Tesla Analysts: Battery Day All About Costs, $100 kWh Milestone

All eyes remain on Tesla Inc TSLA ahead of Tuesday's Battery Day event.

5 Battery Day Developments To Watch: BofA Securities named five key topics they think will be discussed:

1. Improvement in battery cost, power density and range. 
2. Possible battery insourcing or deepening relationships with suppliers. 
3. Potentially externally supply batteries and electric vehicle powertrain. 
4. Integration of electric vehicle powertrain and battery. 
5. An update on Tesla's product pipeline. 

Tesla founder Elon Musk has a vision of vertical integration.

The Battery Day event could show a new focus on Tesla making its own batteries or making its existing relationships stronger with companies like Panasonic, LG Chem and CATL, John Murphy said. 

Tesla has large economies of scale and, given the growing EV market, could begin to externally supply its batteries to other companies, the analyst said: "This could be presented as an opportunity that Tesla can exploit by supplying into others."

BofA Securities analyst John Murphy has a Neutral rating on Tesla with a $550 price target. The price target is based on 13.6 times EV/sales.

Tesla's New Battery Technology: Tesla is working on battery technology to reach the “holy grail” of electric vehicles.

Getting to the $100 kWh price point would help electric vehicles compete better with traditional automobiles that burn gas. 

Leaked images of Tesla’s battery cells produced as part of its internal “Roadrunner” project show a larger diameter, which could increase the volume and capacity of the cells.

The new batteries created by Tesla are expected to be easier to produce and less costly.

Tesla’s potential internally produced batteries would give the company more control over development times and costs.

Tesla remains somewhat reliant today on its partners to meet its vehicle delivery goals.

Important note about Tesla Battery Day unveil tomorrow. This affects long-term production, especially Semi, Cybertruck & Roadster, but what we announce will not reach serious high-volume production until 2022.

— Elon Musk (@elonmusk) September 21, 2020

Wedbush analyst Daniel Ives has a Neutral rating on Tesla and a $515 price target.

“In our opinion this battery technology will be very advanced, potentially last for decades, withstand all types of weather/terrain, and be another milestone for the Tesla ecosystem,” the analyst said in a note. 

All eyes are on the company bringing battery production costs to the key $100 kWh level, he said. 

Past Tesla Events: Tesla stock will be heavily watched Tuesday, but that doesn’t mean investors will react positively.

Tesla highlighted its solar glass roof tiles at an October 2016 event that showed off technology from SolarCity, a company Tesla acquired for $2.6 billion.

In 2019, Tesla’s Autonomy Day promised self-driving cars by the end of the year. Musk said cars would not have steering wheels or gas pedals by the year 2021.

The company would later announce a reworking of its autonomous technology.

“Overall, we expect news flow with the event will be positive, but given there is so much hype behind the company, it is unlikely to drive a material move in the stock in either direction,” said BofA's Murphy. 

TSLA Price Action: Tesla shares ended Monday's session higher by 1.64% at $449.39. 

Photo courtesy of Tesla.