Tesla Battery Day: Bigger Cells, Dry Electrodes, Price Parity Could Be in the Cards

Bigger power cells, price parity and an enhanced autopilot. Those could be some of the themes at Tesla’s Battery Day event this afternoon.

CEO Elon Musk will unveil the new technology after TSLA’s annual shareholder meeting. It could be a huge event for a company that’s rapidly emerged as one of the most important stocks in the market.

Below are some of the items TSLA watchers expect.

Bigger Power Cells

Battery efficiency is a huge issue for electric vehicles. Bigger cells can be more efficient because there’s less need for connectors. (That can also make them cheaper to produce.) But they can also overheat and be less reliable.

Recent reports suggest TSLA is overcoming these issues. First, the company received a patent for “tabless” battery cells in May. Tabs are the pieces of metal carrying the positive and negative charges. Reducing or eliminating them can lower electric resistance and boost efficiency.

Second, Electrek.co published images last week of a new battery cell with about 4 times the volume of TSLA’s existing 2170 cells. Switching to larger units could simplify assembly and trim manufacturing costs.

Dry Electrodes

Battery production has traditionally used wet chemical slurries. That’s expensive and potentially toxic.

Tesla (TSLA), daily chart, with 50-day moving average.

TSLA acquired Maxwell Technologies last year for its “dry” electrode-coating processes. Musk now wants to apply the technology at large scale, reducing the environmental impact of battery production and lowering costs. Analysts think dry-electrode technology could boost efficiency and potentially eliminate the need for cobalt — another expensive input.

Price Parity and Million Mile Batteries

Despite its huge growth and valuation, TSLA controls a tiny fraction of the global vehicle market. Truly going mainstream will require cheaper vehicles and more reliable batteries.

Some of its innovations could focus on “price parity” with gasoline-powered cars. That’s why simpler manufacturing is so important. Musk may also emphasize the concept of batteries with a 1 million mile lifespan. That would be 4-5 times longer than the typical internal-combustion vehicle today.

Roadrunner Facility

Most of these battery innovations center around TSLA’s Roadrunner battery plant on Kato Road in Fremont, California.

The facility has come on line recently, despite the coronavirus pandemic. It’s important because it will let the company rely less on outside suppliers like Panasonic. Some observers believe it will use dry-electrode technology given its small size.

Plaid Powertrain

Musk talked about the Plaid powertrain last year. The design would use three electric motors — one for each rear wheel and one for both front wheels. It could improve performance and range for the Model S sedan.

More recently, Tesla aficionados have predicted Plaid will be combined with new batteries from the Roadrunner plant. That could knit together the company’s design and manufacturing, laying the groundwork for greater production at lower cost.

Tesla and the S&P 500

RadarScreen® showing largest stocks by market cap.

TSLA has risen almost tenfold in the last year. Most of that rally came after the company overcame manufacturing problems with its existing technology. Today’s Battery Day is a big deal because it could showcase Musk’s vision of going to the next level by incorporating newer technologies and an in-house supply chain.

It also focuses attention on a name that’s become one of the most active stocks in the market. TradeStation data shows TSLA as the ninth most valuable company in U.S. markets between Visa (V) and Taiwan Semiconductor (TSM).

S&P Dow Jones Indices surprised investors earlier this month by excluding TSLA from the S&P 500. Instead, it added three firms whose combined market capitalizations are one-tenth the size of TSLA. If Musk offers a promising vision of the future at Battery Day, that decision could seem even stranger.

This article was written by David Russell, TradeStation Securities, Inc., part of the Monex Group Inc, published on 22/09/2020.

David Russell
David Russell is VP of Market Intelligence at TradeStation Group. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.

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