Paul van Gerven
23 September

Tesla expects to be building 25,000 dollar electric cars by 2023, the company announced Tuesday on its first-ever Battery Day event. The cost reduction primarily comes from expanding vertical integration and technology improvements, which would cut the cost of batteries – the most expensive component of electric cars – in half.

The pioneer of modern electric transportation revealed a new type of battery cell, which it will manufacture in-house. Previously, Tesla assembled battery packs from cells that were acquired from suppliers such as Panasonic. Use a dry electrode, a so-called ‘tabless’ design and integration into the vehicle as an entirely structural component, Tesla claims to be able to reduce kWh price by 56 percent, while simultaneously increasing range by 54 percent. Streamlining the production process could decrease investments in gigafactories by 69 percent.

No electric carmaker has taken it upon itself to manufacture its own cells. According to Tesla CEO Elon Musk, however, his company needs to start doing it to support various products. He expects significant cell shortages beyond 2022 if Tesla doesn’t ramp up production on its own.