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Speaking at its combined (remote) shareholder meeting and Battery Day event on Tuesday, EV carmaker Tesla unveiled sweeping changes to its battery design and production processes, along with improvements in the sustainable mining and procurement of battery materials, like lithium, nickel and silicon. In aggregate, Tesla says, these measures will amount to a 56 percent cost reduction per Kilowatt hour in the production of its electric cars and allow it to scale EV production more rapidly.

Tesla co-founder and CEO Elon Musk and SVP of Powertrain and Energy Engineering Drew Baglino spoke before shareholders and company aficionados assembled in parked cars in a Tesla lot. Tesla supporters honked their horns in assent as Musk and Baglino outlined the company’s expected gains in battery range and efficiency.

“The New Giga”

Musk said that Tesla’s first goal is to scale its production capacity of terawatt energy cells. Proclaiming “Tera is the new Giga(watt),” he said that Terawatt hours (1,000 times more power than a gigawatt) is needed to transition global energy to sustainability, a target that will require 100-fold growth in electric vehicle batteries to achieve. He said that roughly 10 TWh of battery production could transition the global fleet of cars to electric power, while 150 TWh would be required to shift global vehicles of all types to electric power.

He said 1600 times current capacity will be required for the global electric grid to reach 100 percent renewable electricity, a figure that could grow even more as the world economy matures and heavily populated countries industrialize. To achieve this transition, Musk says energy growth of 20-25 TWh per year sustained over 15-25 years is required.

Noting that 20 TWh is equivalent to the output of 135 of Tesla’s current giga-factories in Nevada, Musk said existing battery factories will be unable to scale fast enough to meet this demand, costing an estimated $2 trillion investment in materials, cell and battery manufacturing, under current conditions.

Instead, he said, what’s needed is a “dramatic rethink” of the entire cell manufacturing system system for quicker scale.

Tesla also aims to produce more affordable batteries and (therefore) more affordable electric vehicles. But both Musk and Baglino observed that the cost curve per KWh (kilowatt hour) of batteries appears to be plateauing, a slowdown in progress that has motivated Tesla to revisit cell battery design so that electric vehicles can be produced at a $25,000 price point that is accessible to more car buyers.

To achieve this, Tesla plans to cut the cost of battery energy per KWh by half, through targeted improvements to cell design, factory processes, anode and cathode materials, and by integrating cells into the vehicle architecture so that cells themselves can be packed more densely into the structure of the car.

The company believes it will take 12-18 months to begin realizing these efficiencies, and three years before they are fully integrated into the production process.


Tesla’s engineers have concluded that removing the tabs from a cell allows for a bigger diameter in the physical cell (form factor)—ideally to 46 mm—while still maintaining its ability to supercharge. The tabless battery means simpler manufacturing, fewer parts, and a five-fold reduction in the path that a battery electron has to travel, resulting a power-to-weight ratio in a larger cell than a smaller one. This refinement alone will yield a 16% increase in range just from form factor, a five-fold increase in energy and

Baglino and Musk said assembly line process changes, with a focus on achieving volumetric efficiencies through “high-speed continuous motion assembly” of its batteries can cut the cost of production per GWh by $32, enabling the company to scale production more quickly.

Tesla is aiming for production capacity of 100 GWh 2022, and 3 TWh by 2030, which will eventually be its yearly projected production capacity, supplemental to what it will continue to buy from outside battery suppliers like Panasonic and CATL.

“Tesla is aiming to be best at manufacturing of any company on earth,” Musk said. “I think, for long-term competitiveness, eventually every car company will have long-range electric cars, but not every company will be great at manufacturing.”

Ultimately, Tesla wants to replace at least 1 percent of Earth’s total vehicle fleet (about 2 billion vehicles) with its EV batteries.


Tesla says further efficiencies can be achieved by adjusting the material in its battery anodes. The company plans to switch from silicon in its anodes—which ideal for storage, but expands fourfold and quickly loses its energy when fully charged—to raw metallurgical silicone. This shift will allow its engineering teams to design for silicone’s expansive property, increasing battery range by 20 percent, and at 5 percent less cost.

Battery cathode materials—typically nickel and cobalt—which form the stable structure that contain the battery ions, will also see some adjustments. Given that nickel is the cheapest of these, with the highest energy density, Musk said that maximizing the nickel component of its batteries is a goal of Tesla’s as well as its competitors.

But, Musk said, Tesla doesn’t want to be constrained by global nickel availability, and so will pursue a multi-tiered approach to nickel levels in its batteries, using nickel-iron and nickel manganese concentrates for lower-range energy needs, and high nickel for long-range EV needs like semi trucks.

While the company did not make any announcement regarding future acquisitions, Musk said Tesla plans to build its own cathode facility in North America and will “leverage all of the North American [nickel] resources that exist.”

Localized sourcing will reduce the number of miles traveled for cathode materials by 80 percent, he said, generating more cost savings.

Tesla plans to access even more lithium, which—unlike oil—is an ample resource. Baglino and Musk said the current supply of lithium in the state of Nevada alone is enough to convert the entire U.S. vehicle fleet to electric power.

Instead, Tesla plans to refine the process of extracting lithium ore from soil by using table salt to draw out lithium from clay. The company plans to minimize the environmental impact on its 10,000-acre lithium site by replacing the dirt in the ground once the lithium has been extracted.

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