SpaceX owner and Tesla CEO Elon Musk gestures during a conversation at the E3 gaming convention in Los Angeles, June 13, 2019.Mike Blake | ReutersTesla is developing the means to manufacture its own battery cells, according to five current and recent employees, something that the electric vehicle maker has relied on Panasonic to do since the companies signed an extensive partnership deal in 2014.
The move could help Tesla offer cheaper, higher performance electric-vehicles than it does today, without having to pay or share data and resources with outside vendors or partners. The battery pack and battery cells are the main cost component in an electric vehicle, according to research by IHS Markit.
The company has been “battery-constrained” in the past, CEO Elon Musk acknowledged at the company's annual shareholders meeting earlier in June. That means a lack of batteries limited Tesla's production and sales of electric vehicles and energy storage systems (Powerwalls and Powerpacks).
Making its own battery cells would also fit with Musk's general ambition to make Tesla as “vertically integrated” as possible, which means developing, manufacturing and selling everything it can — even its own enterprise software.
But manufacturing cells at high volume would be another challenge for a company that recently implemented cost-cutting measures and is still struggling to perfect its high-volume vehicle production.
Tesla and Panasonic did not respond to requests for comment.
Skunkworks lab on Kato roadTesla employees conduct some of their battery cell manufacturing research at a “skunkworks lab” at the company's Kato Road facility, a few minutes from its car plant in Fremont, California.
That plant is where Tesla makes its Model 3, Model S and Model X vehicles today, while its batteries are made at the Gigafactory in Sparks, Nevada, a factory jointly owned and operated with Panasonic.
Employees in Tesla's battery R&D teams are now focused on designing and prototyping advanced lithium ion battery cells, as well as new equipment and processes that could allow Tesla to produce cells in high volumes, employees and former employees said.
Tesla has posted job listings in the last month for various engineers involved in battery cell design, equipment for producing battery cells and manufacturing processes to make batteries.
Even if Tesla's effort to start making battery cells is successful, the company is not likely to cut ties with Panasonic and other battery suppliers any time soon.
Tesla employees familiar with cell supplier negotiations said the company is most likely to work with Panasonic and LG to provide the cells that go into the initial Model 3 vehicles produced in its Shanghai factory. That factory could start production by the end of 2019, with mass production beginning in 2020.
Tesla CEO Elon Musk speaks at the ground breaking for the automaker's new factory in Shanghai.Eunice Yoon | CNBCThe ambition to bring at least some battery cell manufacturing in house has been broadly discussed within Tesla and among its followers.
At the company's annual shareholder meeting in June, Musk invited CTO JB Straubel and Vice President of Technology Drew Baglino on-stage to tell shareholders about battery-related initiatives at Tesla.
Musk encouraged outside investors to focus on two strategic matters at Tesla: How quickly the company can offer completely self-driving vehicles, and its plan to “scale battery production and get the cost per kilowatt hour lower.” He said Tesla wasn't ready to let the “cat out of the bag” yet, and would reveal further details — including about the company's acquisition of Maxwell Technologies, completed in May this year — at an investor battery and power train day before the end of 2019.
JB Straubel, Tesla Motors chief technical officer.Getty ImagesCTO JB Straubel said: “It's more obvious now than I think it ever was, we need a large-scale solution to cell production.”
Baglino added, “We're not sitting idly by. We're taking all the moves required to be masters of our own destiny here, technologically and otherwise. I think through all the experience we've developed with partners and otherwise, we will have solutions for this.”
Executives' comments on Tesla battery tech follow reports bout tension between the two companies.
In January, Panasonic struck a deal with Toyota to build car batteries together through a joint venture that's majority owned by Toyota. In early April, Panasonic said it would temporarily freeze its investments in Tesla Gigafactories.
A few days later, Musk blamed Panasonic for dragging down the pace of Model 3 production, saying its cell lines were operating at only two-thirds of their capacity, or 24 GWh, at their shared Gigafactory. “Tesla won't spend money on more capacity until existing lines get closer to 35GWh theoretical,” Musk tweeted.
In recent weeks, following layoffs and other cost-cutting efforts by Tesla, Panasonic has hired a number of former Tesla employees at the Gigafactory in Nevada, including technicians, supervisors, process and systems engineers, according to LinkedIn profiles and current and recent Tesla employees.
