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Week Ahead: Tesla Battery Day to spark investor interest
Tesla hosts its long-awaited and much-hyped Battery Day on Tuesday, with investors eyeing a possible game-changing technology announcement. Meanwhile the economic data stream flows with flash PMIs for the Eurozone, a Reserve of Bank of New Zealand interest rate decision and the weekly US jobs report.
Fed chair Jay Powell and Bank of England governor Andrew Bailey are both due to speak in the coming days after last week’s FOMC and MPC meetings.
Tesla Battery Day
Tesla’s 2020 annual meeting of stockholders will be held on Tuesday, September 22, 2020, at 13:30 Pacific Time. Immediately after this meeting, Tesla will hold the Battery Day event, which has been generating equal amounts of speculation in the shares as in what CEO Elon Musk may be about to reveal.
Our full guide to the event can be found here.
How is the economic recovery going?
Is the global economic recovery losing momentum? Whilst the snapback after lockdowns was the easy bit, it’s going to be much harder to get back to 2019 levels. Marginal gains are becoming harder to come by and some high frequency economic indicators are starting to level off. Eurozone PMIs for instance, have started to soften.
The latest round of flash manufacturing and services surveys for the Eurozone, UK and US are due on Wednesday. Meanwhile traders will be watching the weekly US jobless claims numbers as closely as ever on Thursday, while US durable goods orders on Friday offer a useful leading indicator of business demand.
How are central banks responding?
Last week the Federal Reserve and Bank of England signalled they are ready to do more as required and interest rates are set to stay low for a long time. This week sees the Reserve Bank of New Zealand in action after the country posted its worst recession in decades.
The country’s economy shrank by 12.2% between April and June, the steepest decline since the current system of measurement began in 1987 as strict national lockdown measures crippled activity.
The RBNZ has been looking at negative rates with assistant governor Christian Hawkesby saying last month that the central bank is “preparing the groundwork” for additional policy tools, which include negative rates. Will they make the leap now, or will they gauge that the economy will bounce back thanks to the very low number of cases?
Highlights on XRay this Week
Read the full schedule of financial market analysis and training.
|15.00 UTC||21-Sep||Tesla Battery Day Preview|
|17.00 UTC||21-Sep||Blonde Markets|
|17.00 UTC||22-Sep||Webinar: Identify Trends and Choose Technical Indicators|
|14.45 UTC||24-Sep||Master the Markets|
|17.00 UTC||24-Sep||Election2020 Weekly|
Key Events this Week
Watch out for the biggest events on the economic calendar this week. A full economic and corporate events calendar is available in the platform.
|22-Sep||Kingfisher – Half-Year Results|
|14.00 UTC||22-Sep||Eurozone Consumer Confidence|
|02.00 UTC||23-Sep||Reserve Bank of New Zealand Rate Decision|
|07.15 – 08.00 UTC||23-Sep||Eurozone Flash Services / Manufacturing PMIs|
|Pre-Market||23-Sep||General Mills – Q1 2021|
|08.30 UTC||23-Sep||UK Flash Services / Manufacturing PMIs|
|14.30 UTC||23-Sep||US EIA Crude Oil Inventories|
|23.50 UTC||23-Sep||Bank of Japan Meeting Minutes|
|08.00 UTC||24-Sep||German Ifo Business Climate|
|Pre-Market||24-Sep||Accenture – Q4 2020|
|12.30 UTC||24-Sep||US Weekly Jobless Claims|
|14.30 UTC||24-Sep||US EIA Natural Gas Storage|
|After-Market||24-Sep||Costco Wholesale Corp – Q4 2020|
|11.00 UTC||25-Sep||Bank of England Quarterly Bulletin|
|12.30 UTC||25-Sep||US Durable Goods Orders|
Tesla Battery Day primer: Can Musk deliver as TSLA rallies on event hype?
Tesla Battery Day primer
- Battery Day event scheduled for Sep 22nd
- Signs of speculative buying ahead of event
- Elon Musk hints at more energy dense batteries
Investors are charged up with excitement ahead of Tesla’s Battery Day event. Shares have rallied about 25% in the last week after the stock tapped on the 50-day simple moving average following some heavy selling in the middle of the Nasdaq’s early September pullback.
This of course followed disappointment at missing out on S&P 500 inclusion, and some very aggressive bid that took place in and around the stock split. So is Battery Day all hype, or is there something to it?
Tesla’s 2020 annual meeting of stockholders will be held on Tuesday, September 22, 2020, at 13:30 Pacific Time. Immediately after this meeting, Tesla will hold the Battery Day event.
CEO Elon Musk, in his usual caution, said in January that the event will ‘blow your mind’. Recently he toned it down a bit, teasing ‘many exciting things’. Whilst we should always take his pronouncements on Twitter with a pinch of salt, clearly there is a high degree of expectation and speculation – and speculative buying of TSLA stock – taking place in the run-up to the event.
To deliver on its EV promise, Tesla needs to own the battery space. Without this, it’s not so different to an OEM. Musk commented on this at Tesla’s Q4 2019 earnings call in January, explaining that in order to ramp up Model Y production, introduce the Cybertruck and launch the Semi electric truck, a lot more batteries would be needed.
“So, the thing we’re going to be really focused on is increasing battery production capacity because that’s very fundamental because if you don’t improve battery production capacity, then you end up just shifting unit volume from one product to another and you haven’t actually produced more electric vehicles,” Musk said.
And whilst Tesla has a lead in the powertrain stakes, traditional players may catch up. “It’s worth noting that the Model S has like a 100 kWh pack, the [Porsche] Taycan has like a 95 kWh pack. The Model S is steadily approaching 400 miles of range. The Taycan has 200 miles of range. So we must be using that energy pretty efficiently, and the powertrain is a big part of that,” Musk added in January.
Whilst battery production is one thing, making the batteries more efficient is quite something else. Tesla’s acquisition of Maxwell, an ultra-capacitor manufacturer and battery technology business based in San Diego, is a considerable factor.
What to expect from Tesla’s Battery Day
My expectation is that Musk is about to announce if not a leap then a progression in battery technology that brings EV costs down to, or close to, traditional automobiles. It would be a surprise if Tesla were not able to say it has made further progress on batteries that are more energy dense and have a longer life.
We note for example, that on August 24th this year Musk said battery cells of 400 Watt hours per kilogram (Wh/kg) with a high cycle would be possible in volume within 3 to 4 years, way beyond the current 260 Wh/kg in the Model 3, which could indicate knowledge of some improvement coming in the Tesla batteries.
There has also been speculation that Tesla may unveil “silicon nanowire anode” technology that can greatly increase battery density and cell life. All of this remains speculation, of course.
If Tesla can both lower costs and increase battery energy density and life, it would be a significant step forward for the company and further cement its lead in the EV space. However, given the recent rampant speculation on the stock and Musk’s capacity to somewhat overstate his case, there is a considerable risk of a buy-the-rumour, sell-the-fact trade.
Tesla Stock Signals
Whilst client flows remain positive (87% bullish), analysts remain downbeat – the average price target of $300 vs the current $450 for the stock implies a 34% downside. We also note that hedge funds have been decreasing their holdings.
Baillie Gifford, one of the top shareholders, recently reduced its stake as the holding approached fund limits, but also because of fears that valuations had just got silly. Our insider signals tool also delivers a sell signal on the stock.