(FREEMONT, Calif.) — Tesla has announced new, internally-produced batteries for its electric cars, signaling a major shift from the automaker that, if successful, could significantly reduce the cost of electric vehicles. 

“I think it’s the way all electric cars in the future will be made,” said CEO Elon Musk at Tesla’s “Battery Day” event outside its production facility in Freemont, California.

Tesla’s new battery cell features a “tabless” design, which the company claims will provide five times the energy, six times the power, and 16% more range compared to its old battery cell. 

The company’s current vehicles use batteries sourced from suppliers like Panasonic, where the energy stored in the battery pack is transferred to the drivetrain via a conductive metal tab.

The new battery pack accomplishes the same thing by using a design that integrates a series of small bumps and spikes, which the company hopes will eliminate the need for a tab, and consequently drive down costs and production time. Musk tweeted the tech is “way more important than it sounds,” after the patent was approved back in May.

Way more important than it sounds

— Elon Musk (@elonmusk) May 7, 2020


“This is not just a concept or a rendering, we are starting to ramp up manufacturing of these cells at our pilot ten gigawatt-hour production facility,” said Drew Baglino, Tesla’s Senior Vice President, Powertrain and Energy Engineering. 

Tesla also said the new batteries would be 56% less expensive to manufacture and are being developed entirely in-house.

“They own the whole widget,” says Roberto Baldwin, Senior Editor of Technology at Car and Driver. “Which is what gives them the ability to control every aspect, and to tweak as much efficiency as they can out of everything – out of their batteries, out of their motors, out of their inverters.”

Tesla’s investments in its own battery tech don’t mean it’s ramping down partnerships with other battery producers. CEO Elon Musk, in a tweet prior to the event, said Tesla plans to “increase, not reduce battery cell purchases from Panasonic, LG & CATL (possibly other partners too.)” He goes on to note the company predicts shortages in battery cell supply from those suppliers and is ramping up in-house efforts to mitigate those shortages. 

We intend to increase, not reduce battery cell purchases from Panasonic, LG & CATL (possibly other partners too). However, even with our cell suppliers going at maximum speed, we still foresee significant shortages in 2022 & beyond unless we also take action ourselves.

— Elon Musk (@elonmusk) September 21, 2020

During the event, Musk elaborated on those efforts saying that by 2022 they plan on producing 100-gigawatt hours of battery cells per year and by 2030 produce three terawatt-hours per year. 

“It allows us to make a lot more cars and a lot more stationary storage,” said Musk.

Bringing down the cost of battery production is part of Tesla’s plan to eventually sell 20 million vehicles annually- about fifty times more than they sell now.

“I think twenty million is doable,” says Baldwin. “As long as they can continue to grow, and continue to invest and sort of stay ahead of everyone.”

Part of that 20 million vehicle goal will come from a planned $25,000 Tesla, set to go on sale in about three years. It would undercut its current Model 3 sedan as the brand’s cheapest vehicle. Musk also said it would be fully autonomous. 

“It was always our goal to try to make an affordable electric car,” said Musk. 

Musk said that while production is beginning, it will take between a year and eighteen months to fully ramp up production of the new batteries, and it will take longer for that technology to show up in actual vehicles. 

“Tesla has repeatedly set timetables and timelines, and then they’ve missed them,” says Baldwin.

The Model 3 faced significant delays as the company ramped up production in 2017. Since the start of the coronavirus pandemic earlier this year, Tesla has also pushed back the planned releases for it’s “Semi” truck and “Roadster” sports car. But Baldwin notes the company is making improvements, noting the Model Y crossover was released ahead of schedule. 

“On the one hand, they’re taking all the learnings they’ve gotten over the past ten, twelve years, and they’re using that to make their batteries better,” says Baldwin. “But there’s still the potential this could be delayed another year, another four years.”

Tesla’s battery announcement comes at a time of increased competition in the electric vehicle market. Earlier this month, Lucid, an EV startup founded by the former head of engineering for Tesla’s own Model S sedan, unveiled an electric sedan called the Air, with a claimed 503 miles of range. General Motors’ “Ultium” battery pack, which the company unveiled earlier this year, is set to underpin 13 new electric vehicle models across four brands, starting with a new “HUMMER” pickup truck. Volkswagen says it plans to produce 1.5 million EVs annually by 2025 and is set to unveil the ID4, an electric crossover SUV that’s expected to have 310 miles of range, on Wednesday. 

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