Tesla Chief Executive Officer Elon Musk said on Monday improvements to be unveiled at the electric-car maker’s “Battery Day” event would not reach “serious high-volume production” until 2022, knocking its shares lower.
Many analysts and industry officials expected Musk to unveil battery improvements at the widely-anticipated event, extending the automaker’s lead over General Motors, Volkswagen and other rivals.
In a tweet ahead of the event scheduled for Tuesday, Musk said: “This affects long-term production, especially Semi, Cybertruck & Roadster, but what we announce will not reach serious high-volume production until 2022.”
Musk also said Tesla intends to increase battery cell purchases from suppliers Panasonic, South Korea’s LG and China’s CATL, and possibly with other partners as well.
Despite the cell suppliers’ working at maximum speed, Tesla automaker still expects significant shortages in 2022 and beyond, he added.
Shares of the car maker were last down more than 5 percent at $425.50 in extended trade.
Tesla is working to produce new, bigger battery cells with higher energy capacity at its own manufacturing facility in Fremont, two people familiar with the matter have told Reuters. They said the battery cell would have a diameter of 42 mm, double the diameter of the 21 mm cell used in Model 3.
One of the people said Tesla’s battery line would have an annual production capacity of 1 gigawatt-hours.
Battery sources and experts say Tesla faces challenges to mass produce batteries in-house by itself, and may have to partner with other battery vendors like Panasonic to mass-produce the batteries.
“Tesla lacks know-how in manufacturing processes and there are a number of challenges in manufacturing processes,” an LG insider told Reuters.
Some battery industry officials are wary that such move which could put pressure on battery prices.
“Tesla is sending signals to suppliers that they should further lower costs, and if not, Tesla would source more batteries in-house,” a former LG official said.
Tesla’s shares had earlier risen on Monday, helped by a leaked email from Musk that said the company was hopeful of racking up record car deliveries in the third quarter.
© Thomson Reuters 2020