Tesla CEO Elon Musk sees no immediate boost from 'Battery Day' tech unveil

Ahead of the Battery Day event, Elon Musk took to Twitter to caution investors that the tech he announces will not reach serious high-volume production until 2022.
By : Reuters
| Updated on: 22 Sep 2020, 11:12 AM
Tesla CEO Elon Musk (REUTERS)
Tesla CEO Elon Musk (REUTERS)
Tesla CEO Elon Musk (REUTERS)
Tesla CEO Elon Musk

Tesla Inc CEO Elon Musk said improvements to be unveiled at the electric-vehicle maker's "Battery Day" event would not reach "serious high-volume production" until 2022, knocking its shares down.

Analysts were expecting Musk to unveil at the event plans for Tesla to produce its own battery cell as it seeks to cement its lead over General Motors, Volkswagen and others.

But in a post on Twitter ahead of the Tuesday event, Musk said: "This affects long-term production, especially Semi, Cybertruck & Roadster, but what we announce will not reach serious high-volume production until 2022."

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Tesla expects significant shortages in 2022 and beyond, Musk cautioned, adding it intended to increase cell purchases from Panasonic, South Korea's LG Chem, China's CATL, and possibly other partners.

LG Chem and CATL shares rose after the comments.

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(Also read: Elon Musk implies Tesla must make own battery cells to meet EV demand)

But Tesla shares fell more than 5% to $425.50 in extended trade as the tweets cast doubt on whether Tesla would be able to produce its own batteries any time soon - a concern echoed by experts and industry officials.

"Battery firms believe it is not easy to mass produce batteries. It took them a lot of time ... how can Tesla do it overnight?" a South Korean battery industry source told Reuters.

Tesla is working to produce new, bigger battery cells at its Fremont facility, two people familiar with the matter have told Reuters. The new cells will have a diameter of 42 mm, versus the 21 mm ones made at its joint battery factory with Panasonic that are used in Model 3 sedans, the people said.

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Tesla may have to partner with Panasonic to mass-produce its own cells, Seoul-based battery expert Park Chul-wan said.

(Also read: Seven things to watch out for from CEO Elon Musk at Tesla's 'Battery Day')

The new batteries could boost energy capacity, cut costs and enable faster charging, helping Tesla cars better compete with gasoline ones, Park said.

Some battery industry officials are wary that Tesla's move to produce batteries in-house could put pressure on prices.

"Tesla is sending signals to suppliers that they should further lower costs, and if not, Tesla would source more batteries in-house," a former LG Chem official said.

At the event, Tesla may also unveil its "million mile" batteries, which it is developing with CATL and are expected to have much longer life: the equivalent of 1 million miles or more, versus about 500,000 miles now.

First Published Date: 22 Sep 2020, 11:12 AM IST
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