Electric vehicles

Tesla releases new info on both high-end and low-end batteries

Tesla's most substantive battery updates since 2020’s Battery Day could lead to cheaper EVs, as well as higher-performance ones.
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· 3 min read

Over the last week, we’ve gotten some more clues about how the world’s newest $1 trillion company plans to reach its ambitious battery goals.

Last week, Tesla announced that it would begin using lithium iron phosphate (LFP) batteries in all of its standard-range EVs, and on Monday supplier Panasonic shared that a new advanced battery with five times the storage capacity of Tesla’s current battery cells is moving closer to production.

These developments are the most we’ve learned so far about Tesla’s strategy to build more powerful and more affordable batteries, following grand statements from CEO Elon Musk at the company’s “Battery Day” in September 2020.

“One of the things that troubles me the most is that we don’t yet have a truly affordable car, and that is something that we will make in the future,” Musk told investors at that presentation. “But in order to do that, we’ve got to get the cost of batteries down.”

Iron advantage: LFP battery chemistry is significantly cheaper than lithium-ion batteries, and doesn’t use nickel and cobalt, but it also packs less energy density, resulting in lower EVs ranges.

But the trade-offs aren’t dire—the estimated range for the Tesla Model 3 SR+ with an LFP battery is 253 miles, compared with 263 miles with the current nickel-cobalt-aluminum battery. While the average cost of EV batteries was about $137 per kWh in 2020, per BloombergNEF, LFPs were priced at the lowest end of the spectrum at about $80 per kWh.

  • An average battery price of $100 per kWh is the point at which analysts say EVs will become about as affordable as gas-powered cars.
  • In 2020, Musk said that he hopes to bring a $25,000 EV to market in about three years.

Tesla is already producing vehicles with LFP batteries at its factory in Shanghai, which it sells in Asia and Europe.

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Better, faster, cheaper: At the same time that Tesla is shifting toward more affordable batteries, the company is also working with Panasonic to develop more powerful cells for other models.

Panasonic revealed a prototype of the 4680 battery on Monday—a version of the cylindrical cells Tesla uses that are 46 mm wide and 80 mm tall, compared with the current 21x70mm iteration.

  • This battery will store about five times more energy, increasing EV range by more than 50%.
  • Panasonic intends to begin test production of the 4680 battery cells in Japan by March 2022.

Tesla made big claims about this battery in 2020, including that it will be able to produce the 4680 at about half the cost of current batteries. The company also said that when manufacturing at scale gets underway, it will drive a 100-fold increase in gigawatt hours produced by Tesla and its suppliers by 2030.

  • Tesla expects to deliver vehicles with battery packs composed of the new cells next year.
  • But...Musk has notoriously not  met Tesla production promises in the past. In 2016, he set goals for Tesla to produce 500,000 EVs in 2018 and 1 million in 2020, but missed both targets.

Panasonic is also trying to strengthen its relationship with Tesla. The Japanese company is no longer the automaker’s sole battery supplier, and Panasonic said it won’t produce LFP batteries—for Tesla, or anyone else. Tesla will likely source those cells from Contemporary Amperex Technology Co. (CATL), a major producer of LFP batteries in China.

Big picture: Musk sees Tesla’s growing expertise in battery manufacturing as a significant competitive advantage. From the 4680 to the company’s solar-energy battery products, there’s plenty of room to grow Tesla’s energy storage business in an electrified future.

Keep up with the innovative tech transforming business

Tech Brew informs business leaders about the latest innovations, automation advances, policy shifts and more to help them make smart decisions.