Stocks in Tesla Inc tumbled more than seven percent as markets opened on Wednesday after CEO Elon Musk failed to impress with his promise to cut electric vehicle costs at the much awaited ‘Battery Day’ event on Tuesday.
Investors slashed $50 billion from Tesla Inc’s market value on Tuesday after Musk admitted it would be at least three years before it will cut electric vehicle costs so radically that a $25,000 car that drives itself will be possible.
Tesla’s market cap dropped $20 billion in just two hours after trading closed Tuesday, as Musk and other Tesla executives presented their new battery and manufacturing strategies.
Shares closed down 5.6 percent and had dropped another 6.9 percent after hours. They opened Wednesday at 5.4 percent and had dropped to 7.45 percent just after 11.30am ET.
‘Nothing Musk discussed about batteries is a done deal,’ said Roth Capital Partners analyst Craig Irwin. ‘There was nothing tangible.’
The dip in share price came as Tesla’s internal systems went down and some customer connectivity features were not accessible on Wednesday morning.
The outage appeared around 11am ET, with some Tesla owners saying they could not connect to their car through the mobile app.
Sources told Electrek that Tesla’s internal systems are also down, making it impossible to process deliveries and orders.
According to Down Detector, the outage is stretching across the US and over into parts of Europe.
Investors had expected two significant announcements at Musk’s ‘Battery Day’: The development of a ‘million mile’ battery good for 10 years or more, and a specific cost reduction target – expressed in dollars per kilowatt-hour – that would finally drop the price of an electric vehicle below that of a gasoline car.
Musk offered neither. Instead, he promised over the next several years to slash battery costs in half with new technology and processes and deliver an ‘affordable’ electric car.
‘In three years . . . we can do a $25,000 car that will be basically on par (with), maybe slightly better than, a comparable gasoline car,’ Musk said.
Investors slashed $50 billion from Tesla Inc’s TSLA.O market value on Tuesday after Musk admitted it would be at least three years before it will cut electric vehicle costs so radically that a $25,000 car that drives itself will be possible. Musk is pictured above on Tuesday
Meanwhile, The S&P 500 and the Nasdaq retreated on Wednesday as data showed domestic business activity nudged down in September, while a record high for Nike following a strong quarterly earnings report boosted the blue-chip Dow.
Data from IHS Markit showed gains at factories were offset by a retreat at services industries in September, suggesting a loss of momentum in the economy as the third quarter draws to a close.
Bets of a stable economic rebound from a pandemic-driven recession, combined with historic fiscal and monetary stimulus, had driven a rally in the three main U.S. stock indexes since March.
However, doubts over the next coronavirus relief bill as well as a selloff in heavyweight technology-related stocks have weighed on investor sentiment this month, with Wall Street favorites including Facebook Inc, Apple Inc and Amazon.com Inc bearing the brunt of the losses.
‘It’s just this constant push-and-pull in the face of uncertainty where we’re waiting on information about the election, earnings and stimulus,’ said Thomas Hayes, managing member at Great Hill Capital LLC in New York.
The Tesla outage appeared around 11am ET, with some Tesla owners saying they cannot connect to their car through the mobile app. According to Down Detector, the outage is stretching across the US and over into parts of Europe
Seven of the 11 major S&P indexes were down in morning trading, with energy leading declines. Industrial stocks were among the biggest gainers.
The Dow Jones Industrial Average was up 70.47 points, or 0.26 percent, at 27,358.65. The S&P 500, however, was down 2.26 points, or 0.07 percent, at 3,313.31, while the Nasdaq Composite was down 46.23 points, or 0.42 percent, at 10,917.41.
‘When the Dow outperforms the Nasdaq, it’s telling you that the market believes the reopening (and) vaccines are on track, and that’s going to help the type of large industrial stocks,’ Hayes said.
Nike Inc surged 9.7 percent to a record high as its digital sales, especially in North America, helped offset a fall in sales at traditional brick-and-mortar stores.
Oracle Corp fell 1 per cent after a report by a state-backed Chinese newspaper said Beijing was unlikely to approve a proposed deal by the software maker and Walmart for ByteDance’s TikTok.
Musk is pictured during a visit to the construction site of the first European ‘Gigafactory’ near Berlin earlier this month
Travel-related stocks including Delta Air Lines, American Airlines, Carnival Corp and Royal Caribbean Cruises rose more than 1 percent after being hammered earlier this week.
Johnson & Johnson gained 1.3 percent after kicking off a final 60,000-person trial of a single-shot COVID-19 vaccine that potentially would simplify distribution of millions of doses, compared with leading rivals using two doses.
Advancing issues nearly matched decliners on the NYSE and the Nasdaq.
The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 23 new highs and 10 new lows.
Tesla on Tuesday also introduced a new Model S Plaid, a 520-mile range sedan that can reach top speeds of up to 320kph, with deliveries starting in 2021. The Plaid was listed on Tesla’s website on Tuesday at a price of nearly $140,000. It won’t be available outside of the U.S.