Tesla has promised a $25,000 electric car in the next three years as it halves the cost of its batteries.
Chief executive Elon Musk unveiled a plan to make electric cars accessible to the masses, conceding that the company does not yet have “a truly affordable car”.
“The rate of improvement of the affordability of cars is just not fast enough,” Mr Musk said in a presentation which opened with the apocalyptic red skies seen in California as a result of wildfires earlier this month. The company’s cheapest car, the Model 3, currently costs $38,000 (£30,000).
Speaking to shareholders at an event at Tesla’s factory in Fremont, California, Drew Baglino, the company’s head of powertrain engineering, said the company had a plan “to halve the cost per kwh” through a new cell design, materials sourcing and factory efficiency.
The cost of batteries has long been seen as one of the biggest challenges for makers of electric cars as they attempt to replace petrol-powered ones. Mr Musk said that in the long term, “there won’t be an ICE [internal combustion engine] industry”.
Tesla had been trailing big announcements at its “battery day” event, originally planned for May, but postponed due to the Covid-19 pandemic.
Determined to hold the event with an in-person audience, it invited guests who watched the presentation from Tesla cars.
We are all sitting in a Model 3 one person each for safety reasons for the Shareholder meeting and Battery Day. pic.twitter.com/7qkN4oiNw8
— Alex (@alex_avoigt) September 22, 2020
Overhead shot of the Battery Day drive-in! #batteryday pic.twitter.com/Hak99EoDgp
— Tesla Owners North Bay (@TeslaOwnersNBay) September 22, 2020
Mr Musk said it was producing a new “tabless” cell, which is larger than its current cells, and involves fewer parts, allowing for more capacity while cutting costs because fewer casings and cells are needed in each pack. No physical batteries were visible at the presentation.
The new cell technology will provide a five-fold increase in energy, 16pc extra range and a sixfold increase in power, the company said.
Mr Musk said the technology was “close to working”. “This is a really profound improvement,” he said.
The improved technology will power a new more powerful “Plaid” version of the Model S, due to be released at the end of next year.
Overall Tesla expects to be able to increase vehicle range by 54pc, with each kilowatt hour costing about 56pc less.
Sevenfold increase in output
Tesla also unveiled a “high-speed continuous motion assembly” for its factories, designed to improve output sevenfold, with 75pc less investment required for each gigawatt-hour.
A production pilot in Fremont is due to begin, with an annual 10-gigawatt hour production capacity for the factory due to be reached next year.
Batteries will also be manufactured at a new factory under development in Berlin.
The eventual goal is 200 gigawatt hours per year. An existing partnership with Panasonic to supply batteries will continue, with this development happening alongside, Mr Musk said.
Shares were down 6pc after hours, despite Mr Musk’s confident predictions that deliveries would rise 30 to 40pc next year. He also claimed that the $25,000 car would have autonomous technology.
By 2030, he said, the company would be making 20m cars a year, a goal that environmentalists questioned.
Last year at Tesla’s autonomy day the chief executive said the company would have a network of autonomous taxis by the middle of 2020, something which has not materialised.
A beta version of Tesla’s full self-driving technology will be available in around a month, Mr Musk said. Currently the cars have Autopilot which can perform lane keeping and changes, speed management and collision detection features with driver supervision.
He also covered mineral sourcing, claiming to have a partnership with a Nevada project to extract lithium from clay without disturbing the environment. He did not go into details in the presentation.
Earlier at the company’s annual general meeting the chief executive said he thought the year looked “promising from an annual profitability standpoint”.
In preliminary results shareholders rejected proposals to change the company’s arbitration rules and address human rights issues in its supply chain, but approved a measure to advise the board to change voting rules which currently require two-thirds majorities on some votes.