On September 22, Tesla held the long-awaited Battery Day, which once again underlined the fact that the the Elon Musk-led company is far ahead of other automakers. ARK Invest analyst Tasha Keeney shared her thoughts on what Tesla presented. And Battery Day may have explained that Tesla’s lead is even more advanced than anticipated.
There are several pieces of game-changing news Tesla announced Tuesday: a $25,000 car, a 56% reduction in battery manufacturing costs, an increase in range of 50%, and a 70% reduction in factory investment.
"I mean, if you're a traditional automaker, you must be so scared right now."
Tesla Battery Day Could Be the Last Nail in the Coffin for ICE Vehicleshttps://t.co/GPFca0gI1m— Tesmanian.com (@Tesmanian_com) September 20, 2020
Keeney explained that automakers are now trying to save their main business—gas-powered cars—especially given the impact of the pandemic. Furthermore, for the manufacturers who are trying to build mass-produced electric cars, they are understandably aiming for profit. Yet none of them has been successful in this thus far.
With these major Battery Day announcements, Tesla is expected to only further accelerate its lead in batteries. As Keeney explains:
“Tesla has always been a leader in electric vehicles. And at ARK Invest, we’ve been saying for a long time they’re at least 3-4 years ahead on batteries. I think with these announcements, they’re even further ahead. And it’s only becoming harder for automakers to catch up.”
Solving The Money Problem/YouTube, in response to Keeney’s interview, also shares his thoughts. He stresses that Tesla is by far the largest electric vehicle manufacturer in the world in terms of annual volume. And, importantly, Tesla is the only successful and profitable company in the world that does this. Simply put, Tesla has a massive advantage over all companies. Tesla is constantly looking for ways to accelerate, improve, and find effective solutions for further development.
An important aspect of this advantage is that the company has figured out how to drastically reduce the cost of the most important element of the vehicle: the battery. Tesla has a plan to reduce the cost by 56%—truly representing a quantum leap in battery technology and manufacturing. Not to mention Tesla is getting into the lithium mining business.
Keeney emphasizes that other manufacturers are now producing battery cells in a completely different form factor, so even if they just tried to copy what Tesla has, it would mean that they would have to start all over again to develop a new battery platform. With the structure and architecture that Tesla has, it will be extremely difficult for competitors to mimic it and catch up.
At this point—and likely for the foreseeable future—Tesla is the leader in batteries. And if there are any advancements in battery manufacturing by other researchers and companies that occur in laboratories, Tesla wants to hear about it. After all, only Tesla has the scale to help new technology develop. Elon Musk says: "If you can build a bad battery, show it to us."
This leads us to the conclusion that, in the near future, it would be more profitable for other automakers to buy batteries directly from Tesla. Other companies will not likely be able to create their own cells—nor competitive ones at that—and it could very well be it is too late to even try.
Keeney also shared that, taking into account the share split, ARK Invest's target price for TSLA is currently $1,400 per share. She added that the company is continuing to carry out valuations, which means there is a chance that their forecast will be revised based on what Tesla presented at Battery Day.
"You should value Tesla as a technology company."
© 2020, Eva Fox. All rights reserved.
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About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.