It’s a big deal, irrespective of the short-term impact on the stock price
I’m a long Tesla shareholder who does not get too worked-up around the short-term gyrations of what is a very volatile stock. Battery Day didn’t seem to excite investors, with the Tesla stock falling around 10% the day after the event. For me, however, the most significant part of Battery Day centered around what I’m now calling “The Future Factory.”
- Cell Design
- Anode Materials
- Cathode Materials
- Cell Vehicle Integration
All of the above battery and vehicle engineering advancements presented during Battery Day will contribute significantly to driving down Tesla’s battery costs by 56%. However, it’s the capability in what Elon Musk presented as The Cell Factory component of the presentation, that seems most critical to achieving this cost reduction. The ability to dramatically scale manufacturing capacity will separate the electric vehicle winners from the losers.
Much of the presentation’s material science and design components will also lead to an ability to rapidly scale production. In fact Musk stated that Tesla wants to be “the best at manufacturing than any company on earth.” Musk described how both factory volumetric efficiency and faster production speed within the factory are critical to driving down costs. Imagine a world where an EV manufacturer can produce 20 million EVs (a stated Musk goal) using significantly fewer factories than would be required today, at much faster throughput than what is possible today.
Factory volumetric efficiency and manufacturing speed will become a core competence
The design and technology of the factory will require as much engineering capability, including software development, as what’s required to engineer the vehicle. Thus, while manufacturing might seem like and old-world capability only valuable during the days of Henry Ford and the development of mass production, I now believe an ability to dramatically reduce the physical scale required to produce EVs while increasing the throughput within this reduced scale will become an important core competence that drives down costs dramatically.
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