Investors dropped $50 billion from Tesla Inc’s market value on Tuesday despite CEO Elon Musk’s promise to cut electric vehicle costs so radically that a $25,000 car that drives itself will be possible, but not for at least three years.
Tesla’s market cap dropped $20 billion in just two hours after trading closed Tuesday, as Musk and other Tesla executives presented their new battery and manufacturing strategies. Shares closed down 5.6% and dropped another 6.9% after hours.
“Nothing Musk discussed about batteries is a done deal,” said Roth Capital Partners analyst Craig Irwin. “There was nothing tangible.”
Investors had expected two significant announcements at Musk’s oft-touted “Battery Day”: The development of a “million mile” battery good for 10 years or more, and a specific cost reduction target -- expressed in dollars per kilowatt-hour -- that would finally drop the price of an electric vehicle below that of a gasoline car.
Musk offered neither. Instead, he promised over the next several years to slash battery costs in half with new technology and processes and deliver an “affordable” electric car
“In three years . . . we can do a $25,000 car that will be basically on par (with), maybe slightly better than, a comparable gasoline car,” Musk said.
Musk acknowledged that Tesla does not have its ambitious new vehicle and battery designs and manufacturing processes fully complete. Tesla has frequently missed production targets set by Musk.
Tesla expects to eventually be able to build as many as 20 million electric vehicles a year. This year, the entire auto industry expects to deliver 80 million cars globally.
Building an affordable electric car “has always been our dream from the beginning of the company,” Musk told an online audience of more than 270,000.
Tesla on Tuesday also introduced a new Model S Plaid, a 520-mile range sedan that can reach top speeds of up to 200 miles per hour (320 km per hour), with deliveries starting in 2021. The Plaid was listed on Tesla’s website on Tuesday at a price of nearly $140,000.