Achieving price parity with gasoline cars is a prerequisite of widespread electric-car adoption. A new Tesla battery could achieve that, according to a new report.

New low-cost batteries designed to last a million miles are being developed to enable Tesla to sell electric cars profitably at the same price or less than comparable gasoline cars, reports Reuters.

Citing anonymous sources familiar with the matter, Reuters reported that the million-mile battery would first be used on the Tesla Model 3 in China. Tesla opened its Chinese factory in late 2019, and has said it its targeting annual production of 150,000 cars there. Tesla will then expand to other models, and to the North American market, the report said.

The battery is designed for so-called "second-life" applications in energy storage after automotive use, while the cars it powers will be able to discharge power back into the grid, according to Reuters. Such "vehicle-to-grid" or "V2G" applications could allow cars to help balance the grid by absorbing excess energy during periods of low demand, and discharging it during periods of high demand.

V2G has been studied numerous times, but has not been implemented on a large scale by any automaker. In addition to equipping cars for bidirectional charging, it will require a complex management system, and possibly regulatory changes as well.

For all Tesla's future-mindedness, its vehicles currently offered in the market don't look bound to include V2G capability anytime in the near future. Tesla sells standalone Powerwall battery packs for home energy storage, but the number of households that can afford these could dwindle with the current economic downturn. A car with built-in energy storage capability might be more attractive to consumers going forward.

The new battery technology was developed by a team of researchers recruited by Tesla CEO Elon Musk, the report said. In 2019, that same team published an academic paper detailing the use of a new chemistry for longer-lasting Tesla batteries.

The Reuters report added that Tesla will work with China's CATL to get the new batteries into production. Tesla also plans to implement heavily-automated manufacturing processes at massive battery "terafactories"—30 times the size of the company's current Nevada "gigafactory."

Previous reports indicated Tesla has been testing prismatic CATL cells in at least one version of the Model 3 in China. Tesla's current cell format and packaging are very different from other automakers, and it would be unlikely to see a wholesale change.

It's unclear if the battery project discussed by Reuters is related to Tesla's purchase of Ontario-based Hibar Systems, and the automaker's own future potential as a cell manufacturer.