Hopping from Tesla to Panasonic at the Gigafactory wasn't as common just a couple of years ago, according to a former Tesla human resources employee who asked to remain unnamed. Compensation, training and a clearer policy around schedules, especially how to earn and get time off, help draw Tesla employees over to their Japanese partner, this person said.
WATCH: Inside Tesla's Nevada Gigafactory
VIDEO8:5008:50We went inside Tesla's first GigafactoryCNBC ReportsFollow @CNBCTech on Twitter for the latest tech industry news.
Author: CNBC Online news
Read the email from Elon Musk to Tesla employees, pushing them to hit aggressive goals
Elon Musk, co-founder and chief executive officer of Tesla Motors.Yuriko Nakao | Bloomberg | Getty ImagesElon Musk sent out one of his signature “everybody” emails on Tuesday, which are circulated to tens of thousands of Tesla employees.
In it, the CEO rallied employees to work hard to hit the company's aggressive vehicle production and delivery goals for the second quarter.
It is typical for Tesla execs, and Musk, to push employees to work long hours to hit quarterly goals, with extra production and delivery work piling up toward the end of a quarter.
In its first-quarter 2019 update to shareholders, Tesla said:
“We believe we will deliver between 90,000 and 100,000 vehicles in Q2. Although it is possible to deliver a higher number of vehicles, we believe it is important to begin unwinding the 'wave' approach to vehicle deliveries, where overseas cars have been made in the first half of the quarter and North American cars have been made in the second half. This puts extreme stress on Tesla, negatively affects our working capital needs and adds to our cost structure.”
Earlier this month, Musk was prompting people to buy Tesla vehicles, with a Twitter post reminding them that “US federal tax drops by $1875 for any Tesla delivered after June 30.”
Here's what Musk wrote in the email sent Tuesday, obtained and transcribed by CNBC. Bloomberg first reported on the email.
From: Elon Musk
To: Everybody
Date: June 25, 2019
As you may have noticed, there is a lot of speculation regarding the vehicle deliveries this quarter. The reality is that we are on track to set an all-time record, but it will be very close. However, if we go all out, we can definitely do it!
We already have enough vehicle orders to set a record, but the right cars are not yet all in the right locations. Logistics and final delivery are extremely important, as well as finding demand for vehicle variants that are available locally, but can't reach people who ordered that variant before end of quarter.
I have great faith in you. Please let me know if there is anything I can do to help.
Thanks,
Elon
Follow @CNBCTech on Twitter for the latest tech industry news.
Tesla shares drop despite Musk’s prediction of ‘a record quarter on every level’
VIDEO2:1602:16Watch the highlights from Elon Musk speaking at Tesla shareholder meetingAutosTesla shares turned negative Wednesday morning, a day after CEO Elon Musk said the electric auto maker has a “decent shot at a record quarter on every level.”
“I want to be clear: There is not a demand problem,” Musk said at the company's annual meeting with shareholders on Tuesday evening. “Sales have far exceeded production and production has been pretty good so we're actually doing well.”
Tesla shares had jumped 4% in premarket trading Wednesday, before turning negative. By Wednesday's close, the stock was down 3.6%
Musk also said “it won't be long” before the company has an electric car with a range of 400 miles.
In a note to investors after the meeting, Cowen questioned Musk's confidence, saying “basic microeconomic theory would suggest that goods or services that don't have a demand problem don't see their prices lowered by half a dozen times in 4-5 months.” Cowen has an underperform rating and a $140 price target on Tesla shares.
VIDEO3:0003:00Here's why Tesla shares rose following Musk's optimism about demandSquawk BoxBaird, on the other hand, said “the narrative is overly negative,” adding that “bear arguments will be disproven in the coming weeks and months.” Baird has a $340 price target and an outpeform rating on the stock. The firm said there have been “several signs of steady demand over the past few weeks,” a point Musk emphasized during the presentation. Musk said 90% of Tesla's orders are coming “from non-reservation holders, so these are new customers,” he said.
Tesla's stock is down nearly 35% for the year as of Tuesday's close of $217.10 a share but the stock has slowly come back after hitting a low of $179 a share last week.
A key metric for Tesla sales bounced back last month, as the company's Model 3 vehicle saw deliveries higher than expected in May. Overall, Tesla increased total U.S. sales in the month of May by 73% from a year earlier, according to data from Motor Intelligence.
“We continue to see the shares in a tug of war between skeptics and extreme believers, where we have fallen into the skeptical camp for several years,” Cowen said.
