After much hype from Musk, Tesla's `Battery Day' kicks off

TEMPERS TALK

Tesla's chief executive Elon Musk fired up fans and investors for the company's “Battery Day” on Tuesday, even as he tempered expectations that Tesla's electric vehicles will soon surpass the cost and convenience of traditional gasoline-powered cars.

Ahead of the event and annual shareholders meeting, Tesla shares closed on Tuesday at US$424.23, down 5.6 per cent after Musk tweeted late Monday that the battery improvements to be unveiled at the event would not reach “serious high-volume production” until 2022.

As automakers shift from horsepower to kilowatts to comply with stricter environmental regulations, investors are looking for evidence that Tesla can increase its lead in electrification technology over legacy automakers who generate most of their sales and profits from combustion-engine vehicles.

Analysts expect Tesla to present a range of updates, including significant improvements to the amount of energy its batteries can store, allowing vehicles to drive further on a single charge. They also await updates on the production cost of battery cells, largely seen as an impediment to wider electric-vehicle adoption.

Musk in July said scaling battery cell production at an affordable price was Tesla's biggest limitation to growth.

While average electric vehicle prices have decreased in recent years thanks to changes in battery composition, they are still more expensive than conventional cars, with the battery estimated to make up a quarter to a third of an electric vehicle's cost.

Some researchers estimate that price parity, or the point at which electric vehicles are equal in value to internal-combustion cars, will be reached when battery packs cost US$100 per kilowatt hour (kWh).

Tesla's battery packs cost US$156 per kWh in 2019, according to electric-vehicle consulting firm Cairn Energy Research Advisors.

Analysts at UBS expect Tesla to announce battery cell costs of US$70 to US$80 per kWh over the next three years, allowing the company to save roughly US$2,300 per vehicle.

Musk in July also said Tesla was open to license and supply powertrains and batteries to other automakers.