Investors cut $50 billion from Tesla Inc’s market value on Tuesday even after CEO Elon Musk’s promise to drastically cut the costs of electric vehicles. Musk said that a $25,000 car that drives by itself will be possible but not for the next three years.
Tesla’s market cap dropped $20 billion in just two hours after trading closed Tuesday, as Musk and other Tesla executives presented their new battery and manufacturing strategies. Shares closed down 5.6% and dropped another 6.9% after hours.
As Musk and other Tesla executives revealed their new battery and manufacturing strategies, Tesla’s market cap saw a drop of $20 billion in only two hours after trading closed on Tuesday. Shares closed down 5.6% and dropped to another 6.9% after hours.
Investors were expecting two significant announcements at Musk’s “Battery Day”. The first was the development of a “million-mile” battery good enough for 10 years or more. The second was a specific cost reduction target – expressed in dollars per kilowatt-hour – which would help the price of an electric car to be lower than that of a conventional fuelled car.
Musk made neither of the two expected announcements. Instead, he promised to cut battery costs in half with new technologies and processes to deliver an “affordable” electric car. Musk said that in three years Tesla can do a $25,000 car which would be on par with or maybe slightly better than a gasoline car.
Musk admitted that Tesla does not have its ambitious new vehicle and battery designs and manufacturing processes fully complete. Tesla has often failed to meet the production targets set by Musk and aims to build 20 million electric vehicles a year. This year, the entire auto industry is expecting a delivery of 80 million cars globally. Musk asserted that building an affordable car has been a dream for Tesla since the beginning of the company.
On Tuesday, Tesla also revealed the Model S Plaid with a 520-mile range and a top speed of 320 km per hour. The Model S Plaid is expected to go on sale in 2021 and is currently listed at $140,000.