Here's what to expect from Tesla's Battery Day event

Yahoo Finance's Emily McCormick joins Akiko Fujita to break down what to expect from Tesla's Battery Day event.

Video Transcript

AKIKO FUJITA: Shares of Tesla down more than 2% in the session, ahead of its highly anticipated Battery Day and annual shareholder meeting set to kick off later this afternoon. Elon Musk expected to unveil a new type of battery cell, but he tried to downplay the importance of any announcements to the company coming out of this event in a tweet, saying whatever is introduced today won't reach serious high volume production until 2022. Emily McCormick is here with a preview of what to expect at this event. And Emily, we saw shares of Tesla drop about 6% yesterday after Elon Musk tweeted that out. There's certainly a lot of anticipation about what we can expect in terms of this event, but seems to be some jitters about what this means for the company's bottom line.

EMILY MCCORMICK: Absolutely, Akiko. And taking a look at the share price action we've seen over the past couple of days, a lot of the downturn having to do with those remarks from Elon Musk, of course, downplaying the importance of this event, really saying that the company won't be at scale with this battery production likely until about 2022, so still seeing a couple of years off here before we get that high volume production of any new technology. Now, just taking a look overall, we do have shares of Tesla still up 400% for the year to date, but that includes a 9% decline in September for the month to date. So we did see the stock pullback just around those tempered expectations.

Now, one of the things that Elon Musk highlighted in his tweets yesterday was the extreme difficulty of scaling production. He said that it's a hun-- 1,000% to 10,000% harder than making a few prototypes when you actually have to scale that production. The machine that makes the machine is vastly harder than the machine itself, according to Musk's tweets.

Now, we also noted yesterday that Tesla plans to increase, not reduce battery cell purchases from suppliers, including Panasonic and LG. Now, the company already has battery contracts and supply contracts with these companies, so seeing here that Tesla actually is going to be increasing its reliance on the next couple of years as it plans to unveil or really scale the production of its newly unveiled models, including the Semi Cybertruck and Roadsters. Now, he said that, even with cell suppliers going at maximum speed, he still foresees significant shortages starting in 2022, unless Tesla also builds out its own in-house battery making capabilities. So that really provides some context into the importance of today's events, the technology that's going to be unveiled, and the fact that it's going to be laying the groundwork for a scaling of production for Tesla vehicles to come.

Now, also want to highlight though that Musk's recent comments did, as you said, put a damper on some of the anticipation that had been swirling around this event since summer. He had said in a Twitter post September 11th that, quote, many exciting things would be revealed for the first time later today. That's still likely going to be the case, but, again, that ramp may take somewhat longer than expected.

Now, even with this in mind, Wall Street has largely been constructive around the event. We had Dan Ives of Wedbush writing in a recent note that he believes Tesla is to announce a number of, quote, game changing battery developments and that the company is nearing announcing a million mile battery. Now, questions around battery efficiency, cost, sizing, durability, and range are likely going to take center stage tonight, as investors and potential buyers are going to be looking for this technology to potentially far surpass capabilities provided by typical combustion engine vehicles. That would help provide an incentive for customers to pivot towards these battery electric vehicles like Tesla. That's really the end game here for this company and for any battery electric vehicle company, to bring that cost of production down so that the price of the vehicle for consumers can be more in line with the prices of gas powered cars and unlock still further demand, Akiko.

AKIKO FUJITA: Yeah, Emily, we talked so much about Elon Musk over selling Tesla's capability. It is interesting to see the reaction to him sort of setting expectations to what is really realistic. And we have seen the losses accelerate on that front, with Tesla shares down nearly 5% now in the afternoon session.