Elon Musk announces first Tesla-made battery to get to $25,000 EV

Tesla’s Battery Day finally happened Tuesday, drive-in movie theater style, with attendees sitting in parked Tesla cars. They were in the Fremont car factory lot facing a stage to hear about the next advancement in battery technology powering Elon Musk’s electric vehicles. 

After the company’s annual shareholder meeting wrapped up, Battery Day kicked off with CEO Elon Musk and Tesla senior vice president Drew Baglino announcing the first ever Tesla-made battery.

The news indicates a true anticipated tipping point for EVs to go mainstream and cost as much as—or less than—a gas-powered car. Having its own battery is integral to Tesla’s plan to produce way more than the expected 500,000 Tesla vehicles this year. Musk said he wants to eventually make 20 million vehicles a year. 

But the real tipping point will be once Musk realizes his dream for the company: a $25,000 EV with respectable battery range and performance abilities. (The cheapest Tesla is the Model 3 at just under $38,000.)

He expects an EV that’s truly accessible to the masses to happen in the next three years.  But to get there, Musk emphasized improving battery capacity, cost, and production.

To get technical, it’s crucial to get battery cell production under $100 per kilowatt hour (kWh). As The Hustle reports, if Tesla can hit that price point with its own batteries, it undercuts internal-combustion engine (or ICE) cars’ current price advantage. During Musk’s presentation he showed how the new battery design will more than halve the cost per kWh for Tesla. “We basically thought through every element of the battery,” Musk said on stage. 

Tesla is still working with partners like Panasonic, LG Chem and CATL to make its batteries, but it’ll soon be producing its own cells for its entire lineup including the Cybertruck pickup, the Semi truck, Roadster sports car, Model S and 3 sedans and Model Y and X SUVs.

Musk said selling the Tesla cells to other companies isn’t off the table. “If we can make enough for other companies we will supply them,” he speculated. “We’re putting so much effort into making cells. We’re not getting into the cell business just for the hell of it.”

Jonathan Carrier, head of business development at battery producer commented on Tesla’s announcement in an email, “Tesla is pushing to increase vertical integration to grow scale and lower costs, while moving away from cobalt and [realizing] significant improvements in energy density.” This will affect the whole industry, Carrier says, since “cell producers must be increasingly flexible, be able to adapt in chemistry and format, in order to pivot in response to a diversifying EV market.”

Cheaper battery production with more energy density is the winning recipe for EVs, and Musk thinks Tesla’s got it down with the new batteries. But as he warned before the event, don’t expect any mass production of Tesla’s own batteries until 2022. Although there’s a pilot plant in Fremont up and running already, it’s not a full battery production facility. 

The new batteries will be “tabless”—it’s a whole thing to remove the tab in battery production and Elon talks all about it on the three-hour livestream recording. They’ll also be cobalt-free, something Tesla has long hoped to do for a cheaper, more environmentally friendly battery.

It wasn’t all electrodes, anodes, and cathodes at the event (although there was a lot of that): The next generation Model S Plaid was introduced with 520-mile range. (Sorry, Lucid Air, that means you’re no longer EV range champion.) The newest performance car with three motors is already up on the Tesla website for $140,000. It’s expected to arrive by the end of 2021.