New Tesla battery cells with more power for half the price announced, alongside Model S Plaid

We've consistently said that Elon Musk's end-game with Tesla isn't the cars; it's the battery technology. And Tesla's Battery Day on September 22 brought with it the announcement of a breakthrough that could drive down EV prices as well as making them a more attractive proposition for buyers.

In front of a crowd of Teslas, rather than rows of seats, Elon Musk announced a range of news for the Tesla brand, but the most important was all around batteries, and battery production. Its Gigafactory gamble is paying off; as it relies less and less on cells bought from suppliers and expands its own cell production with the potential to supply other EV makers on a huge scale in future.

By 2022, Tesla will produce 100 Gigawatt-hours of its own cells. By 2030, that number is forecast to rise to 3 Terawatt-hours (3000 Gigawatt-hours) enabling it to reduce costs and effectively be battery independent. The company will continue to work with Panasonic, LG and CATL in order to meet demand, however, with the goal to produce batteries for up to 20 million cars per year.

The big news: New battery design

Musk's big news is a new battery design which promises a 54 per cent increase in energy density, 16 per cent more range, but with a 56 per cent cost in reduction per kWh at a production level than the batteries in the Model 3 and Model Y. This should enable it to get the cost per kWh below the magic $100 (£75) from the current rough cost of somewhere between £110 and £150 per kWh.

The added power density could also make it easier for Tesla to join the 500 mile club, alongside the Lucid Air.

Tesla has achieved this using 'continuous cylindrical cells' rather than 'tabs' in current batteries. Designated the 4680 due to its dimensions of 46mm wide and 80mm long, it's much larger than existing cells, but according to Tesla this size offers a balance between thermal stability during supercharging and capacity.

Cost savings are enabled as the cells are cheaper and simpler to produce, with Tesla developing new production methods for obtaining anode and cathode materials. It's also developing its own “inexpensive” silicon, whilst significantly reducing the amount of Cobalt it uses. They are also greener and more space-efficient to produce, enabling Tesla to scale-up production of the same energy capacity in a much smaller physical area within its Gigafactories.

Application in the real world

Tesla is aiming to produce a sub-$25,000 (£20,000) EV thanks to the cost savings enabled by the new battery technology. However, this is currently a pipe dream which won't come to fruition until at least 2022 by which time the company hopes to have full-scale production in place. In addition to an as-yet unnamed new car, Musk suggested in a tweet that the Tesla Semi, Cybertruck and new Roadster will get the new cell design.

At the event, Musk said: “We need more affordable cars. We don't have a truly affordable car and that's something we will have in the future. For that, we need cheaper batteries.”

As it stands, Tesla has a pilot plant operating next to its Fremont plant in California which is capable of producing 10GWh of the new cells, however it is planning on full-scale production being in the order of 300GWh. Musk's goal is for continuous motion production, meaning that the physical act of production should be more efficient than current methods.

Investors not convinced?

Taking the edge off of Tesla's – and Musk's – big splash was the fact that the firm's share price fell by nearly six per cent by the close of trading on the day of the event. The likely cause of this slump is down to the expectation of the announcement of a 'million mile battery', as well as the new technology's long lead time before its production-ready.

Model S Plaid revealed

Tesla's answer to the Lucid Air – the much-anticipated Model S Plaid – was also announced during the event. And as you might expect, Musk's distaste for being second fiddle in the EV Top Trumps stakes means that the Plaid goes just a little bit faster and a little bit further than the Air.

Three motors endow the range-topping Model S with 1100bhp and fire it to 60mph in 'less than two seconds' and on to a top speed of over 200mph. It'll also do a standing quarter mile in around nine seconds whilst promising a range of up to 520 miles on a charge. So essentially Tesla has looked at the Lucid Air and eked out a tiny bit more from its hard- and software to beat it.

Perhaps unsurprisingly Tesla's game of one-upmanship extends to the price which, at £130,980 in the UK, is just over a grand less than the top-spec Lucid Air Dream Edition. Order books are already open.

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