JAKARTA – Leon Musk's electric car manufacturer Tesla has weathered the pandemic and supply chain crisis better than many of its competitors. Even now, reaching a record delivery last quarter. But Chief Executive Elon Musk is facing pressure to come up with a breakthrough battery and a new factory and model, which is too late.
Those questions, demand in China, and the financial effect of selling Bitcoin will be investors' main concerns when the electric vehicle company publishes results on Monday, July 26.
September 2020, Musk announced ambitious plans to manufacture his own battery cells with new designs and manufacturing processes.
The bigger, simpler battery would, in theory, have a higher energy density and would expand the range of current vehicles and let Tesla offer a $25,000 car in three years, sharpening its technological edge as competitors flood the market with EVs.
But Musk last month pushed back the debut of the 4680s by canceling the long-range Plaid+ Model S, which he said would use a cell, sparking concerns. He said the 4680 will go into volume production next year and will be used in the Model Y from a plant under construction in Texas.
Now, Tesla aims to produce vehicles with 4680 batteries starting at small volumes this year in unfinished models. Tesla sources stated this information to Reuters.
One person said Tesla would initially use batteries made at Tesla's pilot production line in California. It added that they are being tested in a prototype vehicle.
"Tesla is also working with Panasonic to develop 4680 cells," the source said. LG, another Tesla supplier, is working to produce 4680 battery cells for Tesla by 2023, Reuters previously reported.
But it's unclear when Tesla will be able to mass-produce the new battery in Texas and Berlin, and it will be able to achieve all of its ambitious goals for the battery, industry officials said.
"It takes a huge amount of engineering to bring Maxwell's proof-of-concept to high-quality volume production and we're still not done," Musk said, referring to the dry battery electrode manufacturing process he was developing after acquiring Maxwell.
MODEL S BOX
While bigger production rivals regularly shut down production due to supply issues, Tesla has mostly kept its factories moving. It also cut some features and raised the price of the car, including a $4,000 increase for the long-range Model Y to $53,990 from April to the end of July.
The move comes as Tesla braces for a hit from bitcoin investments and a decline in sales of environmental credit to other automakers. This is, the source of revenue that the company relies on to post quarterly profits.
Tesla is speeding up plans to drop the radar sensor from its driver assistance system due to a chip shortage, a person familiar with the matter said, and dropped the adjustable lumbar support from its passenger seat.
"Not worth the cost/mass for everyone when hardly ever used," Musk tweeted.
"Tesla adapted very quickly to what they needed," said investor Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management.
"I just don't see a big catalyst, like, oh, they're going to blow their numbers this quarter," Gerber said. "We're much more bullish for Q3 than Q2," said Gerber, expecting Tesla to ramp up production of the Model S Plaid by a higher margin.
Shortly after the June launch, one of the high-end models caught fire while its owner was driving.
The roller coaster ride in China raises questions about the political and competitive challenges in Tesla's second-largest market.
Tesla's sales in China slumped in April 2021 amid negative publicity from consumer complaints, quality issues and regulatory pressure. Sales rebounded last May and June, as Tesla launched end-of-quarter promotional campaigns such as loan offers, according to showroom ads.
The automaker also this month introduced a cheaper version of the Model Y in China. "China is the key to the bull thesis," said Tesla bull and Wedbush Securities analyst Daniel Ives. "You need to see an incline in the second half of the year," he said.
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