Tesla's Battery Day Unveils Path to Becoming World's Largest Company
After months of anticipation, Tesla's Battery Day event is finally in the books leaving investors with one simple question: did it live up to the expectations?
While many 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. In fact, the only product update was to Tesla's Model S, which will begin offering a new top-of-the-line "Plaid" powertrain option late in 2021, later than expected.
What Tesla did announce, however, may prove to be much more significant than a product update. The company unveiled a new battery cell and battery production line which they believe will allow for 54% more range, reduce battery costs per kWh by 56%, and cut required investments by 69%.
Tesla is highly confident in achieving these targets, which would enable a ~500 mile EPA range Model 3 to be sold profitably for less than $40,000 and open up the possibility of a more compact Tesla vehicle with a starting price around $25,000 in a few years.
Still, execution risk remains. Tesla CEO Elon Musk noted multiple times during the presentation the amount of work that still needs to be done by Tesla to realize these possibilities.
If all goes to plan, Tesla believes they can scale in-house battery production to 100 GWh/year in 2022 and 3 TWh/year (3,000 GWh/year) by 2030. The 2030 target would be enough capacity for 40 million long-range vehicle battery packs annually. Tesla, however, plans to eventually produce around 20 million vehicles per year and allocate the rest of their battery production to stationary energy storage products like the Tesla Powerwall.
The average selling price for a new car in the United States is around $37,000. Assuming a $5,000 lower average selling price on Tesla's 20 million vehicle target, Tesla's automotive revenue could eventually be around $650 billion dollars per year before considering the impact of additional revenue from autonomy as a service. With the remaining battery production, Tesla could potentially generate $200B+ in revenue from stationary energy storage products. Including solar, service, and other revenues, Tesla's Battery Day laid a roadmap for the company to generate a trillion dollars of revenue annually by 2030. Currently, Walmart is the world leader in annual revenue at $523B.
For more analysis on Tesla's Battery Day, please see the included video and be sure to follow Tesla Daily on The Street.
Disclosure: Rob Maurer is long TSLA stock and derivatives.