Tesla isn't only making new types of cars that will drive off of electricity instead of gasoline. The company also plans to make new types of battery formats at its factory outside of Reno, Nevada.
Many conventional lithium-ion batteries that power electronics today use the format called "18-650," which stands for 18 millimeters in diameter and 65 millimeters in length (the zero in the name is just an add-on). Tesla has used these batteries to power its Model S and Model X electric cars.
However, Tesla's Gigafactory, which is supposed to produce its first battery cells by the end of this year, plans to produce a new format of lithium-ion batteries called the "21-70." That stands for 21 millimeters in diameter and 70 millimeters in length.
These batteries will be wider and longer, holding more raw materials inside, and would be used in Tesla's Model 3 electric car. That car is supposed to cost $35,000 and be out by the end of 2017. Panasonic will produce the 21-70 batteries in the Gigafactory for Tesla.
But why did Tesla decide it wanted to upend such a long running standard in the lithium-ion battery world? It's largely about optimizing costs, explained Tesla CTO JB Straubel and CEO Elon Musk during an event at Tesla's battery factory on Tuesday.
Straubel said that Tesla has spent a long time thinking about battery formats, and had questioned why the 18-650 lithium-ion battery had become the standard. Its standardization was "an accident of history," said Straubel.
Instead, Musk said that Tesla thought about what would be the optimal battery size to produce the product Tesla wants, if no battery standard existed. They say after much consideration they realized that would be the 21-70.
"It really comes from the first principles of physics and economics. That’s the way we try to analyze everything," said Musk.
Get Data Sheet, Fortune’s technology newsletter.
It's also about lowering the overall cost of the Model 3. Tesla has to shave off as much cost from the car as possible—including a planned 30% from the batteries—to be able to meet its goal to make a $35,000 car. It's other cars currently cost between $70,000 to $120,000.
Changing the size of a battery can have trade-offs. For example, if you make a lithium-ion battery bigger, it could store more energy and produce more power. However, longer and wider batteries could mean that the battery pack (which collects individual battery cells together) could be wider or heavier, which could constrain design or range of the car.
But the Tesla team seams satisfied with settling on the 21-70 format for its lithium-ion batteries for its Model 3 cars. In fact, Tesla fancies the 21-70 format so much that it could even consider one day using those batteries for its older car models.
Musk said that after Tesla gets the Model 3 out the door it will revisit whether or not it wants to make new Model S and Model X cars with the 21-70 batteries.
Updated on July 27 at 9:45AM PST, to correct that 18650 batteries today tend to power more high performance electronics, rather than cell phones.