Ford expands autonomous vehicle testing with a new self-driving prototype
An employee walks past a Ford logo in the yet-to-be-completed engine production line at a Ford factory on January 13, 2015 in Dagenham, England.Carl Court | Getty Images News | Getty ImagesFord Motor is staying close to home to test its latest generation of autonomous vehicle technology.
The automaker and Argo AI have deployed their latest self-driving test vehicle in Detroit, making it the fifth city where the companies are seeing how their autonomous vehicles handle a variety of conditions.
“Bringing these vehicles to Detroit in addition to our other test cities gives us the opportunity to learn how they operate in yet another environment,” Argo AI President Peter Rander said in a post on Medium.
Argo and Ford are already testing self-driving vehicles in Pittsburgh, Palo Alto, California, Miami and Washington, D.C.
Ford will not say how many of its third-generation autonomous test vehicles will be driving around Detroit. Each autonomous car, a modified Ford Fusion Hybrid, will have a safety driver behind the wheel and a co-pilot in the front passenger seat monitoring the vehicle's performance.
The cars will also have an upgraded set of sensors and higher resolution cameras to be able to see and identify objects that are further away. Rander said the modified Ford Fusions will also feature redundant systems to “help ensure our vehicles can continue operating safely in the event that something unexpected occurs.”
While this Fusion is Ford's third generation autonomous vehicle, it is unlikely to be its last before the company rolls out its first fully autonomous vehicle for commercial use. That is scheduled to happen in 2021. Ford expects that model will be used by ride-hailing companies, package delivery companies and other businesses.
Hyundai backs Aurora to develop driverless systems for Kia and Hyundai models
A Hyundai NEXO fuel cell vehicle with Aurora self-driving systems.AuroraHyundai Motor Group is investing in Aurora, a developer of self-driving technology for autos, with a plan to bring the systems to Hyundai and Kia models.
The companies have been working for the past year to develop and integrate the “Aurora Driver” into Hyundai's NEXO fuel cell vehicles as well as on other projects.
It's an extension of an existing partnership and furthers the work that large auto manufacturers are doing with developers of driverless technology. General Motors acquired Cruise in 2016, and Ford took a stake in Argo.ai the following year. Aurora still aims to provide autonomous systems to many different players.
On Monday, Aurora announced a partnership with Fiat Chrysler to develop self-driving vehicles for corporate clients. It also works with Chinese electric vehicle maker Byton.
Aurora CEO Chris UrmsonAuroraIn a statement, Aurora co-founder and chief product officer Sterling Anderson — previously the director of Autopilot programs at Tesla — said the company's aim with its partners is to “deliver the benefits of self-driving technology safely, quickly, and broadly.” After reportedly failing to acquire Aurora last summer, Volkswagen concluded a partnership with the company on Tuesday.
Aurora employs lidar, or light ranging and detection sensors, as part of its autonomous systems. That's different than Tesla, which uses cameras and radar primarily to power its “full self-driving” and Autopilot features.
Led by CEO Chris Urmson, former technical lead of Google's self-driving efforts, Aurora has raised at least $700 million in funding. Other investors include Amazon, Greylock, Sequoia, Shell Energy's venture group and T. Rowe Price. The size of Hyundai's investment wasn't disclosed.
WATCH: The best way to get self-driving vehicles on the road
VIDEO3:2903:29The best way to get self-driving vehicles on the road.
Goldman Sachs cuts Tesla price target: ‘Downward path for shares will resume’
Elon Musk, co-founder and chief executive officer of Tesla Motors Inc.Yuriko Nakao | Bloomberg | Getty ImagesGoldman Sachs slashed its price target on Tesla on Thursday and said it was expecting shares to continue to decline over concerns about demand.
“Sustainable demand [is] the key question as shares [are] likely continue to de-rate,” the bank said in a note. Goldman lowered the price target to $158 from $200, which would represent a 30% drop from Tesla's current levels based on Wednesday's close of $226.43.
“We believe that is the largest question for investors to underwrite at this point — what are sustainable demand levels for the Model S, Model X, and Model 3 — and how does that change with the introduction of Model Y production,” Goldman Sachs analyst David Tamberrino said. “We believe a downward path for shares will resume as it becomes more clear that sustainable demand for the company's current products are below expectations.”
Tesla shares are down more than 3% on Thursday. The stock is down 30% this year as the company continues to be mired in a myriad of controversies. Analysts and investors also continue to mull whether the company will need to raise more capital.
