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Tesla Inc Stock Shrugs Off Not-So-Secret Weapon

Tesla Inc stock moves on not so secret weapon

Tesla Inc has just put its future into production. Elon Musk’s team has confirmed that a new a generation of battery cells is now in production at Gigafactory 1 in Nevada. Those cells are destined for the Model 3, and likely a place in history.

Tesla Inc stock moves on not so secret weapon

The new cells are based on a Nickel Cobalt Aluminum Oxide chemistry. Tesla hasn’t said much about the changes it has made to the design of the cells. We really don’t know what kind of improvements are being built in at this stage. What we do know, however, is the firm’s goal. It wants batteries that last longer while at the same time being significantly less expensive than current cells.

Tesla Inc aims to drop battery costs

JB Straubel, the CTO at Tesla Inc confirmed that production on the new cells had started this weekend at the Midwest Renewable Energy Association’s 28th Annual Energy Fair in Wisconsin. Mr. Straubel gave the keynote presentation at the conference.

Slashing costs is a major target for Tesla Inc as it heads toward the release of the Model 3. The firm’s massive stock valuation is based on a promise of very high gross margins. Unless it delivers on that promise those with shares in the firm could be very disappointed. Battery tech, and production scale, are key to future margins.

Tesla should begin to deliver the first Model 3 units inside the next month. Wall Street will be watching every little bit of progress closely in order to decide whether or not Tesla stock is worthing running from. The firm has made a lot of promises about its battery tech over the past two years.

Some analysts have gone so far as to say that the firm really sells batteries, the Model S, Model X and Model 3 are simply interesting packaging. That story goes nicely with that of  Schick, the razor company bought out by battery firm Energizer Holdings Inc . Soon after that buyout vibrating, battery powered razors became common.

Tesla stock depends on perfect production

Tesla Inc has managed to get over a large number of risks in recent months. So good has been the firm’s progress that Tesla stock has earned upgrades because of almost monopolistic positioning. The way the firm handles its battery build will reveal more about its future than almost anything else.

Tesla shares have gained more than 70 percent since the start of the year. Many on Wall Street are focusing their bets on the Model 3. There are some, however, who still see batteries at the true heart of future growth.

On Monday morning traders were not reacting strongly to the firm’s big battery news. Investors were likely expecting the info some time this month. Tesla had previously promised that it would start production in the second quarter. That’s exactly what it has done, simple meeting expectations.

The lack of reaction on Wall Street doesn’t mean the start of production isn’t important for Tesla stock, however. This news confirms production is meeting its schedule, at least on one front. Also, CEO Elon Musk has been making big promises about the power of these cells. Traders on Wall Street will soon be able to find out for themselves whether or not Elon’s new cells can live up to that promise.

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Adrian Smith

Adrian Smith is a finance and tech writer and currently working on a Masters in Business Information. He has developed a keen interest in all things finance and technology and loves to write about it.