Wednesday, September 23, 2020

Tesla Unable to Charge Investors at Battery Day

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News shaping
the markets today

     

What’s happening: Shares of Tesla fell in extended trading on Tuesday after hosting its highly anticipated Battery Day event.

What happened: Investors were eagerly awaiting updates made by Tesla in making batteries cheaper and more powerful. The Battery Day event was followed by the company’s annual shareholder meeting.

The event triggered high volatility in the electric vehicle maker’s shares. The stock rallied initially on Tesla’s forecast for strong deliveries. However, shares settled lower on concerns over the time the company may take to achieve its battery-advancement goals.

Why it matters: Tesla has been planning to make its own lithium-ion batteries, a development that will eliminate the company’s dependence on third-party suppliers like Panasonic and LG Chem.

Tesla is looking to expand its annual production capacity to 100 GWh (gigawatt-hours) by 2022, with the expectation of reaching 3 TWh (terawatt-hours) capacity by 2030.

Tesla’s recently announced 4680 battery cell, which lifts energy density, is expected to cost 14% lower than the 2170 cell. Apart from the lower cost, the new battery cell is expected to increase vehicle range by 16%. 

Tesla also announced plans to develop a vehicle that will cost just $25,000. Elon Musk indicated that it could take the company three years to get there. Musk had earlier promised to deliver Model 3 at a price tag of $35,000, but the model is currently costs $37,990.

The CEO also said the company is all set to release a private beta version for its Autopilot (fully self-driving technology) within a month. Musk had said last year that he expects Tesla 1 million driverless robotaxis by the end of 2020.

The electric vehicle maker is also looking to turn battery packs into major structural parts of the car. The company expects the move to increase vehicle range by 14%, with battery production costs likely to be lowered by 7%.

Tesla projected an increase of 30% to 40% in vehicle deliveries in 2020, versus the consensus estimate of 31.5% growth to 483,000.

How shares responded: After rising earlier in the after-hours trading session, Tesla’s stock dropped 6.9% to $395.08. The company’s shares had declined by 5.6% during regular trading hours. The stock has gained a whopping 111% over the past three months.

What to watch: The EV maker’s much awaited event turned into a dampner for the company’s shares as investors were left disappointed with the timeframe indicated by Tesla to achieve its targets. Markets cheered the company’s strong forecast for 2020 deliveries, despite several interruptions through the year. The upbeat guidance might help Tesla rebound in today’s session.

The Markets Today

     

Crude oil will be in focus today, ahead of the EIA’s (Energy Information Administration) report on crude supplies.

Context: Crude prices moved higher on Tuesday, recording a partial rebound from the significant downturn a day earlier.

Details: Crude oil moved sharply lower on Monday following a rise in covid-19 cases and fears of this triggering a return to lockdowns and some restrictions in certain regions of Europe.

Various countries across Europe are already taking steps to curb the resurgence in cases, including restrictions on businesses.

On Tuesday, WTI (West Texas Intermediate) crude for October delivery rose 0.7% to close at $39.60 per barrel on the NYMEX (New York Mercantile Exchange) following a 4.3% decline on Monday.

Meanwhile, November Brent crude gained 0.7% to settle at $41.72 per barrel on ICE Futures Europe.

Late Tuesday, the API (American Petroleum Institute) reported US crude supplies had risen by 691,000 barrels in the week ending September 18.

October natural gas closed mostly unchanged at $1.834 per million British thermal units on Tuesday.

What to watch: Markets await the EIA’s report on crude inventories. Analysts are projecting domestic crude supplies to decline 4 million barrels in the week ending September 18. Gasoline inventories are projected to drop 1.9 million barrels, while a rise of 1.2 million barrels is expected in distillate stockpiles.

Investors will also monitor the covid-19 numbers, with total infections exceeding 31.4 million globally.

Other Markets: US indices closed higher on Tuesday, with the Dow Jones, S&P 500 and Nasdaq 100 up by 0.52%, 1.05% and 1.71%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Germany’s Services PMI, Manufacturing PMI and Composite PMI, Eurozone’s Manufacturing PMI, Services PMI, Composite PMI and ECB’s non-monetary policy meeting, UK’s Manufacturing PMI, Services PMI and Composite PMI, South Africa's SACCI business confidence index, Mexico’s retail sales, Brazil's current account, foreign direct investment and federal tax revenues, Argentina’s leading economic index, unemployment rate and retail sales as well as the US MBA mortgage applications, house price index, Manufacturing PMI, Services PMI, Composite PMI and Fed Chair Powell’s testimony.