Tesla battery day and the future of electric batteries

0
38



Tesla CEO (ticker: TSLA) Elon Musk recently added to the hype by tweeting “a lot of exciting things will be revealed.” He closed the tweet with a flash emoji.

The event is a big deal for the stock. It will shape investor opinion on the future of electric vehicles and Tesla’s technological advance. To prepare for Tuesday, investors can divide the likely topics into a few categories: battery cost, battery reliability, and battery capacity. New battery technologies should also be discussed. And investors should be prepared to hear about stationary power as well, which includes the Tesla Powerwall business.

Battery cost

The costs are very important for all manufacturers of electric vehicles, including Tesla. Historically, electric vehicles were initially more expensive than comparable gasoline models. This is, essentially, because high tech batteries cost more than a tank of gasoline.

Battery costs are falling. Some industry insiders say Barron’s costs have fallen by 75% over the past 10 years. The bogey cost today is for battery cells to hit $ 100 per kilowatt hour.

Credit Suisse analyst Dan Levy believes Tesla’s event will focus on cutting costs, potentially offering $ 75 per kilowatt hour. Reducing costs “can help unlock lower-priced sales and thus fuel further growth,” writes Levy in a recent research report. He values ​​stocks the equivalent of Hold’em and has a target price of $ 400 for the stock.

Morgan Stanley analyst Adam Jonas also rates stocks the equivalent of Hold’em. Its price target is lower, however, at $ 272 per share. He asks in his event preview report, “Could Tesla communicate plans … to hit $ 50 per kilowatt hour?” »This is the lowest cost target for battery cells Barron’s saw in a Wall Street research report. (Jonas’ preview note, by the way, is the one with “mind blowing” in the title.)

Anything below $ 100 a kilowatt hour, along with a credible plan to achieve it, should be a victory for Tesla shareholders.

Reliability

Wedbush analyst Dan Ives believes a million-mile battery will be “front and center” on Tuesday. It is a battery that can last a million kilometers during all charge cycles. A battery like this would outlast the car body and open up possibilities for reuse and recycling. The reuse of batteries is another cost reduction factor.

Ives values ​​Holds stocks and has a target price of $ 380 for the stock. New Street Research analyst Pierre Ferragu also rates Hold stocks. Its target price is $ 300 per share.

Ferragu has a different take on the million mile battery. He thinks this has nothing to do with Tesla’s long-term success. Other automakers may achieve the same, so he believes battery reliability won’t help Tesla differentiate itself from its competition in the long run.

Capacity

Ferragu, on the contrary, thinks Tesla’s secret “Roadrunner” project could be huge. Roadrunner is an in-house project, apparently designed to improve all aspects of battery design and manufacture.

“The key to success here is to evolve the chemistry, the design of the airframes, the entire powertrain and the manufacturing of all of those components,” writes Ferragu. “The current configuration is suboptimal. Tesla is co-developing chemistry and cell architecture and is not manufacturing. We see key benefits in bringing everyone together under one roof. ”

Ferragu also ignores the importance of giant “tera-factories,” which are, in theory, orders of magnitude larger than Tesla’s Nevada Gigafactory.

(The numeric prefix tera is one with 12 zeros. Giga is a 1 followed by nine zeros.)

Capacity always matters. Tesla has sufficient battery capacity to manufacture approximately 600,000 to 700,000 vehicles per year. The company will need to increase its capacity to meet its projected growth objectives.

Ferragu believes investors want to know that Tesla will have enough capacity to make 2 million cars by 2025. That means an increase in battery capacity of about 3 times by then. (Tesla has around 63 gigawatt hours of battery capacity today.) Jonas de Morgan predicts that Tesla will produce 439 gigawatt hours of batteries by 2030. That’s seven times more in 10 years, a growth of about 21% per year. year, on average.

Any indication of Tesla’s direction on capacity can be compared to these numbers.

Technology

Startup QuantumScape becomes a publicly traded company by merging with a PSPC. He plans to introduce solid-state battery technology to the EV market. Solid-state batteries have a higher power density – more electricity can be, essentially, pushed into a smaller unit, which reduces costs and improves weight.

“With semiconductor competitors aiming for a semiconductor power density greater than 400 [watt-hours per kilogram]we would expect [Tesla] to give its expected time to reach such levels, ”wrote Oppenheimer analyst Colin Rusch in a report forecasting Battery Day. Today’s batteries have a capacity of around 260 watt hours per kilogram.

Musk recently tweeted about higher energy density batteries, saying they are probably three or four years away.

Rusch qualifies as a Tesla bull. He evaluates buying Tesla shares and has a target of $ 451 for the shares.

Stationary power

Investors should not forget about stationary power. “The growth of stationary storage, while strong, has fallen short of Tesla’s stated goals,” writes Levy. “In 2014, Tesla cited the goal of reaching 15 gigawatt hours of Tesla Energy’s volume by 2020… t year, they only had 1.7 gigawatt hours.”

One problem is that the capacity of the battery cells has been limited. Tesla has been busier building cars. The storage market, according to Levy, is “nascent” but represents an advantage as costs fall and capacity increases.

Joker cards

Several analysts are wondering if Tesla will become a supplier to the EV industry. Sale of batteries and battery systems to other car manufacturers. He’s a potential wild card.

Baird analyst Ben Kallo offers an interesting idea in his preliminary report. Tesla could “adopt a model of ownership for batteries, where the company manages distributed energy assets, such as an electric utility.” He points out that Tesla already has “Autobidder,” a technology that helps utilities manage the electricity stored in batteries.

Autobidder is a new issue that an analyst must raise. This does not often happen during management conference calls.

The stock

To be sure, there is a lot to follow. Ultimately, investors will want to be confident that Tesla’s technological lead is sustainable, and that it has sufficient capacity to manufacture at least 2 million cars by 2025. Once that is done, the Bulls can justify above-average profit margins and future growth.

Tesla shares are up more than 400% year-to-date, far better than comparable returns in the

Dow Jones Industrial Average

and

S&P 500.

Write to Al Root at [email protected]

LEAVE A REPLY

Please enter your comment!
Please enter your name here