla fell as much as 7.7% in post-market trading on Tuesday after closing at $ 424.23.
“The challenge with stocks is that all they’re talking about is three years from now,” said Gene Munster, managing director of Loup Ventures. “I think the traditional car is in an even more difficult situation, but Tesla investors want this tomorrow.”
Cybertruck, ATV, Roadster and Semi
CARS pic.twitter.com/4Aq1A5cYkH– Elon Musk (@elonmusk) September 23, 2020
The vertically integrated improvements, from manufacturing its own battery cells on a pilot line at its factory in Fremont, California, to owning the rights to a lithium clay deposit in Nevada, are designed to allow Tesla to reduce costs and offer a cheap car as soon as possible. 2023.
“This has always been our dream from the beginning,” Musk said at the event that showcased Tesla’s battery technology. “In about three years from now, we are confident that we can build an attractive $ 25,000 electric vehicle that is also fully autonomous.”
Cut battery costs in half
Musk, 49, scoffs at the prospects for a cheaper mystery model without ever meeting the $ 35,000 price he had long promised for the Model 3. Three years after Tesla began taking orders for the car at In early 2016, the CEO announced plans to close most of Tesla’s stores as a cost-saving measure, allowing it to offer the car at that cost.
It went back 10 days later, and the cheapest Model 3 available now costs $ 37,990.
Making a truly mass-market electric car and increasing Tesla’s current annual production to 20 million cars will require far more batteries than are currently being produced by a handful of suppliers around the world. So Musk plans to expand global capacity by manufacturing battery cells in-house to supplement what it can buy.
“Today’s batteries can’t scale fast enough,” said Musk, who is driven in part by the need to find sustainable energy sources. “There is a clear path to success, but there is a lot of work to do.” Musk said the gasoline internal combustion engine will one day be obsolete.
Musk described an “incredible series of innovations with varying levels of difficulty,” said Venkat Viswanathan, a drum expert at Carnegie Mellon University. While advances in battery manufacturing are feasible and can be delivered within three years, Viswanathan believes that chemical developments will take longer.
If planned innovations work, vehicle range could increase 54%, cost could decrease 56% and investment in gigafactories could decrease 69%, said Andrew Baglino, senior vice president of powertrain and energy engineering at Tesla.
BloombergNEF estimates that prices for Tesla packages were $ 128 / kWh in 2019. A cost reduction of 56% would lower prices to $ 56 / kWh. In addition to the pilot line for the production of battery cells in Fremont, Musk said the company will also manufacture cells at the factory that is under construction in Berlin.
Battery cell ‘jump’
Most global automakers have avoided making their own battery cells, citing high investment costs and a lack of experience in an industry dominated primarily by Asian electronics manufacturers such as Panasonic Corp. and LG Chem Ltd.
Musk said in a tweet Monday that Tesla will need to start producing its own battery cells to support its various products, even as it increases purchases from outside vendors. He wrote that the company expects a significant shortage of cells in 2022 and beyond, unless it increases its own production.
“I’m really surprised they’re making that leap themselves,” said Tony Posawatz, a consultant who led the development of General Motors Co.’s Chevrolet Volt plug-in hybrid and is now on the board of directors of Lucid Motors Inc, a rival of Tesla.
“I think this is going to be a bit more difficult than they think, and I don’t think we’ll see a lot of volume in that for quite a while.”
Tesla’s most important and long-standing partner in batteries is Panasonic, based in Osaka, but it also has smaller-scale agreements with Contemporary Amperex Technology Co, or CATL, in Fujian province and southern China.
LG Chem from Korea.
The highly technical Battery Day presentation included several nuggets of news that were overshadowed by the conversation about cathodes and electrolytes. One example: The “Plaid” version of the Model S sedan, with a range of 520 miles, is now available to order, although the vehicle is not expected to go on sale until the end of 2021.
The three-hour event on Tuesday began with the annual shareholders meeting, held outdoors to allow for social distancing. Shareholders sat in Tesla cars in a parking lot, honking loudly instead of cheering as Musk spoke.
Investors voted to re-elect Musk and President Robyn Denholm to the board and voted against resolutions that would have required more transparency about human rights in the supply chain and the use of arbitration with employees.
A shareholders resolution, which requires Tesla to adopt a simple majority of votes, passed.
Musk told shareholders that he expects deliveries to grow on the order of 30% to 40% this year, reinforcing Tesla’s forecast at a time when automakers are struggling to recover from the coronavirus pandemic. “While the rest of the industry is down, Tesla is up,” he said.
Tesla has said it anticipates delivering 500,000 vehicles in 2020, 36% more than in 2019. In July, the electric car maker said achieving that goal would be “more difficult” due to a pandemic-related production shutdown in early July. year.
Global sales are projected to fall about 17% this year to 75 million from 90 million last year, according to research firm LMC Automotive.
Read: A look back at some of Elon Musk’s biggest products as Tesla gears up for battery day.
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