More than £15billion was wiped off the value of Tesla after boss Elon Musk’s promise to make a genuinely affordable electric car in three years failed to impress investors.
The electric car maker’s ‘battery day’ had been hyped up in previous weeks, with Musk at one point telling fans his announcement would ‘blow your mind’.
And it came as the firm’s shares have been on a seemingly unstoppable rise, surging more than 700 per cent higher in the past year.
Facing the music: Tesla boss Elon Musk pictured with singer-songwriter girlfriend Grimes, admitted his company had not yet made the necessary breakthroughs in battery technology
But they fell by as much as 7 per cent yesterday after analysts were underwhelmed by what Musk actually said – amid speculation that he was poised to unveil a ‘million-mile’ battery with vastly improved technology.
In the event, the billionaire promised big improvements but admitted his company had not yet made the necessary breakthroughs.
Musk, 49, rattled off a list of advantages of the new batteries which he said could halve the cost of Tesla’s cheapest car to just £20,000.
But the claims were cautiously received by analysts, who said the key question was whether Musk could follow through.
Canaccord Genuity analyst Jed Dorsheimer said: ‘It’s one thing to announce all these breakthroughs, which might be great for momentum algorithms, but like most things Tesla, the devil will be in the details, which sadly will take some time to play out.’
Neil Wilson, senior markets analyst at Markets, said: ‘Given all the anticipation around a potential game-changer in battery technology, investors were a little underwhelmed by the news.’
Toni Sacconaghi, of Bernstein, said that Musk’s comments were ‘long on vision, short on near-term deliverables’.
The current limits of battery technology present the biggest hurdle for car manufacturers trying to make mass-market models, affecting both the cost and range of vehicles
Musk said the new batteries would be made in-house, using smaller amounts of pricey cobalt than before. He said this would increase the range and power of Tesla’s cars, while also making them less expensive to build.
Eventually, this could dramatically cut the cost of the company’s cheapest car, he added.
The company launched the Model 3, its first mass-market car, in 2017 but it still costs £40,500, far more than the cheapest petrol cars.
Speaking to an audience of Tesla owners sitting in their vehicles – to meet coronavirus social distancing rules – Musk said: ‘One of the things that troubles me the most is that we don’t yet have a truly affordable car, and that is something that we will make in the future. To do that, we’ve got to get the cost of batteries down.’
The current limits of battery technology present the biggest hurdle for car manufacturers trying to make mass-market models, affecting both the cost and range of vehicles.
Many drivers still shun electric cars over fears they could run out of power while on the road, and surveys have also found many do not buy them because of their big price tags.
However, Musk claimed that more efficient batteries would transform the market, making Tesla the biggest car manufacturer in the world.
He claimed Tesla would aim to make 20m cars per year by 2030 – significantly more than the 367,500 it made in 2019 and double the number currently made by German firm Volkswagen.
But Musk admitted the advances needed for the technology had not yet been made and that it wouldn’t reach ‘serious volume production’ until 2022.
After opening yesterday, Tesla shares fell by about 7 per cent. They were trading at around $400 each.
Deutsche Bank upgraded the firm and encouraged investors to ‘take advantage’ of the fall.