Tesla Inc TSLA battery supplier shares slumped in morning trade on Asian markets Wednesday after the automaker’s CEO Elon Musk revealed a plan to halve the cost of batteries and make them at its own factories.
What Happened: Korea’s LG Chem Ltd LGCLF fell 4.5% in the morning hours in Seoul, while Panasonic Corp PCRFY shares fell 4% in Tokyo and China’s CATL fell by as much as 4% in Shenzhen, Reuters reported.
Growth of battery makers in China, South Korea, and Japan may be stunted in the long-term as Musk’s comments at the company’s battery day are reportedly indicative that Tesla might pressurize suppliers to reduce prices.
“Tesla will have more power in negotiating prices and therefore overall battery costs will fall further. This is not a good signal to battery vendors in Korea and overseas,” analyst Rho Woo-ho of Meritz Securities told Reuters.
Daeshin Securities analyst Han Sang-won told Reuters that “Tesla is sending signals to suppliers that they have to lower prices too.”
Why It Matters: Tesla revealed a new battery design at its Battery Day which could cost as much as 50% less and increases power by six times and energy by five times, while extending the range of the vehicle by 16%.
The automaker is also aiming to produce a $25,000 fully-autonomous EV in the next three years.
Investors were left disappointed at the time-horizon of the announcement and the company’s market value suffered a $50 billion erosion.
Musk revealed that the EV company has a target to shoot up battery production by 2030 to 3,000 gigawatt-hours a year, which is 85 times greater than the current capacity of its Nevada plant, Reuters noted.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.