Which company first comes to mind when you think of electric-vehicle (EV) innovation? I suspect many, if not most, people would have the same answer: Tesla (TSLA 0.12%).
Elon Musk's company didn't invent the electric car, of course. However, Tesla was a pioneer in showing how EVs could be practical, fast, and stylish.
Today, Tesla dominates the U.S. EV market. In the first half of 2023, the company sold close to 300,000 more electric cars than its nearest rival. But could Tesla be in trouble with a potentially game-changing EV development from another automaker?
Finding "the Holy Grail"
Toyota (TM 1.75%) recently announced what could be "the Holy Grail" of electric vehicles. The Japanese automaker revealed plans to launch a new battery-powered car with a driving range of over 900 miles and a charging time of only 10 minutes.
The key to this game-changing development is Toyota's solid-state battery technology. Solid-state batteries are similar to the lithium-ion batteries currently used in most EVs. Instead of using liquid electrolytes through which lithium ions flow, they use a solid electrolyte.
However, solid-state batteries are better than lithium-ion batteries in several ways. They last longer, take less time to charge, and are smaller. They're also less likely to catch on fire.
The main problem with solid-state batteries, though, has been they're more expensive to make than lithium-ion ones. Toyota believes that it has achieved a breakthrough that will allow it to manufacture solid-state batteries at a much lower cost. The company stated that it expects to begin mass production of its solid-state battery as soon as 2027.
Leaving Tesla behind?
Tesla's Model S boasts a driving range of a little over 400 miles. Musk has claimed in the past that the company could extend the range to 600 miles. However, he said that Tesla didn't want to make the trade-offs that would be required to do so, including lower acceleration and poorer handling.
Actually driving 400 miles in a Tesla Model S depends on several factors, though, notably including weather conditions. Cold weather can negatively impact the range of lithium-ion batteries. That's not a problem for solid-state batteries.
Tesla's Superchargers can charge up to 200 miles in 15 minutes. However, that's still 50% more time required than the 10-minute charge Toyota is touting.
Toyota didn't talk about the potential for its batteries to last much longer than lithium-ion batteries, which tend to begin degrading much sooner than solid-state batteries do. This could be yet another plus for Toyota.
Not in trouble -- for now
Is Tesla in trouble? Not at this point. And there's no guarantee that solid-state batteries will be its Achilles' heel.
For one thing, Toyota has earned a reputation for overpromising and underdelivering when it comes to its EV technology. As recently as 2017, the company was trumpeting solid-state batteries that could be used in cars by 2020. That didn't happen.
But Toyota isn't alone in developing solid-state battery technology. Several other electric-vehicle battery makers are also moving forward aggressively with their own efforts.
On the other hand, Tesla is developing an alternative to solid-state batteries. The company's lithium-ion 4680 batteries hold the potential to check off several of the same boxes that solid-state batteries do, including increasing the range by more than 50%. In Tesla's latest quarterly update, management stated that the company has produced more than 10 million 4680 cells in its Texas facility.
Still, there's a real possibility that Tesla could regret not investing more heavily in its own solid-state battery technology. Driving range and charging times rank as two of the biggest complaints about electric vehicles today. If Toyota solves these issues more effectively than Tesla does, it just might be able to take away market share in the future.
