Tesla Battery Suppliers See Shares Drop After Battery Day

According to Yahoo Finance, on Wednesday, the day after automaker Tesla (TSLA) shared its plan to cut the cost of batteries in half at its Battery Day event, the stocks of battery makers LG Chem Ltd (OTC: LGCLF) and Panasonic (OTC: PCRFY) fell 4.5% and 4%, respectively.

Alongside Tesla CEO Elon Musk’s announcement that it would cut battery cost in half, it also shared that it would be producing the batteries at its own factories, rather than sourcing them from its suppliers’ factories.

Meritz Securities analyst Rho Woo-ho told reporters, “Tesla will have more power in negotiating prices and therefore overall battery costs will fall further.” He continued, “This is not a good signal to battery vendors in Korea and overseas.”

“Tesla is sending signals to suppliers that they have to lower prices too,” said Han Sang-won, Daeshin Securities analyst.

At Battery Day, Musk shared that the new battery would increase power five-fold and energy six-fold.

While the new battery developments unveiled at Tesla’s Battery Day were impressive, they apparently were not impressive enough for investors, ultimately resulting in a $50 billion (USD) market value erosion for the company.

Though the Battery Day may have been underwhelming to Wall Street, it should not take away from Musk and Tesla’s push towards sustainable transportation, and in all likelihood, it won’t. The company’s long term vision should not be judged in the short term, and it’s likely more details are still to come from Tesla’s battery breakthroughs.