Tesla’s new larger cylindrical cells will provide five times more energy, six times more power and 16% greater driving range, Musk said, adding that full production is about three years away.
“We do not have an affordable car. That’s something we will have in the future. But we’ve got to get the cost of batteries down,” Musk said.
To help reduce cost, Musk said Tesla planned to recycle battery cells at its Nevada “gigafactory,” while reducing cobalt – one of the most expensive battery materials – to virtually zero. It also plans to manufacture its own battery cells at several highly automated factories around the world.
The automaker plans to produce the new cells via a highly automated, continuous-motion assembly process, according to Drew Baglino, Tesla senior vice-president of powertrain and energy engineering.
Speaking at the event, during which Musk outlined plans to cut costs, the CEO acknowledged that Tesla does not have its new battery design and manufacturing process fully complete.
The automaker’s shares slipped as Musk forecast the change could take three years. Tesla has frequently missed production targets.
Tesla expects to eventually be able to build as many as 20m electric vehicles a year. This year, the entire auto industry expects to deliver 80m cars globally.
At the opening of the event, which drew over 270,000 online viewers, Musk walked on stage as about 240 shareholders – each sitting in a Tesla Model 3 in the company parking lot – honked their car horns in approval.
As automakers shift from horsepower to kilowatts to comply with stricter environmental regulations, investors are looking for evidence that Tesla can increase its lead in electrification technology over legacy automakers who generate most of their sales and profits from combustion-engine vehicles.
While average electric vehicle prices have decreased in recent years thanks to changes in battery composition, they are still more expensive than conventional cars, with the battery estimated to make up a quarter to a third of an electric vehicle’s cost.
Some researchers estimate that price parity, or the point at which electric vehicles are equal in value to internal combustion cars, is reached when battery packs cost $100 per kilowatt hour (kWh).
Tesla’s battery packs cost $156 per kWh in 2019, according to electric vehicle consulting firm Cairn Energy Research Advisors, which would put the cost of a 90-kWh pack at around $14,000.
Tesla is also building its own cell manufacturing facility at its new factory in Germany in addition to the new plant in Fremont.