Musk’s Big Battery Plans Could Jumpstart TSLA Stock

Tesla (NASDAQ:TSLA) is still struggling as the week winds down. Since Twitter (NYSE:TWTR) accepted Elon Musk’s offer to acquire the company, the electric vehicle (EV) leader has been slipping. Investors want proof that TSLA stock can still rise as Musk’s focus shifts to another company. And while the CEO is gearing up to begin a new venture, that doesn’t mean that Tesla is sitting quietly by. Last week, the company provided some exciting battery production updates.

A close-up of the Tesla (TSLA) logo on the hood of a red Tesla car.
Source: Tudoran Andrei / Shutterstock.com

What’s Happening With TSLA Stock

After dropping off two days ago, TSLA stock is still in the red. It fell this morning, and despite some slight attempts to rally, it is currently down more than 5% for the day. With today’s declines, it is down almost 18% for the week.

TSLA is not the only high-growth tech stock to battle strong market forces this week. As InvestorPlace Assistant News Writer Shrey Dua reports, “the tech-heavy Nasdaq is continuing to suffer from recent pullbacks, shedding about 9% in the first quarter of 2022.”

However, TSLA investors have plenty of reason to be optimistic. Let’s take a look at the road ahead and how the company will get there.

Why It Matters

Last week, Tesla reported positive earnings, blowing past Wall Street expectations on both top and bottom lines. While this news delighted investors, it overshadowed another key announcement. Tesla also disclosed an important battery production statistic. Nearly half the vehicles produced in 2022 Q1 were powered by lithium iron phosphate (LFP) batteries. As Reuters reports, these are a less expensive option than the popular nickel-and-cobalt-based batteries.

It’s no secret that EV producers have been concerned about battery production. The supply chain crisis was already making it difficult to procure important metals before Russia’s invasion of Ukraine. Now soaring prices of materials such as nickel have created an even more daunting industry, which isn’t helped by cobalt-mining problems.

The time is opportune for Musk to double down on EV batteries that don’t rely on either, and he is doing just that. This focus on iron-based cell batteries have earned him the title “Iron Man,” but they signal something important: that iron-based batteries are about to take over the market. As always, Tesla is leading the charge forward. Data from the Benchmark Mineral Intelligence (BMI) indicates that 44% of China’s EVs are powered by LEP batteries. According to Teslarati, they “tend to be larger, heavier, and generally hold less energy than nickel-cobalt-manganese (NCM) cells.” However, in an age in which ability to procure materials is of paramount importance, the tradeoff is not hard to make.

What It Means

This type of adoption will help the company continue to scale production, sending TSLA stock up as it does. And its investors won’t be the only ones to benefit. If Tesla is doing something, other EV producers are sure to follow. Startup Fisker (NYSE:FSR) is already in talks to start sourcing LEP materials from nearby countries. The company sees the technology as being perfect for city dwellers who often don’t drive too far.

Investors haven’t been heavily focused on Tesla’s battery production recently, but they should be. It is an important area that promises to help the company maintain its position as leader of the EV race.

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/2022/04/musks-big-battery-plans-could-jumpstart-tsla-stock/.

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