Yahoo Finance’s On the Move panel discuss Tesla’s Battery Day and the reported Tesla network outage.
JULIE HYMAN: We are watching Tesla as well today. Those shares are down by 8% right now. A lot going on with Tesla. It had its Battery Day yesterday that fell flat for some investors, or at least did not meet their most lofty expectations. In addition, there are reports this morning that Tesla is suffering a network outage, that internal systems are down, the customer connectivity features are not available, so that could be hurting the shares as well.
Rick, for a company where execution is important when you're talking about a company like Tesla, especially when you're priced like a company like Tesla.
RICK NEWMAN: Yeah, let me address that outage question first. So we obviously don't know exactly what's going on, but this is a big deal, because it's not just that the company's website is down or that internal systems are down, but the people actually cannot use their Tesla vehicles because of the connectivity between the car itself, the app on the phone that many people use to operate their vehicle that, for example, locks and unlocks the car, and Tesla's internal network.
So they're all linked, and when the corporate network goes down at Tesla, apparently that immobilizes some of the vehicles. I mean, that's completely unusual there. I'm trying to think of any other automaker where you would not be able to operate your vehicle if the company's corporate networking went down, and I'm not sure there are any. So that is a vulnerability in the vehicles themselves that Tesla's going to have to address, even if this turns out to be pretty short-lived.
As for Battery Day, you mentioned its stock being down more than 8%. So the market didn't get what it wanted. That's what that drop in the stock price tells you. But stock is still up more than 370% this year, so that's not a big drop for a company like Tesla.
I think the sort of best case for Battery Day was some-- news of some kind of imminent breakthrough in battery technology, and we did not get that. What we got was Elon Musk saying their plans for a $25,000 car, perhaps within three years. That's a fairly long time horizon.
That's a lot longer than I think the market wanted. To get to a $25,000 car, because the batteries are such a big part of the cost, you would need to get the battery costs down. And I guess the last thing I'll say, as Adam is probably preparing to interrupt me--
ADAM SHAPIRO: Yes.
RICK NEWMAN: --is just remember that Moore's law does not apply to batteries. We don't see a doubling of capacity every six months. It's much slower than that. And quicker development technology is what we really need here.
ADAM SHAPIRO: Let us remember the range on Detroit electrics back at the turn of the last century was something like 50 to 100 miles. So no, technology in the batteries is slow. This number he threw out yesterday-- as my brother who has a Tesla was bragging about his car last night-- 20 million vehicles at some point. That's an outlandish claim, or is it when it comes to Elon Musk?
RICK NEWMAN: Well, I mean, that assumes hyperbolic growth. So you know, but that's what Elon Musk foresees. I mean, he thinks Tesla is going to be the-- the world's biggest automaker at some point, and that's what's been going on with the crazy-- you know, crazy stock price.
The bull case for Tesla is that Elon Musk is right, and it has already cemented a lead in electric vehicle technology over all the other automakers, that none of them will ever be able to match, it will stay in front forever, and electric vehicle technology will be the main way cars are propelled. But they're nowhere near that right now. I mean, Tesla's market share at the moment is 1% of the US market. So if you believe Elon Musk, they're going to get their market share up to something like 20%. That's a huge leap.
JULIE HYMAN: Well, it would maybe match the market value of the company, which seems to estimate that kind of thing. Thanks, Rick. We should mention, as well, there are reports that connectivity is coming back to those Tesla vehicles, although it doesn't appear to be back fully.