Why Tesla’s New Battery Pack Is Important by Katie Fehrenbacher @FortuneMagazine August 24, 2016, 12:21 PM EDT E-mail Tweet Facebook Linkedin Share icons Tesla Motors announced a breakthrough on Tuesday that was the stuff of energy nerds: a new battery pack for its performance cars that packed more energy into it. The not-so-geeky result of that new 100 kilowatt-hour battery pack are cars that can accelerate more quickly and can drive for longer on a single charge. This milestone isn’t just another notch on Tesla’s belt. It shows how as Tesla tsla continues to innovate, it’s leading the auto industry, and it’s far ahead of competitors when it comes to developing electric car battery technology. According to Tesla, the new Model S P100D—thanks to the new battery pack—is the third fastest accelerating production car ever produced (including traditional gas-powered cars). And at 315 miles, it has the longest range ever for a production electric vehicle. It was only six or so years ago that Tesla’s first car, the $100,000 Roadster, was enabling its early customers to travel a little over 200 miles on a single charge. Then came the Model S, which kicked up the range closer to 300 miles on a single charge, followed by an optional upgrade to a 90 kilowatt-hour battery pack last year. Thanks to Tesla’s engineers, the company has now crammed even more energy into the same size pack, using the same battery cells. Tesla’s battery packs contain thousands of lithium-ion battery cells that discharge energy to power the car. Customers can upgrade to the 100-kilowatt hour battery pack from the 90-kilowatt hour battery pack for a charge. Tesla’s CEO Elon Musk said during a call with reporters on Tuesday that the 100-kilowatt battery pack is coming close to reaching the theoretical limit of how much energy density the company can pack into that size and shape battery pack using those specific batteries. For Tesla to achieve a higher energy density for future battery packs, it would need to improve the battery chemistry itself by adding new materials or tweaking the battery cell design. If Tesla wanted to create an even more powerful battery, it would have to make the battery pack bigger, but that would add on weight to and change the shape of the cars. Instead of changing the external pack shape or size or cell chemistry for the 100 kilowatt-hour battery pack, Tesla created a whole new battery cell cooling system and rearranged the battery cell architecture and electronics, explained Tesla’s CTO JB Straubel on the call. Get Data Sheet, Fortune’s technology newsletter. It’s likely Tesla added in more battery cells to the same shape pack, but it was able to still place the cells in a position where they could be adequately cooled while charging and discharging. (Batteries heat up when they charge and discharge.) The big fear is that the more energy-dense a battery pack is, the bigger the risk that there could be a fire if there’s an accident. Tesla needs to be careful, because—like with internal combustion cars—cars can catch on fire and Tesla needs to assure its customers that its cars are safe. “It’s been quite a challenging development,” Musk said. The 100-kilowatt hour battery pack will only be sold to Tesla’s high-end cars for now, and will only represent maybe 10% of production, said Musk. But down the road, Tesla will eventually offer the 100 kilowatt-hour battery pack for all versions of the Model S and Model X. The 100-kilowatt hour battery pack will help differentiate the Model S and Model X from the less expensive Model 3, which is supposed to cost $35,000 and start shipping at the end of 2017. The range of the Model 3 isn’t supposed to be any more than 250 miles per charge, according to analysts. The Model 3 will have new lithium-ion batteries made at Tesla’s Gigafactory outside of Reno, Nevada. Those batteries will be bigger (wider and longer) than the traditional ones, packing more materials into each battery. They’ll also use the latest in battery chemistry, including using silicon in the anode part of the battery. A battery has an anode and a cathode, as well as an electrolyte medium that shuttles lithium ions between the anode and cathode. Battery technology is meaningless unless it’s delivering a better electric car. Tesla’s 100-kilowatt hour battery pack is an auto industry breakthrough that shows what a company can do with current battery technology and car design. No other company is producing electric cars on a production basis with a 315-mile range. That milestone will also help set the bar for what customers will expect from other automakers like GM GM , Ford F , and Nissan. And Tesla’s move will push these automakers to try to get close to or match Tesla’s new features.