Tesla's Flat Battery Day

Shares of Tesla (TSLA.US) fell as much as 7.6% in extended trading  on Tuesday after the electric-auto maker unveiled innovations and increased efficiencies that appeared to disappoint investors at its “Battery Day” event.

At the company's annual shareholder gathering on Tuesday, Musk announced that his company is planning to build a $25,000 full self-driving car within three years that will use significantly cheaper batteries. Interestingly Musk also acknowledged, “It’s not like Tesla’s profitability is crazy high. Our average profitability for the last four quarters was maybe 1%. It’s not like we’re minting money. Our valuation makes it seem like we are, but we’re not.”

During the "Battery day " presentation, Tesla confirmed that it has designed and is working on its own battery cells as its plan to make its vehicles more affordable to a mainstream buyer and batteries are currently the most expensive part of the car. Tesla’s senior vice president of powertrain and energy engineering, Drew Baglino said that new larger cells, along with other manufacturing and design changes underway at Tesla, would eventually improve the range of its cars by more than 50%.

However sentiment worsened after Musk said that some of the innovations showcased at the event were “close to working” and some three years away from fruition. The long lead-time for some projects disappointed many, suggesting that Tesla’s lead over rivals in the key battery space is no longer as big as it was before.
Also many investors expected more information regarding the development of a “million mile” battery which could last for 10 years or more, and a specific cost reduction target -- expressed in dollars per kilowatt-hour -- that would finally drop the price of an electric vehicle below that of a gasoline car, however Musk did not comment on these issues.
Therefore despite Musk's promises, investors slashed $50 billion from Tesla market value on Tuesday and the negative sentiment continues to prevail today.