Tesla’s ‘Golden Goose’: Improvements Promise 30-50% Cuts In Battery Cost

Elon Musk, CEO of Tesla Motors, speaks at a press conference at the Nevada State Capitol, September 4, 2014, in Carson City, Nevada. Musk and Sandoval announced a plan to build a Tesla Gigafactory in Nevada to produce batteries for electric vehicles providing 6,500 jobs to the state. MAX WHITTAKER/BENZINGA 


By Shanthi Rexaline

A Tesla, Inc. (NASDAQ:TSLA) bull came away impressed from a visit to the electric vehicle giant’s Giga Nevada, which manufactures lithium-ion batteries and EV components. 

Wedbush analyst Daniel Ives has an Outperform rating and a $183 price target for the stock.

An aerial view of Tesla Shanghai Gigafactory on March 29, 2021, in Shanghai, China. Tesla Shanghai Gigafactory is reportedly producing vehicles at a rate of about 450,000 cars per year. XIAOLU CHU/BENZINGA

Aiming to reduce battery costs by 30-50% over the long term is the “golden goose” for Tesla, Ives said in a note.

The company is taking great efforts to meticulously create cost efficiencies while strategically expanding, the analyst said following his walk around the factory. 

It is now aiming to produce about 100 Gigawatt-hour capacity of in-house 4680 battery cells per year,  he said, adding that this along with Panasonic Holdings Corp. (OTC:PCRFY) cells, would be sufficient to power about 2 million annually.

This, according to the analyst, will be a crucial step to ramp up battery production nearly 29 times by 2030.

Tesla automobile plugged in and charging a Supercharger rapid battery charging station for the electric vehicle company Tesla Motors, in the Silicon Valley town of Mountain View, California, August 24, 2016. SMITH COLLECTION/BENZINGA

Giga Nevada produced 7.3 billion battery cells, or 37 GWh+ annually, and supplied a total of about 3.6 million drive units, the company said at the start of the year, Ives noted. With the $3.6 billion investment in Nevada announced in January, the company plans to nearly triple its historical GWh output, he added.

“We view this as a major step forward for Tesla which we believe could potentially be ahead of schedule while from the bird’s eye view creating large economies of scale for costs and laying out the blueprint for the future,” Ives said.

The analyst noted that the 4680 batteries focus on a 16% increase in range and six times power while cutting capex per GWh, and its next-gen drive units aim for a 75% reduction in silicon carbide, zero rare-earth metals usage and a 50% reduction in factory footprint.

“The all-important 4680 production ramps, battery cost-cutting of 30% – 50%, and margins will be the largest focal points of the year along with units/gross margins balance,” the analyst said.

Tesla ended Thursday’s session up 0.86% at $184.47, according to Benzinga Pro data.

Produced in association with Benzinga



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