Panasonic Holdings is developing a next-generation high-capacity electric vehicle (EV) battery that could boost the range of Tesla’s best-selling Model Y crossover by as much as 90 miles (145 kilometers).

The Japanese electronics giant, already a longtime strategic partner and key battery supplier to Tesla, is working on a new anode-less design.

By eliminating the anode structure in the manufacturing process, Panasonic says it can free up additional space inside each cell to accommodate more energy-dense cathode materials such as nickel, cobalt, and aluminum. The company projects that this innovation could raise battery capacity by about 25% without increasing cell size.

That improvement would give Tesla the flexibility either to extend the driving range of its vehicles or to maintain current ranges using smaller, lighter battery packs—potentially lowering costs and improving efficiency. Panasonic expects to achieve what it calls a “world-leading” level of capacity by the end of 2027.

The development comes as battery makers worldwide race to improve energy density and reduce reliance on costly raw materials.

Panasonic has hinted plans to reduce dependence on nickel, one of the most expensive metals used in EV batteries. However, the company has not yet disclosed production costs for the new design or a clear timeline for mass commercialization.

Tesla’s relationship with Panasonic dates back over a decade. The two companies jointly operate Gigafactory Nevada, a massive facility near Reno that produces battery cells for Tesla’s EVs and energy storage products. Panasonic has also supplied cells for Tesla’s Model 3 and Model Y vehicles from its Japanese plants.

In recent years, Panasonic has invested heavily in next-generation battery technologies to keep pace with rivals like China’s CATL and South Korea’s LG Energy Solution, which dominate global EV battery supply.

Tesla itself has been working on its proprietary 4680 battery cell design, which it aims to manufacture in-house at facilities in Texas and California.