Can Tesla CEO Elon Musk win back the confidence of the market at his company’s annual investor day on Wednesday?
Musk and his comments are among the most powerful drivers of sentiment in renewables, especially battery related metals such as lithium.
An upbeat, visionary Musk could re-inject a lot of the confidence that has vanished from the sector as his Twitter antics have undermined his credibility, just as Tesla has been overtaken by Chinese vehicle and battery giant, BYD and reacted with price cuts, especially in the vital Chinese market.
For all of his whining about costs, the price of lithium and other factors in the evolution of renewables, Musk has the runs on the board as a doer – even if many of his targets seem to slip – such as an electric truck and electric pick up and a low cost-broad selling EV.
So, will Musk reveal more about his much talked about plans for a ‘cheap’ electric vehicle at the carmakers investors day in the US on Wednesday? Certainly, quite a few analysts think it is a possibility.
That’s despite Musk saying last year he had ended plans for a $US25,000 vehicle to be called the Model 2, because he hadn’t mastered the new battery technology that he has said would be crucial to the cheap cars.
There’s a lot riding on the investor day – it’s going to be a chance for Musk to talk about Tesla and not be quizzed endlessly about Twitter where his $US44 billion takeover looks weaker by the week.
Tesla shares are up nearly 70% year to date but are still at half their November 2021 peak with a market value around $US650 billion but they are still dogged by Musk’s diversion into Twitter.
Expanding into the mass car market has always been a big ambition for Musk and Tesla – he has talked in the past of aspirations to produce tens of millions of Teslas a year.
A low-priced car (and range) is forecast to be part of Musk’s ‘Master Plan Part Three’, to be announced tonight at the ‘Investor Day’, along with plans for factory expansion and capital spending.
Reuters commented in a report that whatever Musk says about timelines, though, “investors will be wary, since he has missed his most prominent deadlines while building the world’s most valuable car company.”
“The formula for decoding Musk is pretty simple. Take whatever time frame he has, and multiply it by two,” said Gene Munster, Managing Partner at Deepwater Asset Management, which owns Tesla shares.
He expects the new car platform to be rolled out in 2025 at the earliest, which would still be years faster than the typical auto industry development of a new vehicle.
The Model 2 leave was a big deal for Musk a couple of years ago (pre-pandemic) when he said that making a compelling $US25,000 electric vehicle “has always been our dream from the beginning of the company,”
Last year, Musk announced a plan to roll out a robotaxi with no steering wheel or pedals by 2024, though it was not clear if it was the same inexpensive car.
Reuters said that a recent Tesla engineering video showed a small car with typical Tesla curves that was assumed by company watchers to be a Model 2 sketch.
Some analysts think Tesla might announce a cheaper car with short driving range for the Chinese market (where Tesla is missing out on sales to local producers such as BYD, Bio and Li).
And then there is the cost of lithium. He will have to answer questions about the reported ambition to buy Canada-based Sigma Lithium after speculation about a possible bid surfaced in mid-February, and then died away.
Although there are signs lithium prices are easing in early 2023 as the Chinese government pressures its mining and processing sectors, Musk has said lithium costs could force Tesla to make its own supply of the electric vehicle battery metal.
Reuters also pointed out that battery production also is an issue for Tesla and Musk.
Musk forecast in 2020 that his company would by 2022 produce 100 gigawatts of newer generation, lower cost batteries, enough to power about 1.3 million Tesla Model Ys, but the December production rate of the batteries, called 4680s, was enough for just over 50,000 vehicles a year.
Musk has also said Tesla will continue to use battery suppliers to scale up fast. Tesla uses Panasonic, CATL, LG Energy Solution and BYD as cell suppliers.
Investors will look out for any hints of plans to ramp up production of the Cybertruck, which Musk said will start volume production next year, and locations of new Tesla factories, with Mexico, Canada, Indonesia and South Korea all cited as potential candidates.
Musk last week was reported to have a meeting with Californian governor Gavin Newsom, who in fact toured the car makers new technical HQ in California. Tesla’s first factory is based in Fremont, California.
