t’s all eyes on Tesla (TSLA) this week as the EV-maker will hold its Investor Day on Wednesday from its Gigafactory in Austin. The event will be live-streamed (and this being Tesla, timing has not been announced), though some institutional and retail investors will attend the event in person.
Here are three big things to watch as the event unfolds:
Long-term expansion plans
Tesla CEO Elon Musk recently said his long-term goal for Tesla is to produce 20 million cars a year by 2030. With the company delivering 1.31 million vehicles in 2022, it has a long way to go to achieve that goal.
The ramp-ups at Giga Austin, Giga Berlin, and expansion plans at Giga Shanghai will help, but the company would need more gigafactories than that to achieve such mass scale. As of the end of 2022, Tesla projected an installed annual capacity of around 1.9 million vehicles, and Musk has speculated Tesla will need 12 gigafactories in total to produce 20 million vehicles a year.
Expect to hear more about these expansion plans on Wednesday — and a possible announcement on next steps. Government officials from Mexico to Indonesia have been talking to Tesla execs about expansion plans and would love nothing more than to bring Musk’s grand vision to their shores.
Tesla’s ‘generation 3 platform’
A key part of the Investor Day will be the company’s reveal of its “generation 3 platform.”
This generation 3 platform will likely be Tesla’s cheaper, robo-taxi car, as Musk has called it, and will be key to mass volume expansion of Tesla’s cars — and EVs globally in general. An EV costing around $25,000-$30,000 will open up a wide swath of potential customers looking for a cheap EV alternative.
It’s most likely impossible for Tesla to deliver 20 million vehicles annually by 2030 without a cheaper EV to reach a mass group of buyers. Expect Tesla to show investors a working design or even a full-scale model of this gen-3 platform, and to hear a bit more about the platform underpinnings and powertrain.
“While recent global price cuts have driven demand, TSLA likely needs Gen 3 to maintain its 50% delivery CAGR (compound annual growth rate),” Wells Fargo analyst Colin Langan wrote in a note last week. “Gen 3 is expected to be $30K, so TSLA would cover ~95% of US price points; $30K EV that is as profitable as a comparable ICE model, likely drives more near-term momentum; therefore, credible profit/cost targets & launch timing are key.”
Tesla may not fully reveal it, but investors will surely be keen to know how Tesla intends to build an EV cheaply and at scale. Will the battery technology differ remarkably from its current cars? How soon will the vehicle arrive? These will be key questions that investors will surely asking at the event.
Musk’s Master Plan 3
When invites went out last month, Tesla fans and investors were speculating there would be more to this event than capital allocation plans and long-term expansion. And Musk confirmed as much, proclaiming that he would indeed reveal his upcoming Master Plan 3:
Musk had previously teased his Master Plan 3 early last year, saying it would be dealing with topics like “scaling [production] to extreme size, which is needed to shift humanity away from fossil fuels, and AI.”
Of course, part and parcel of Musk’s vision of shifting humanity to a sustainable energy future will require mass scaling of EVs and making them affordable to most people, as mentioned above.
How to store that solar power will be key for harnessing Tesla’s sustainable energy vision. New updates to Tesla’s residential Powerwall battery may be coming, as well as new details on technology or upcoming projects for Tesla’s massive Megapack commercial battery applications. Tesla has been
Secondly, the question of how to store that solar power will be key for harnessing Tesla’s sustainable energy vision. New updates to Tesla’s residential Powerwall battery may be coming, as well as new details on technology or upcoming projects for Tesla’s massive Megapack commercial battery applications. Tesla has been ramping up Megapack production and construction initiatives recently.
“Tesla has been supply constrained in energy storage for as long as we can remember,” New Street Research analyst Pierre Ferragu wrote in a note last week. “And the ramp of the new megapack fab in Lathrop, which quadruples the company’s production capacity, we expect an inflection point in 2023 to 2024.”
Tesla has been slowly ramping up its use of new 4680 battery cells, and using LFP battery chemistry for some of its vehicles in China.
Expect to hear more on those initiatives, plus more importantly, how the company is going to acquire the materials needed to build these batteries. Most recently Tesla started construction of a lithium refinery in Texas, and is reportedly in talks to buy lithium miner Sigma Lithium. Perhaps an announcement will be made on Tesla’s sourcing of critical minerals it will use to build batteries, and where it will be making them.
“To support its volume and cost targets, we think Tesla will speak about the role of in-house battery manufacturing technology, capacity expansion, and actions to secure raw materials,” Deutsche Bank analyst Emmanuel Rosner said in a note last week. Rosner believes this week’s event will push the stock higher, and raised his price target to $250 from $220 in anticipation.
