(CNBC) – Tesla CEO Elon Musk offered new delivery predictions for 2020 at the company’s shareholder’s meeting on Tuesday, where the company also detailed a new battery design that it claims will make its cars cheaper to produce.
Musk said he expects vehicle deliveries to increase by 30 to 40 percent over last year, when the company reported deliveries of 367,500 vehicles. The new guidance from Musk implies deliveries of between 477,750 and 514,500 cars, a range that encompasses the company’s previously stated goal to deliver half a million cars in 2020.
“In 2019, we had 50% growth. And I think we’ll do really pretty well in 2020, probably somewhere between 30 to 40 percent growth, despite a lot of very difficult circumstances.”
Musk also said the battery and manufacturing advances Tesla is working on will soon lead to lower prices, which will be vital for getting more electric vehicles on the road. “About 3 years from now, we’re confident we can make a very compelling $25,000 electric vehicle that’s also fully autonomous,” he claimed. Musk is notorious, however, for being overly optimistic with his predictions.
In response to one shareholder’s follow-up question about lowering pricing, Musk acknowledged, “It’s not like Tesla’s profitability is crazy high. Our average profitability for the last four quarters was maybe 1%. It’s not like we’re minting money. Our valuation makes it seem like we are, but we’re not.”
He continued, “We do want to make the price as competitive as we can without losing money. If you keep losing money, you’ll die.”
The company’s shares dropped as much as 7% during the presentation, which took place after normal trading hours.
Battery improvements promised
During the “battery day” portion of the presentation, Tesla confirmed that it has designed and is producing its own battery cells at a facility in Fremont, as part of its quest to make its cars affordable to a mainstream buyer.
In general, the batteries of a Tesla — which contain thousands of cells — are the most expensive part of the car.
Tesla’s senior vice president of powertrain and energy engineering, Drew Baglino, described how the company’s new cells, dubbed “4680,” are larger and simpler to make than the “2470″ cylindrical battery cells it purchases from Panasonic and other suppliers today. A Tesla battery pack would require fewer cells with the new shape and design.
Baglino said the larger cells, along with other manufacturing and design changes underway at Tesla, would eventually improve the range of its cars by more than 50%.
Near-term, Tesla says it aims to produce 10 gigawatt hours worth of the new battery cells at its pilot plant within a year. Musk noted that whatever cells it produces in Fremont would be supplemental to 100 gigawatt hours worth of cells it buys from suppliers, and said “To be clear, it will take about a year to reach the 10 gigawatt hour capacity.”
With its new cells, Tesla is also seeking to reduce or completely avoid the use of some expensive materials used in lithium-ion battery production today, including cobalt.
Associate Professor in Civil and Environmental Engineering at Carnegie Mellon University, Costa Samaras, said: “If Tesla can make a cheap, reliable battery with little or no cobalt, it will really improve the ability of EVs to scale up. Most cobalt is from the Democratic Republic of Congo and the mining has long generated human rights and child labor concerns.”
On Monday, Musk warned that the advances announced at battery day won’t find their way into mass production until 2021, sending the company’s stock down about 6% ahead of the event on Tuesday.
Due partly to Covid-19 health orders that limit the size of in-person gatherings, Tesla postponed its annual meeting from July this year to Sept. 22, 2020. The company previously held its shareholder meetings at the Computer History Museum in Mountain View, California but moved the event to the parking lot of its U.S. vehicle assembly plant in Fremont. Shareholders parked and sat in their cars at the meeting, which Musk characterized as a “drive-in.” They honked in lieu of applause.
Al Prescott, Tesla’s VP of legal, at the company’s socially distanced 2020 shareholders meeting, as attendees listen in their cars.
Those who wanted to attend had to obtain a winning lottery-style ticket (or other special access) to the meeting. Otherwise, shareholders could log into a website to ask questions to be answered during the live-streamed event.
Cannacord Genuity analyst Jed Dorsheimer wrote in a note to investors before the meeting:
“The big question will be on follow through. It’s one thing to announce all these breakthroughs, which might be great for momentum algorithms, but like most things TSLA, the devil will be in the details, which sadly will take some time to play out.”
Cannacord maintains a “Hold” rating and a price target of $442 on shares of Tesla currently.
Shares of the electric car maker are up more than 400% year-to-date.