Tesla (TSLA) - Get Report shares downshifted further Wednesday, accelerating the company’s market-cap losses, after the electric vehicle maker’s much-hyped “Battery Day” failed to impress or deliver, among other things, a newer, cheaper, longer-range battery.
Shares of Tesla were down more than 8% on Wednesday, adding to the carmaker's market-cap losses endured after trading closed Tuesday, as Musk and other Tesla executives virtually and in person rolled out their new battery and manufacturing plans.
Tesla's market cap dropped $20 billion in just two hours on Tuesday following the car and battery maker’s “Battery Day” reveal, in which CEO Elon Musk laid out plans to produce a cheaper, lower-cost battery, build a $25,000 electric car and eventually produce 20 million vehicles a year - but not until 2023.
Tesla did unveil plans for a new battery cell and battery production line which the company believes will allow for 54% more range, reduce battery costs per kWh by 56%, and cut required investments by 69%.
However, the longer-term nature of those plans underwhelmed investors, who prior to the event had pushed Tesla stock up by more than 400% this year, with anticipation about the battery day fueling a large part of the gains.
All told, some $50 billion has been erased from Tesla’s market value as of Tuesday. The underwhelming nature of the event itself prompted those losses to accelerate on Wednesday, with the stock down 8.66% at $387.51.
While Tesla's "Battery Day" event was generally well-received among analysts, investors were less sanguine, particularly given that no new battery was actually revealed at the event, and longer-term timelines for the development and rollout of one provided by Musk were opaque.
Indeed, Musk had alluded to the challenges of scaling up cheaper battery production before the event happened. In a series of tweets prior to the event, Musk wrote about the “extreme difficulty” of scaling up production of new technology - an indication that a next-gen revolutionary low-cost battery with more range is not immediately in the cards.
“The extreme difficulty of scaling production of new technology is not well understood. It’s 1,000% to 10,000% harder than making a few prototypes,” Musk said. “The machine that makes the machine is vastly harder than the machine itself.”
To be sure, Tesla's announcements and plans prompted some analysts to raise the proverbial checkered flag.
Baird analyst Ben Kallo raised his one-year price target to $360 from $332 following the event, while Goldman Sachs analyst Mark Delaney lifted his price target on Tesla to $400 from $295 based on what he sees as the potential for “accelerated electric vehicle adoption.”
Tesla Maven Rob Maurer also struck an optimistic tone following the event, noting that while investors seem to have expected Tesla to unveil advancements to their current lineup of products, "Tesla's presentation was all about what's coming next."
On the flip side, RBC analyst Joseph Spak wasn't impressed, particularly with Musk's admission that other car makers are catching up to Tesla on the battery technology front.
“Elon [Musk] indicated that every car company will have long-range electric cars and eventually everyone will have autonomy,” Spak wrote. He rates Tesla's shares the equivalent of a sell, with a $290 price target.