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Prototype Battery Success Could Send Tesla Stock Racing in 2022

Recent events regarding the construction of an automotive showroom and service center in China’s Xinjiang region have cast a negative light on a major electric vehicle (EV) producer. Indeed, Tesla (NASDAQ:TSLA) has been under fire after CEO Elon Musk decided to set up shop in an area synonymous with human rights violations. While Tesla stock is still down today, the company also has some good news to report much closer to home. This just might help the stock regain momentum in more ways than one.

Tesla (TSLA) badge on back end of red Tesla car
Source: Hadrian / Shutterstock.com

What’s Happening With Tesla Stock

The EV race came to define 2021 as new companies arose and others took significant steps forward. However, for all the progress that was made, many key players still faced difficulties. Primarily, these difficulties stemmed from battery production constraints, due largely to the supply chain problems that plagued all manufacturing-centric industries throughout the year.

As it turns out, Tesla may be on its way to solving that problem with the help of a Michigan-based startup. Car and Driver reported that Our Next Energy (ONE), recently retrofitted a Tesla Model S sedan with a new battery that held twice the energy of the car’s original power source. The vehicle was then able to drive 752 miles across Michigan on a single charge.

While it’s true that Tesla stock is down today, its declines are only at 0.6% as of this writing. Even following yesterday’s events, shares are still up almost 8% for the week while their gains for the month exceed 13%. This story hasn’t received too much coverage outside auto industry trade outlets, but that doesn’t mean investors shouldn’t be optimistic. Let’s take a look at the broader picture.

The Road Ahead

For a company operating in the EV battery space, successfully powering a Tesla car is an excellent proof of concept. Additionally, it’s equally good news for Tesla, if not better. The company has made it clear throughout 2021 that streamlining the battery-production process is on one of its top priorities. Throughout late December, Tesla stock rose as rumors circulated that the company had entered into an agreement with Chinese battery cell producer Gotion High-Tech. Then, the stock rose even further upon confirmation that it actually inked a deal with Australian graphite miner Syrah Resources (OTCMKTS:SYAAF).

With that in mind, consider what a partnership with a U.S.-based battery innovator could do for Tesla stock. ONE is clearly a company worth watching in the space. If it is able to scale operations for Tesla, it would be hugely beneficial to both companies. This is especially true if the batteries maintain this caliber. Musk has long wanted to streamline battery production operations close to home. Now, it seems like ONE may be exactly the company to help him do that.

The Bottom Line

The way it looks from here, Tesla stock is already recovering from the declines it suffered yesterday. The company began 2022 on an excellent note after reporting that it had exceeded delivery expectations for the final quarter of 2021. This helped propel the stock upward as Wall Street bells rung in the new year.

This story hasn’t received much coverage yet, but investors in the EV sector should be paying attention. If Tesla is able to secure a battery production partner close to home, it will pull further into the lead in the EV race. Given what we know of ONE’s batteries, that certainly sounds possible.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2022/01/prototype-battery-success-could-send-tesla-stock-racing-in-2022/.

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