What cheaper batteries would mean for TSLA stock

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The road to the top of the electric vehicle (EV) race lies in battery production – or more precisely, the ability to streamline battery production and reduce overall costs. You’re here (NASDAQ:TSLA) knows as much, now working hard to perfect its drums before its competitors.

Of course, it hasn’t been a great day for TSLA stock so far, which is up less than 2%. But the company has a few exciting updates on the battery front. Reuters reports that “by using larger cells and a new process for dry-coating the electrodes, Tesla could cut the cost of a Model Y battery in half, saving consumers more than 8% of the car’s starting price. United States “.

This kind of achievement could change the face of electric vehicle production, not just for Tesla, but for the entire industry. However, there is a flip side. According to 12 Tesla-linked experts, battery production technology is only halfway done. Meanwhile, Tesla faces increasing pressure from international markets. Companies like the one in Hong Kong Lithium battery technology for aviation in China are equally get bigger shares of the electric vehicle battery market at a time when Tesla needs to maintain its lead.

Let’s take a closer look at what investors in TSLA stocks can expect as the company strives to stay ahead.

What this means for TSLA stocks

It is no secret that the recent supply chain crisis has created many obstacles for producers of electric vehicles. Battery production is one of the hardest hit areas, as prices for nickel, cobalt and other battery metals have soared. At the end of April 2022, however, Tesla reported that about half of its vehicles produced in the first quarter of the year were powered by lithium iron phosphate (LFP) batteries. This represented a significant step forward in battery production, but was overshadowed by the company’s positive earnings report.

Since then, Tesla has not released any major battery updates until today. But this week’s news is important because it could foreshadow a major catalyst for growth. Experts note that Tesla is struggling to streamline production because its technology is so new. Reuters reports the following:

“The dry coating technique used to produce Tesla’s largest 4680 battery cells is so new and unproven that the company is struggling to scale up manufacturing to the point where the big cost savings kick in.”

Even so, it’s important for TSLA stock investors to get the big picture here. Tesla has an impressive history of reduce battery production costs, which has been a constant driver of actions. There is no reason to assume that the company cannot continue to reduce costs even further. Some of the experts consulted by Reuters believe that Tesla will be able to cut production costs for the Model Y 4680 battery by as much as $5,500. Saving that much per vehicle would put Tesla in a great position to continue producing more electric vehicles at a time when demand is skyrocketing.

CEO Elon Musk has set a goal of selling 2o million electric vehicles a year by 2030. If Tesla is able to streamline battery production as experts predict, that goal will be within reach. If – or when – the company encounters it, TSLA stock will soar.

At the date of publication, Samuel O’Brient held (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

Samuel O’Brient has been covering financial markets and analyzing economic policy for over three years. His areas of expertise are in electric vehicle (EV) inventory, green energy and NFT. O’Brient enjoys helping everyone understand the intricacies of economics. He is ranked in the top 15% of stock pickers on TipRanks.