(Bloomberg Businessweek) -- At his first Battery Day event, Tesla Inc. CEO Elon Musk said a lower-priced car will come in the next three years.
Reducing—specifically halving—manufacturing costs of lithium-ion batteries was the overarching theme of the event. That reduction will enable a cheaper model—a “dream from the very beginning,” Musk said. Tesla aims to eventually produce 20 million of these fully autonomous vehicles per year, but he didn't give a clear time frame for achieving this goal. The battery innovations include the following:
1. More Silicon, Less Cobalt
Musk focused on the two materials used in a battery's electrodes (the anode and the cathode, where the cell gets its energy). Silicon, the most abundant material on Earth, is increasingly being used in the anode. At the same time, Tesla is reducing—and ultimately removing—cobalt, a costly metal that's also controversial because of the often unethical way it's mined.
2. Dry Electrodes
Changes to the manufacturing process also are aimed at increasing energy density. To achieve this, Tesla has improved its electrode coating, the process by which the two electrodes are made. The current method is a wet coating process that is energy-intensive and requires a large plant footprint. Tesla has moved to a dry process to minimize energy use and equipment costs at its facilities.
3. Cathode Production
The batteries powering Tesla's cars use lithium, nickel, cobalt, aluminum, and other materials, which its suppliers—Panasonic, LG Chem, and CATL—manufacture into cells. These represent about 45% of the manufacturing cost of a battery cell. To lower that, Musk says the company will become more involved in cathode production, from raw materials to finished product. (He used the event in Fremont, Calif., to announce that Tesla has the rights to a Nevada lithium deposit.) The cathode approach also aims to decrease the amount of wastewater resulting from manufacturing.
Frith is an analyst for BloombergNEF.
Read next: Sodium-Ion Batteries Emerge as Cheaper Alternative to Lithium
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