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Tesla Shares Have Depreciated Because the Stock Market Is Tired of Promises

After the Q4 2021 earnings call, Tesla shares slid. The company lost more than $100 billion in value on a single day, which is equivalent to a BYD – or a Daimler plus a Nissan. Twitter was crammed with attempts to explain why that happened, mostly from people who have invested every single penny they have in Tesla stock.
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For these believers, the market did not understand how groundbreaking Optimus would be. If you missed it, that’s the name of Tesla’s humanoid robot. So far, all we have seen about it are CGIs and a person dancing with an Optimus fantasy suit on stage at Tesla AI Day.

Others prefer to think that the market just can’t see what a breakthrough FSD will be when it is ready. They are echoing Elon Musk during the earnings call. The Tesla CEO repeated this to exhaustion as if people were just too stupid to realize what a revolution “self-driving” cars would be.

What these analyses fail to grasp is that Elon Musk had promised an updated roadmap for Teslas products. In other words, they wanted to know about the Cybertruck, Semi, Roadster, and Tesla’s high-volume vehicle, which some still insist on calling Model 2 despite Musk’s denials about the name. Now, they have to deal with the Tesla CEO denying it is even under development.

The market was also waiting for a roadmap for the 4680 cells. Presented at Tesla Battery Day on September 22, 2020, they would be a true revolution. Ironically, Tesla shares also dropped right after that event: the company lost $50 billion in market cap on September 23, 2020. This was probably the first sign that people were not willing to believe Musk’s promises without solid evidence that they were attainable.

About these cells, Musk said they would enter mass production at Giga Austin with the Tesla Model Y made there. This vehicle will also have a structural battery pack. If that really happens, Musk will have beaten his last prediction for them to enter production lines.

On Tesla’s Q1 2021 earnings call, held on April 26, 2021, the Tesla CEO said the 4680 batteries were 12 to 18 months away from manufacturing at that point. In other words, Tesla vehicles would get them by April 2022 in the best-case scenario or by October 2022 in the worst one. If the first production Model Y units with them really leave Giga Austin in March, that’s one month earlier than what Musk predicted at that point.

That would be great news for the company apart from one detail: these first 4680 cells are made by Tesla. Panasonic – the company’s largest battery supplier – said it would only produce this format in 2023. The company said that “mass-producing them requires new techniques.” In other words, processes that will only be mature enough a year from now.

On top of that, Panasonic would not do so at Giga Nevada: production will happen in Japan. According to Nikkei Asia, the decision would have been taken because of a “U.S. snag.” The move to Japan would be to boost output at a low cost without compromising quality and safety. Yikes…

If Panasonic will not dare to produce these cells at this development point, why will Tesla? Has the company done all necessary testing to ensure these 4680 cells are safe? Is it confident they will be robust enough for the vehicles’ lifecycle? With Tesla’s record of quality control and testing, that’s something to worry about, especially when confronted with its “deliver now, fix later” policy.

In the end, the roadmap revealed that Tesla is just worried about expanding the production of its current vehicles. Summing up, there was no roadmap, only an attempt to put Tesla’s entire value on new promises: a humanoid robot that will start its career “moving parts around” Tesla factories, and a piece of software that would turn Teslas into robotaxis in 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, and 2023 – so far.

Anyone genuinely looking for an explanation on why Tesla stock fell so sharply just has to look at the facts: what the company has pledged to do and what it has delivered. Tesla’s present market cap is based on perspectives, not on the current state of things. Losing as much value as two automakers that produce many more vehicles than Tesla on a single day shows how insane the stock market currently is. Above all, it shows Tesla needs to deliver more and promise less.

 
 
 
 
 

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