Watch: Analysts are divided on Tesla — one investor makes the bull caseVIDEO6:3906:39Analysts are divided on Tesla. Watch one investor make the bull caseSquawk Box
Jaguar Land Rover’s stunning turnaround is under threat
The classically British automotive brands Jaguar and Land Rover had seen their fortunes soar under the stewardship of the Indian auto company Tata Motors.
But now that legacy is under threat.
Land Rover's market in China has been shrinking, Jaguar has a portfolio heavy on less-popular cars, and the fallout from Brexit threatens to raise prices on supplies Jaguar Land Rover uses to make vehicles.
Jaguar Land Rover's performance peaked in mid-2016, CIMB analyst Pramod Amthe told CNBC.
Since then, a slowdown in JLR's China market has been perhaps the biggest factor behind the company's woes. JLR has said its Chinese business is struggling due to challenging market conditions. But one report from Automotive News said the company was battling quality-control issues in the country.
“We feel the worst is nearly there in JLR performance,” Amthe said. “Management efforts to cut costs and turn around have started yielding results in UK and USA. But China is taking longer than expected to revive.”
Waymo inks driverless car deal with Renault, Nissan to develop autonomous vehicles
Waymo unveils a self-driving Chrysler Pacifica minivan in Detroit, Michigan, U.S. on January 8, 2017.Brendan McDermid | Reuters Waymo has signed a deal with Renault and Nissan to develop self-driving cars and trucks for use in France, Japan and possibly other countries in Asia, including China, the autonomous car company announced Thursday.
It's the first agreement Waymo has signed to provide its technology and services to automakers working to build their own self-driving cars and services.
Waymo, a subsidiary of Google's parent company Alphabet, is currently testing a small fleet of autonomous vehicles just outside of Phoenix. Those vehicles, which are modified Chrysler Pacifica minivans, are part of Waymo's work to develop autonomous ride-share services. With Renault and Nissan, Waymo's relationship will be more as a provider of technology and services that each automaker will use as they develop their own self-driving vehicles.
“Our Waymo Driver can deliver transformational mobility solutions to safely serve riders and commercial deliveries in France, Japan and other countries,” John Krafcik, CEO of Waymo said in a prepared statement.
Renault and Nissan — which have a close yet strained relationship since the arrest and detention in October of Renault's former CEO Carlos Ghosn, who was also chairman of Nissan — are putting aside their differences when it comes to autonomous vehicles.
The companies said they're creating a joint venture companies to focus exclusively on driverless mobility services.
Thierry Bolloré, CEO of Renault, said in a statement that the deal will put his company, “at the forefront of driverless mobility new business streams in our key strategic markets.”
Hiroto Saikawa, president and CEO of Nissan echoed that confidence.
“Our expertise in the global automotive industry and expertise in strategic partnership will enable us to explore opportunities to grow our portfolio and deliver new value to customers with Waymo, the recognized leader in this space,” he said.
Waymo, formerly known as the Google Self Driving Car project, is considered a leader in autonomous vehicles, analysts and technology executives say.
That lead, however, is far from safe. General Motors' subsidiary Cruise, is expected to publicly launch its first autonomous vehicle later this year. Meanwhile, Uber is also working to develop autonomous ride-share vehicles.
Walmart to test self-driving delivery from warehouse to warehouse
A Wal-Mart employee pushes grocery carts at a store in Miami.Getty ImagesWhen most people think about how self-driving cars will help retailers, the image that comes to mind often is a robot car whisking a delivery to a customer's door, but according to an article in Bloomberg the reality — at least in the near term — will be different.
Analysts cited by the news service estimate the market for transporting goods on a fixed route from warehouse to warehouse using driverless vehicles could reach $1 trillion. These miles in the middle help get goods closer to their final destination.
Walmart, which has experienced a boom in online sales, will begin using robot cars to transport goods in between warehouses, in the hopes that the company will be able to cut costs and increase efficiency.
Walmart spokeswoman Molly Blakeman told CNBC the retailer is working with its partner Gatik, a self-driving vehicle startup, to test out a self-driving vehicle. It will travel along a two-mile route in Bentonville, Arkansas between two stores.
“We are working with city and state officials to obtain the approval we need to operate and plan to start the pilot program this summer with the aim being to learn about the logistics of adding AVs into our ecosystem, operation and process changes, and more opportunities to incorporate this emerging technology,” Blakeman said.
Consumers have grown wary of robot-taxis due to accidents like the killing of a pedestrian last year by Uber's new test car, Bloomberg reported.
