Investors Shrug as Tesla Promises $25,000 EV in Three Years

While Tesla founder and CEO Elon Musk promised a US$25,000 electric vehicle within three years, driven by dramatic production cost reductions and performance improvements, for battery cells, his highly-touted Battery Day event earlier this week ended up disappointing investors looking for a bigger announcement and faster results.

Tesla’s plans add up to a 56% reduction in production costs and a 54% increase in battery range, The Driven writes. But the immediate result of company’s big reveal, was an 11% drop in the value of shares that had previously surged 360% so far this year, amounting to a $320-billion increase in market value driven largely by Musk’s grandiose goals, Bloomberg Green reports.

“The challenge with the stock is that everything they are talking about is three years away,” explained Loup Ventures Managing Director Gene Munster. “I think traditional auto is in an even tighter spot, but Tesla investors want this tomorrow.”

Musk, who eventually intends to see Tesla produce 20 million vehicles per year, “described a series of innovations that include using dry-electrode technology and making the battery a structural element of the car,” Bloomberg writes. But “those incremental and longer-term advances belied expectations for a blockbuster leap forward, which Musk himself played up in the weeks leading up to the event.”

In particular, Musk’s past musings about a million-mile battery were nowhere to be found in this week’s messaging.

As a result, “with the Battery Day in the rear view, we think there is a lack of upcoming catalysts and are cautious about demand given the recessionary environment,” said Ben Kallo analyst Robert Baird.

“Given the high expectations into the event, we think the market will initially respond negatively to the relatively long timelines of the innovations and the lack of granularity,” agreed UBS analyst Patrick Hummel.

In contrast to most other automakers, Bloomberg says Tesla is moving toward supplementing its existing battery supply chains by manufacturing its own. “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 ramps up purchases from outside suppliers,” the news agency writes. “He wrote that the company expects significant shortages of cells in 2022 and beyond unless it ramps up output of its own.”

That’s what it would take to increase Tesla’s battery production capacity to 20 or 25 terawatt-hours per year, The Driven says, up from the 150 gigawatt-hours currently available from the company’s gigafactory near Reno, Nevada.

In the course of the Battery Day event, Musk and Drew Baglino, Tesla’s senior VP for powertrain and energy engineering, outlined five factors that will help the company drive down costs: cell design, battery factory size and investment, anode and cathode production processes, and eventually, a plan to integrate EV batteries into the structure of the vehicle. The Driven has details on each of the five elements of the plan.

But while Tesla continues to aim high, the Aborigen Forum in the Russian Arctic is sounding a note of caution. Earlier this month, the group urged Musk not to acquire nickel for its EV batteries from Norilsk Nickel, the company responsible for a 23,000-litre diesel spill into the Ambarnaya River.

“We expect that the river was poisoned for a long period,” Gennady Shchukin, a member of the Dolgan ethnic group, told Grist through a translator. “Maybe for several years there will be no fish in these rivers, and in the lake. This is very difficult, of course, for Indigenous people.”

So “rather than focus on an obscure Arctic mining company, Aborigen Forum is appealing to someone more likely to grab international headlines.” They’re running a social media campaign urging Musk to pay close attention to the supply chain for the nickel he needs for the cathodes in his company’s EV batteries.

“We don’t want the next industrial revolution of electric cars and clean energy developed for the price of Indigenous peoples’ rights and traditional lands,” said Aborigen Forum network member and campaign coordinator Dmitry Berezhkov. “We think if Tesla could elaborate strategy and rules for itself in the field of human rights and Indigenous peoples’ rights with regards to nickel, it could be a good opportunity to influence the general nickel market.”

Last year, the London, UK-based Business and Human Rights Resource Centre (BHRRC) made a similar but wider case connecting six of the essential raw materials behind electric vehicles, solar panels, and wind turbines—cobalt, copper, lithium, manganese, nickel, and zinc—with local land rights infringements, corruption, violence, and death.

A rapidly-growing renewable energy sector “has a chance to change the standards and practices of the industry,” BHRRC Deputy Director Marti Flacks said at the time. “This is a unique chance to send the sector a message to say: ‘You have to do your due diligence, you have to have a human rights policy, and you have to be engaging in multistakeholder initiatives, doing site visits, and most importantly talking to communities and NGOs to get accurate reporting of what’s going on.’”

On The Guardian, meanwhile, essayist and activist George Monbiot says pollution problems in the UK, in particular, will be solved by a “total transportation rethink”, not by electric cars.

“Cars are an environmental hazard long before they leave the showroom,” he writes, in an opinion piece responding to the UK government’s plan to end all sales of gasoline and diesel cars by 2030. “One estimate suggests that the carbon emissions produced in building each one equate to driving it for 150,000 kilometres,” and “the rise in electric vehicle sales has created a rush for minerals such as lithium and copper, with devastating impacts on beautiful places.”

To some degree, Monbiot says, the outcome depends on the plan. “If the aim is greatly to reduce the number of vehicles on the road, and replace those that remain with battery-operated models, then they will be part of the solution. But if, as a forecast by the National Grid proposes, the current fleet is replaced by 35 million electric cars, we’ll simply create another environmental disaster.”

Either way, Monbiot adds that “switching power sources does nothing to address the vast amount of space the car demands, which could otherwise be used for greens, parks, playgrounds, and homes. It doesn’t stop cars from carving up community and turning streets into thoroughfares and outdoor life into a mortal hazard. Electric vehicles don’t solve congestion, or the extreme lack of physical activity that contributes to our poor health.”

There’s a lot more to Monbiot’s argument. Read the whole post here.