Tesla prom­ises new bat­tery tech­nol­ogy, but stock plunges.

More af­ford­able cars with longer range to fol­low

San Francisco Chronicle - - FRONT PAGE - By Michael Liedtke and Tom Krisher

Tesla is work­ing on new bat­tery tech­nol­ogy that CEO Elon Musk says will en­able the com­pany within the next three years to make sleeker, more af­ford­able cars that can travel dra­mat­i­cally longer dis­tances on a sin­gle charge.

But the bat­tery break­throughs that Musk un­veiled this week at a highly an­tic­i­pated event didn’t im­press in­vestors. They were hop­ing Tesla’s tech­nol­ogy would mark an even big­ger leap for­ward and pro­pel the com­pany’s soar­ing stock to even greater heights.

Tesla’s shares shed more than 10% Wed­nes­day, af­ter Musk an­nounced out­lined the plans for the Palo Alto com­pany. That deep­ened a down­turn that be­gan Tues­day as in­vestors be­gan to brace for a po­ten­tial let­down. Musk raised those wor­ries with a se­ries of tweets, warn­ing that Tesla’s new bat­tery tech­nol­ogy might not be ready for high­vol­ume pro­duc­tion un­til 2022.

Musk re­it­er­ated that timetable dur­ing Tues­day’s show­case at the Fremont fac­tory, and then added that it might take up to three years be­fore the bat­tery tech­nol­ogy trans­lates into a new Tesla model sell­ing for $25,000.

That would be a dra­matic mark­down from Tesla’s cheap­est car now, the Model 3, a sedan that starts at $35,000 but usu­ally ends up cost­ing buy­ers more than $40,000.

“We don’t have a truly af­ford­able car, and that is some­thing we want in the fu­ture,” Musk said dur­ing an

event shaped by the re­stric­tions im­posed by a pan­demic that re­quires peo­ple to keep their dis­tance.

Be­sides low­er­ing the price, Musk promised the new bat­tery tech­nol­ogy would help Tesla re­duce the size of its ve­hi­cles by about 10% and ex­tend their range by 56%. That pro­jec­tion im­plies that the Tesla cars us­ing the new bat­ter­ies will be able to travel 500 miles or more on a sin­gle charge, sur­pass­ing the dis­tance many gas­com­bus­tion cars can tra­verse be­fore need­ing to re­fuel.

Musk took the stage be­fore a mostly on­line au­di­ence, al­though there was a small group of share­hold­ers who won a lottery for the right to sit in Tesla ve­hi­cles parked in a lot near the fac­tory.

“It is a lit­tle hard to read the room with ev­ery­one in cars,” Musk joked as he be­gan his pre­sen­ta­tion dur­ing an early phase of the event that was de­voted to Tesla’s an­nual meet­ing of share­hold­ers.

But the share­hold­ers in at­ten­dance fre­quently beeped their horns to pro­vide a dif­fer­ent form of ap­plause as Musk rat­tled off Tesla’s ac­com­plish­ments since the com­pany held its last an­nual meet­ing 15 months ago.

Since then, Tesla has posted four con­sec­u­tive quar­ters of prof­its to re­verse a long his­tory of losses, while boost­ing its pro­duc­tion and lay­ing the ground­work for fu­ture ex­pan­sion by open­ing or be­gin­ning work on three more fac­to­ries in Shang­hai, Ber­lin and Austin, Texas.

All that progress has caused

Tesla’s stock price to soar by five­fold this year and boost the com­pany’s mar­ket value to nearly $400 bil­lion.

No one has ben­e­fited more from the run­up than Musk, who has seen his es­ti­mated wealth climbed to $89 bil­lion — the fifth­largest for­tune in the world, based on es­ti­mates by Forbes mag­a­zine.

“What hap­pens when com­pa­nies get big­ger is things tend to slow down. We are go­ing to speed up,” Musk said Tues­day.

He said he be­lieves that Tesla will re­main a step ahead of its com­pe­ti­tion in the elec­tric ve­hi­cle mar­ket and per­suade more con­sumers to aban­don gas­com­bus­tion cars with its new bat­tery tech­nol­ogy. The break­throughs that he out­lined Tues­day in­volve some highly tech­ni­cal changes to the com­po­si­tion and de­sign of bat­ter­ies, along with new man­u­fac­tur­ing pro­cesses.

Even as Tesla tries to set new stan­dards in bat­ter­ies, Musk made it clear that the com­pany will also con­tinue to rely on Pana­sonic and other sup­pli­ers.

Musk has a his­tory of be­ing too am­bi­tious in his prom­ises. For in­stance, 17 months ago, he bragged that Tesla was on the verge of break­throughs in au­ton­o­mous driv­ing tech­nol­ogy that would en­able the com­pany to have a fleet of ro­botic taxis on the road by the end of this year.

He has since backpedale­d slightly from that goal, al­though Tues­day he said he be­lieves Tesla’s $25,000 car will be ca­pa­ble of driv­ing on its own.

Maja Hi­tij / Getty Im­ages

Tesla CEO Elon Musk tours a fac­tory site in Ber­lin this month. Oth­ers are planned in Shang­hai and Texas.

Justin Sul­li­van / Getty Im­ages

A Tesla is charged in Pe­taluma. Musk says new mod­els will cost less and go 500 miles on a charge.

Justin Sul­li­van / Getty Im­ages

The new Tesla mod­els would have a range that is 56% far­ther than cur­rent ve­hi­cles, like this one charg­ing in Pe­taluma.

Ben Mar­got / As­so­ci­ated Press

Tes­las are loaded onto car­ri­ers at the Fremont plant in May. The com­pany plans to de­velop a less ex­pen­sive model.

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