The robo-trucks also take out the human element, eliminating the hassle of human passengers and the cost to create a passenger compartment in the first place.
With the rise of online shopping, the robots also fill a huge demand for truck drivers. A shortage of drivers has led to 60,000 unfilled long-haul positions, according to data Bloomberg cited from the American Trucking Association.
Read the full Bloomberg story here.
VIDEO3:5003:50Walmart announces an in-home grocery delivery serviceSquawk Box
BMW debuts 4-door, 8-Series Gran Coupe with an entry price around $86,000
The 2020 BMW 8 Series Gran Coupe. European model shown.Source: BMWBMW has a habit of stretching definitions, as it did when it introduced a stretched version of the old 6-Series coupe, adding a pair of extra doors and dubbing it a “Gran Coupe.”
Since then, it has expanded the array of four-door coupes that have fleshed out its line-up. The new 2020 BMW 8-Series Gran Coupe is BMW's latest offering.
For those who want more power, however, the new Gran Coupe comes with a brutish, 523-horsepower twin-turbo V-8.
Based on the two-door model introduced just a year ago, the new model offers more space and easier entry, as well as the first inline-six engine option available for the 8-Series line. The sporty M850i version will also become one of the automaker's most expensive models ever when it reaches showrooms in September, pushing into six-figure territory when all the option boxes are checked.
When it reaches U.S. showrooms, expect a starting price of $85,895 for the 840i and $88,705 for the 840i xDrive. The M850i will start at $109,895.
The debut of the new Gran Coupe comes almost exactly a year after BMW revealed the two-door version of the 8-Series, reviving a nameplate it abandoned nearly two decades ago and providing a more sporty alternative to the familiar 7-Series sedan flagship.
But, in today's SUV-centric market, coupes have lost even more ground than sedans, and the Gran Coupe is expected to solidly outsell the two-door 8-Series going forward.
The 2020 BMW 8 Series Gran Coupe. European model shown.Source: BMWThat said, BMW designers worked hard to maintain the coupe-like lines of the earlier model, retaining the long nose and sweeping roofline, even though the Gran Coupe features a more upright windshield to allow for a taller roof.
It is bigger in most key dimensions, adding 7.9 inches to the two-door's wheelbase, for one thing, and 9.0 inches to overall length. The Gran Coupe also gains 1.2 inches in width and stands 2.2 inches taller, those number translating into a cabin roomy enough to allow adults to sit in the rear without bumping elbows or banging heads whenever the car hits a pothole.
Both versions will come with a panoramic moonroof as standard fare, though the M850i will also offer an optional carbon-fiber roof to reduce overall weight and lower the Gran Coupe's center of gravity. The body itself uses a mix of materials to hold down mass, including aluminum doors and hood and a dent-plastic resistant trunk lid.
As one might expect of the BMW flagship, even a base model is lavishly equipped, with standard leather seating and trim, though buyers can opt up to a two-tone leather package, as well. Unlike the two-door model, the Gran Coupe features a wide center console running the length of the cabin to divide it into four seating sections. The rear seats can be folded in a 40/20/40 configuration to open up more cargo space.
There are some significant technical features, too, including LED headlamps with Laserlight that help extend a driver's view significantly at night. The rear console features new USB-C ports and the driver has handy access to the latest version of the BMW iDrive infotainment system.
The 2020 BMW 8 Series Gran Coupe. European model shown.Source: BMWWhile BMW offers the 8-Series coupe with a variety of different powertrain options around the world, it limited the U.S. two-door model to the 523-hp twin-turbo 4.4-liter V-8 found in the M850i trim. That version was able to launch from 0 to 60 in under 3.5 seconds. The heavier Gran Coupe, BMW estimates, will need about 3.7 seconds to get there.
Going forward, the Bavarian automaker will add the rear-wheel-drive 840i and 840i xDrive Gran Coupe which will bring to the U.S. a 3.3-liter inline-six making 335 horsepower and 368 pound-feet of torque. It estimates a 0 to 60 launch time of 4.6 seconds for the xDrive model, and a top speed of 155 mph when driving on performance tires.
Both engines will be paired with a quick-shifting eight-speed automatic with steering wheel-mounted paddle shifters.
The Gran Coupe gets a double-wishbone front suspension and a five-link rear. An active steering system is meant to increase the car's agility, especially during high-speed cornering.
The 2020 BMW 8 Series Gran Coupe. European model shown.Source: BMW