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The market value of electric car company Tesla (TSLA) plunged on Tuesday after chief executive Elon Musk announced that the company would make a radically cheaper new electric car battery — but that it would not be ready for three years.
Investors appeared unimpressed with the time frame of Musk’s innovations, and the company’s shares closed down 5.6% and then fell by another 6.9% after hours.
At Musk’s so-called “Battery Day” event, the electric-vehicle pioneer told the 270,000 online audience that he promised to cut battery costs in half in the next couple of years, which would make e-cars significantly cheaper.
“In three years, we can do a $25,000 (£19,691) car that will be basically on par, maybe slightly better than, a comparable gasoline car,” Musk said.
The new batteries will not only cost less, Musk said, but their larger cylindrical cells will deliver six times the power and much longer range. The new battery cells will contain virtually no cobalt — an expensive element in batteries — and that the company will not only make its own cells in its own factories, but be able to recycle them too.
“It does work but not [yet] with a high yield,” Musk said, adding that there is a “clear path to success but a ton of work from here to there,” not only with new battery designs but also with new manufacturing processes that will ultimately lead to cheaper cars for consumers.
Challenges with ramping up production are nothing new at Tesla, however. Musk said that building an affordable electric car has “always been our dream from the beginning of the company.”
Tesla’s new Model S Plaid was also revealed at the event on Tuesday. The electric sedan, it said, can achieve a range of 520 miles, a top speed of 200mph, and starts at around $140,000.