Batteries. That’s the difference between the price of an EV and a gas-powered vehicle. The price of batteries. It’s also the main factor in a vehicle’s range. Regardless of how far a person travels 99 percent of the time, range anxiety still weighs heavily on potential buyers. While Tesla has demonstrated that its vehicle range requires efficiency drivetrains and other components, it all comes down to batteries.
It's also the company's chance to talk about its environmental mission. At the top of the event, CEO Elon Musk said, "this presentation is about accelerating the time to sustainable energy.” He added that to hit their mark there needs to be a 100x growth in batteries for EVs to achieve this mission and that "tera is the new gigawatt."
Problem: Today’s battery factories can’t scale fast enough. In Musk's words at Battery Day, the company would need 135 fully built out Nevada Gigafactories to make 20 terawatt-hours of batteries in a year that Tesla says it needs.
So it’s no surprise that Tesla has bundled its Battery Day event with a stockholder meeting to announce that it has a plan to halve the cost per kilowatt-hour by building its own cells.
Part of the process has been to create larger, tabless cells than what was in the company's original battery packs. The new 2170 cells are easier to manufacture, with fewer parts, and have a shorter electrical path length to reduce heat. Overall it's a more efficient cell with five times the energy, 16 percent more range, and six times the power. It also leads to a 14 percent wattage per house cost savings. That's where EV costs can start coming down.
The cells will start production in a pilot gigawatt factory at the Fremont factory location. Musk says it'll take about a a year to reach the 10-gigawatt hour capacity for the pilot plan. The plan for the actual production is about 200 gigawatt hours.
Bringing battery prices down so that there is price parity for EVs in the same vehicle segment as gas-powered counterparts has long been a target by Tesla and other automakers.
This is a developing story. We will add to it as more information is announced.
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