Tesla CEO Elon Musk's next big bet rides on better batteries

FILE - In this March 9, 2020, file photo, Tesla and SpaceX Chief Executive Officer Elon Musk speaks at the SATELLITE Conference and Exhibition in Washington. Tesla is expected to announce a breakthrough in electric vehicle battery chemistry on Tuesday Sept. 22 that could bring down the cost of the vehicles and increase their range and durability. At an event called battery day,  Musk likely will show off the new technology, which could increase the traveling range per charge and durability of its batteries.(AP Photo/Susan Walsh, File)
FILE - In this March 9, 2020, file photo, Tesla and SpaceX Chief Executive Officer Elon Musk speaks at the SATELLITE Conference and Exhibition in Washington. Tesla is expected to announce a breakthrough in electric vehicle battery chemistry on Tuesday Sept. 22 that could bring down the cost of the vehicles and increase their range and durability. At an event called battery day, Musk likely will show off the new technology, which could increase the traveling range per charge and durability of its batteries.(AP Photo/Susan Walsh, File) (Copyright 2020 The Associated Press. All rights reserved.)

DETROIT – Tesla is working on new battery technology that CEO Elon Musk says will enable the company within the next three years to make sleeker, more affordable cars that can travel dramatically longer distances on a single charge.

But the battery breakthroughs that Musk unveiled Tuesday at a highly anticipated event didn't impress investors. They were hoping Tesla's technology would mark an even bigger leap forward and propel the company's soaring stock to even greater heights.

Tesla's shares shed more than 6% in extended trading after Musk's presentation. That deepened a downturn that began during Tuesday's regular trading session as investors began to brace for a potential letdown. Musk raised those worries with a series of tweets Monday warning that Tesla's new battery technology might not be ready for high-volume production until 2022.

Musk reiterated that timetable during Tuesday's showcase and then added it might take up to three years before the battery technology translates into a new Tesla model selling for $25,000. That would be a dramatic markdown from Tesla's cheapest car now, the Model 3, a sedan that starts at $35,000 but usually ends up costing buyers more than $40,000.

“We don't have a truly affordable car and that is something we want in the future," Musk said during an event shaped by the restrictions imposed by a pandemic that requires people to keep their distance.

Besides lowering the price, Musk promised the new battery technology would help Tesla reduce the size of its vehicles by about 10% and extend their range by 56%. That projection implies the Tesla cars using the new batteries will be able to travel 500 miles (800 kilometers) or more on a single charge, surpassing the distance many gas-combustion cars can traverse before needing to refuel.

Musk took the stage before a mostly online audience, although there was a small group of shareholders who won a lottery for the right to sit in Tesla vehicles parked in a lot near the company’s Fremont, California, factory located about 40 miles (64 kilometers) southeast of San Francisco.

“It is a little hard to read the room with everyone in cars,” Musk joked as he began his presentation during an early phase of the event that was devoted to Tesla's annual meeting of shareholders.