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Tesla shares plunge as much-lauded 'Battery Day' fails to provide badly needed spark

Investors slashed $50 billion from Tesla’s market cap after-hours as Musk and other Tesla executives presented their ‘Battery Day’ strategies

Tesla Inc -
Tesla shares closed down 5.6% on Tuesday and were off over 6% on Wednesday

Tesla Inc (NASDAQ:TSLA) shares were reversing in New York on Wednesday morning following the electric vehicle maker's much-lauded 'Battery Day'' after CEO Elon Musk promised to cut electric vehicle costs so radically that a $25,000 car that drives itself will be possible, but not for at least three years.

Investors slashed $50 billion from Tesla’s market cap following the event which was after-hours on Tuesday as Musk and other Tesla executives presented their battery strategies. Tesla shares closed down 5.6% on Tuesday and were off 6.43% to $396.51 in New York in Wednesday's early deals..

Neil Wilson, senior markets analysts at Markets.com commented: "There is some debate about whether Tesla’s Battery Day announcements amount to incremental or revolutionary changes to battery technology, but two things are clear: Tesla has not suddenly acquired warp speed capability, but clearly the company has a roadmap to cheaper, longer life battery technology that it will make itself and will allow it to lead the EV field for a while longer. 

"Panasonic and other suppliers were hit with Tesla planning to make its own battery. Nevertheless, given all the anticipation around a potential game-changer in battery technology, investors were a little underwhelmed by the news."

REACTION: Tesla's battery ambitions are significant for patient, medium-term investors

Investors had expected two significant announcements at the Battery day - the development of a “million-mile” battery good for 10 years or more, and a specific cost reduction target that would finally drop the price of an electric vehicle below that of a gasoline car – but Musk offered neither.

Instead, he promised over the next several years to slash battery costs in half with new technology and processes and deliver an “affordable” electric car.

Musk acknowledged that Tesla does not have its ambitious new vehicle and battery designs and manufacturing processes fully complete.

Building an affordable electric car “has always been our dream from the beginning of the company,” Musk told an online audience of more than 270,000.

But as if to flaunt that aim, Tesla introduced a new Model S Plaid on Tuesday, a 520-mile range sedan that can reach top speeds of up to 200 miles per hour, with deliveries starting in 2021, which was listed on Tesla’s website at a price of nearly $140,000.

To help drive down vehicle cost, Musk described a new generation of batteries that will be more powerful, longer lasting and half as expensive than the company’s current cells.

Tesla’s new larger cylindrical cells will provide five times more energy, six times more power and far greater driving range, Musk said, adding that full production is about three years away.

Musk also said Tesla planned to recycle battery cells at its Nevada “gigafactory,” while reducing cobalt -- one of the most expensive battery materials -- to virtually zero. It also plans to manufacture its own battery cells at several highly automated factories around the world.

Commenting on the ‘Battery Day’ announcements, Roth Capital Partners analyst Craig Irwin said: “Nothing Musk discussed about batteries is a done deal. There was nothing tangible.”

 -- Updates share price, adds additional comment --

Quick facts: Tesla Inc

Price: 410.83 USD

Market: NASDAQ
Market Cap: $385.8 billion

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