(PROACTIVE) – Tesla Inc (NASDAQ:TSLA) shares plunged in New York after-hours trading on Tuesday as CEO Elon Musk promised 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.
Investors slashed $50 billion from Tesla’s market cap as Musk and other Tesla executives presented their ‘Battery Day’ strategies. Tesla shares closed down 5.6% and dropped another 6.9% after-hours to $395.20.
Investors had expected two significant announcements at the Battery day – the development of a “million-mile” battery good for 10 years or more, and a specific cost reduction target that would finally drop the price of an electric vehicle below that of a gasoline car – but 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.
Musk acknowledged that Tesla does not have its ambitious new vehicle and battery designs and manufacturing processes fully complete.
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.
But as if to flaunt that aim, Tesla introduced a new Model S Plaid on Tuesday, a 520-mile range sedan that can reach top speeds of up to 200 miles per hour, with deliveries starting in 2021, which was listed on Tesla’s website at a price of nearly $140,000.
To help drive down vehicle cost, Musk described a new generation of batteries that will be more powerful, longer lasting and half as expensive than the company’s current cells.
Tesla’s new larger cylindrical cells will provide five times more energy, six times more power and far greater driving range, Musk said, adding that full production is about three years away.
Musk also said Tesla planned to recycle battery cells at its Nevada “gigafactory,” while reducing cobalt — one of the most expensive battery materials — to virtually zero. It also plans to manufacture its own battery cells at several highly automated factories around the world.
Commenting on the ‘Battery Day’ announcements, Roth Capital Partners analyst Craig Irwin said: “Nothing Musk discussed about batteries is a done deal. There was nothing tangible.”