Tesla: Our Next-Gen Battery Tech Will Help Create a $25,000 Electric Car

To one day create a $25,000 electric car, Tesla says it’s come up with a way to reduce the costs to building its batteries by more than 50 percent. 

At the company’s Battery Day event, Tesla CEO Elon Musk went over a whole series of changes the automaker plans on making that promise to streamline vehicle manufacturing and the battery cells themselves. The results can not only help Tesla save on costs, but also increase the range of its electric cars by as much as 54 percent.  

Among the changes are a new battery, the 4680, which Tesla says can offer five times the energy capacity and six times the power over the company’s existing batteries. 

Tesla plans on incorporating the new tech and manufacturing methods in 12 to 18 months with full utilization in three years, according Musk. Once in place, the company will be able to pump out electric batteries at a higher volume and at a lower cost, enabling the automaker to bring millions of more vehicles to market—including less expensive models. 

“I think probably about three years from now we can confidently make a very compelling $25,000 electric vehicle that’s also fully autonomous,” Musk said. (For perspective, the cheapest Tesla car, the Model 3, currently goes for $37,790.)

The newly announced cost improvements come not from a single technological breakthrough, but from numerous changes made across the entire manufacturing chain and how the batteries themselves are constructed. 

For example, one change involves constructing a Tesla car from a single piece of metal so that the electric battery can be more densely packed inside. Another improvement involves the company setting up its own cathode production facility by directly extracting the lithium from a field in Nevada.

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“Tesla will absolutely be head and shoulders above anyone else in (electric car) manufacturing. That is our goal,” Musk said. 

On the flip side, it’ll take some time for Tesla to iron out and build out the new manufacturing technologies. “If we could do this instantly we would,” he added. “But I think it really bodes well for the future. The long-term scaling of Tesla and the sustainable energy products we make will be massively increased.”

At the event, Musk also gave an update on Autopilot, the driver-assist feature on Tesla vehicles. The company plans on releasing a beta update to Autopilot in "a month or so" that will allow for a fully self-driving Tesla, which Musk has long promised. He was sparse on the details, but said his company overhauled the software behind the system to better identify 3D objects recorded with the car's sensors.