Tesla Stock Hits $1,000 Because of the "Million Mile Battery" -- Barrons.com
11:00 am ET June 10, 2020 (Dow Jones) Print
By Al Root
Tesla shares hit a fresh record Wednesday morning: $1,000 a share. The stock is being lifted by positive news about its battery technology along with the possibilities of new products.
Tesla (ticker: TSLA) stock opened at $999. Shares are up about $60, or 6.4%, to about $1,001 in morning trading.
A few things seem to be moving the stock while the Dow Jones Industrial Average is down nearly 200 points, awaiting the Federal Reserve's announcement at 2 p.m. eastern time.
For starters, several media outlets are reporting the electric vehicle pioneer's heavy duty semi-truck is ready for production. The truck was launched around 2017 and Tesla has signed up customers such as J.B. Hunt Transport Services (JBHT) and Walmart (WMT).
Tesla didn't respond to a request for comment about semi-truck production.
The semi-truck caught investors by surprise Wednesday. Tesla's bulls and bears have been more focused on the company's plant restart plan, Chinese sales and Model Y production.
In addition to Tesla's semi-truck, shares got another boost from Wedbush analyst Dan Ives. He boosted his price target to $1,000 a share. It's the third price target with four digits among large brokers, according to FactSet.
Ives still rates the shares the equivalent of Hold. But he was encouraged by recent Chinese Model 3 sales. What's more, he believes Tesla has a growing lead in battery technology. That's a much bigger deal.
"Musk & Co. are slated to announce a number of new potential game changing battery developments at its highly anticipated Battery Day," wrote Ives in a Wednesday research report. "We believe the company is getting closer to announcing the million mile battery."
While this isn't a battery that can go 1 million miles on a single charge, an impressive feat, this battery pack could last for 1 million miles.
Few cars run more than 200,000 miles. But battery durability is still a game changer because it raises the possibility of reusing batteries as well as supporting Tesla service vehicles -- like taxis -- which could run for years without fear of battery life degradation.
Tesla is planning to host a battery technology day later in June. Details haven't been released yet. "The Street's focus of the upcoming Battery Day will be reducing battery production costs to the key $100 [per kilowatt-hour] threshold," adds Ives.
Electric car jargon is still confusing to car buyers. Here's what that means: A Model 3 Sedan, for instance, can be bought with a 75 kilowatt-hour battery pack. Roughly speaking, the battery pack costs $7,500 to put in the car. Then there are the costs for battery integration and electric motors. That amount needs to be compared with the cost of an internal combustion engine, gear box and gas tank.
Typically, investors think that electric vehicles cost more up front, due to battery costs, but are cheaper to operate because electricity is less expensive than gasoline. For that reason, getting battery costs down helps electric vehicles compete with traditional cars on cost.
Tesla stock is now up about 140% year to date, crushing comparable returns of automotive peers, the S&P 500 and the Dow over the same span.
Write to Al Root at allen.root@dowjones.com
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