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We all know the saying, “Life has its ups and downs”, and that certainly rang true for Tesla following its successful Battery Day on Tuesday, 22 September. Barely 24 hours after riding the high of a remarkable event, Tesla’s EV owners and shareholders experienced a downer.
Shares fell as much as 7.6% hours after Tuesday’s event, but have pared some gains to trade down 6.0% in Wednesday’s premarket session. This suggests investors were initially underwhelmed by the news of Tesla’s plans for the new battery design and manufacturing strategy. September was a rocky month for Tesla stock’s rising and falling. Following the stock's 1,000% gain between August 2019 and August 2020, a bumpy ride ahead is almost inevitable. While some analysts were optimistic after Tesla's Battery Day update, there were some that were disappointed.
Bernstein analyst, Toni Sacconaghi noted the event included bold aspirations but lacked specifics, and Morgan Stanley analyst, Adam Jonas said that Battery Day "largely lived up to the hype, but didn't clearly exceed it." Tesla is no stranger to skeptics and while they want to see Tesla executing its battery breakthroughs that were announced, Rome wasn’t built in a day. As Elon Musk said, many of the innovations announced will take about three years to be realized.
Long-term investors make their plans based on a yearly forecast and a three-year horizon seems a long way off. Everything Musk talked about had substance, but investors want something solid in a quicker time frame. It’s all about believing in a vision.
Then came a blip later on Wednesday when Tesla drivers were left puzzled when they had trouble getting into their cars, checking how much the battery had charged and accessing other services. The cause was a network outage rippling across Tesla’s range of services which hindered user connectivity to the EV company’s mobile app and website. Telsa vehicles use mobile connections for multiple functions, such as remotely setting heating and air conditioning and making service appointments. It is also used to unlock the features of Autopilot driver-assistance system and make use of the Smart Summon feature.
Through social media, users were reporting several services being inaccessible, including being unable to get into their cars. While Tesla owners are encouraged to fully integrate their smartphones with their car, Tesla issues physical key cards to unlock cars as a backup.
The EV company also states on their website: “Tesla recommends that you always have a functional physical key readily available if parking in an area with limited or absent cellular service, such as an indoor parking garage.”
As with all aspects of our lives exposed to digital transformation, we start relying more and more on technology. Outages are not rare across industries, it happens in the workplace and in mission critical situations but as long as there is a sharp response to resolve it, life carries on with minimal disruption. The outage lasted for just over an hour when services started coming back online.
Internet-connected cars will only become more prevalent as the shift grows to electric vehicles to minimize the impact on climate change. On Wednesday, California Gov. Gavin Newsom announced the US state is going to prevent the sale of gasoline-powered cars by 2035, which will only stimulate the consumer growth of electric vehicles. This means we will inevitably have to rely on sensors and components that will be connected to the Internet. Much like we do today on a daily basis.
At the time of writing this article, Tesla has not yet released a statement detailing the root cause of its short-lived network outage.