On Tuesday afternoon, Elon Musk took the stage at Tesla’s Fremont, Calif. factory to open the long-awaited “Battery Day” event, where the CEO was expected to share the latest developments on Tesla’s in-house battery manufacturing facilities, what kind of next-generation batteries the company is making—and possibly a new car.
Big, But Low-Cost, Battery Cells
Tesla opened the discussion of battery manufacturing with the bold promise that it has a plan to halve the cost per kilowatt-hour (kWh), a key metric affecting the final cost of an electric vehicle.
The company then unveiled a bulky battery cell, called 4680. The new cell has a tabless design, which Musk noted is a challenging modification. it has five times more energy, six times more power, 15 percent more driving range than the current Panasonic 2170 cells used in Model 3 and Mode Y.
The modified shape and size of the battery cell alone will reduce the cost per kWh by 14 percent, said Andrew Baglino, Tesla’s head of Powertrain and Energy Engineering, who joined Musk on stage.
Cell 4680 is already in production at a pilot factory in Fremont. Musk estimates that it will take about a year for Tesla to reach the target of 10 Gigawatt capacity at the battery factory.
Tesla’s ultimate goal is to reach “Terawatt-hour” (TWh) scale battery production. Tera means a trillion, which is 1,000 times of Giga. “Tera is the new Giga,” Musk said on stage.
To put the numbers in perspective, it takes about 135 facilities the size of Tesla’s Nevada Gigafactory to produce 20 Terawatts of power a year, which isn’t a lot. So, to achieve that goal Tesla will need to build out factories quickly.
It doesn’t mean building hundreds of Gigafactories, though, because Tesla could get far more output from a space smaller than Giga Nevada, from a volume standpoint, Musk explained.
For now, Tesla will using current battery cell suppliers as it ramps up in-house production capacity. Short-term goals are to reach 100 GWh by 2022 and 3 TWh per year by 2030.
That level of factory efficiency, combined with the capacity of the new battery, will reduce cost per kWh by 32 percent.
Other Cost-Reduction Breakthroughs
As part of its in-house battery assembly line, Tesla is going to build a cathode factory in North America. It’s also piloting a full-scale recycling factory next quarter at Giga Nevada.
To simplify battery manufacturing, single-piece casting is crucial. Tesla will need to develop its own alloy with no heat treating or coatings.
Musk said Tesla batteries will be a “structural part” of a car, just like how airplanes’ wings also serve as fuel tanks, which will effectively make the battery weight “negative.”
With all these innovations, Tesla could reduce cost per kWh by 56 percent, increase range by 54 precent and cut investment cost per GWh by up to 69 percent.
20 Million Vehicles a Year
Musk said the battery tech breakthrough will allow Tesla to “make a lot more cars and a lot more stationary storage.” His long-term goal is to make 20 million vehicles a year, with the most affordable option starting at just $25,000.
Last year, Tesla made approximately 367,500 cars across all models. This year, it aims to deliver half a million vehicles.