Tesla CEO Elon Musk Sees Shortage of Batteries as Electric Car Sales Take Off
September 22 2020 - 04:01PM
Dow Jones News
By Heather Somerville and Tim Higgins
Tesla Inc. Chief Executive Elon Musk on Tuesday will host a
long-promised event showcasing advances in battery technology, the
fuel in the race between the Silicon Valley car maker and rivals to
win electric vehicles sales.
So-called Battery Day is scheduled to take place right after Mr.
Musk addresses Tesla's annual shareholders meeting, its first such
gathering since the pandemic struck, the company's record run of
profits and a new production facility in China has come online.
On the eve of the gathering that has been delayed by the
pandemic and is taking place online and in-person near the
company's lone U.S. car plant in Fremont, Calif., Mr. Musk dropped
hints about the challenges ahead. "With our cell suppliers going at
maximum speed, we still foresee significant shortages in 2022 &
beyond unless we also take action ourselves," Mr. Musk tweeted
Monday, even as he said the company also would buy more cells from
suppliers.
Tesla has enjoyed a strong run in the face of the global
pandemic. The company in July for the first time posted its
fourth-consecutive profitable quarter and is poised to deliver its
first-ever full-year profit in 2020, according to analysts surveyed
by FactSet.
Those results, driven in part by the sale of emissions credits
to rival car makers, came despite a temporary shutdown earlier this
year of the Silicon Valley electric vehicle maker Fremont plant
when regional authorities ordered most businesses to close to
contain the spread of the Covid-19 outbreak. Mr. Musk sparred with
local authorities and defied public health orders to reopen the
plant, at one point daring officials to arrest him. (They
didn't.)
The car maker has benefited from the opening late last year of
its first overseas assembly factory located in China and from the
Model Y sport-utility vehicle rolling off the line in March. The
SUV's order backlog secured before the pandemic helped sustain
deliveries when many prospective new car buyers were stuck at
home.
Tesla in early April stopped reiterating full-year car delivery
guidance that called for at least a 36% production boost this year
and deliveries of more than 500,000 vehicles. At the time, analysts
cautioned Tesla could fall short of its guidance because of the
pandemic. Now, they are less certain. Tesla delivered just under
180,000 cars in the first six months, and analysts expect the
company to deliver a record 144,000 this quarter and 179,000 in the
final three months of the year.
The performance has spurred huge demand in Tesla's stock, which
has roughly quintupled this year, and made the company the highest
valued car maker, even though its production volume still is far
behind the likes of Toyota Motor Corp., Volkswagen AG, or and
General Motors Co. In spite of its recent run of profitability,
Tesla was passed over for inclusion in the S&P 500 index,
disappointing many of the company's bullish investors.
Mr. Musk's ambitions for millions of annual car sales has driven
him to further expand the company's production capacity. Tesla is
building its first-ever European car assembly plant outside Berlin
and has begun work on a second U.S. assembly factory near Austin,
Texas.
But Tesla also faces potential challenges, including questions
about demand during a global recession given its cars still carry a
premium over combustion-engine models, something it has been trying
to address by improving its battery technology. And it also
operates in an increasingly competitive environment as rivals
introduce more electric vehicles.
Write to Heather Somerville at Heather.Somerville@wsj.com and
Tim Higgins at Tim.Higgins@WSJ.com
(END) Dow Jones Newswires
September 22, 2020 15:46 ET (19:46 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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