Panasonic will start the mass production of new lithium-ion batteries that will increase the range of electric vehicles over 15% as early as 2023 to compete with rival South Korean and Chinese battery makers.

The new battery is expected to give the vehicles one of the world's longest ranges per kilowatt-hour, on par with those developed by Asian makers. Given that EVs will be able to travel farther on a single charge, Panasonic expects the shift to EVs will accelerate and is investing heavily in the development of such batteries.

Tesla says its current flagship Model S has a range of about 650 km on a single charge. With the new battery, its range will improve to around 750 km. This is close to Mercedes-Benz's flagship EQS which can travel around 770 km on a single charge.

One of the hurdles for slow EV penetration is their short ranges, which means that drivers will have to stop to charge constantly. Panasonic began developing the new 4680 battery cells on request from Tesla, which had plans to produce those batteries itself, although it is unclear if those plans extend to mass production.

CEO Elon Musk says the company wants to make its own batteries to supplement supply and that Tesla will continue to procure batteries from Panasonic or other battery manufacturers. Batteries make up 30% of the total cost of each EV.

The new battery will be twice as big as older versions, with a fivefold increase in capacity. This will allow car manufacturers to cut down on the number of batteries used in each car, which will also reduce the time taken to fit them in the vehicles.

Given its high efficiency, it will cost 10% to 20% less to produce these new batteries, compared with older versions on the basis of capacity.