LONDON, Sept 10 (Reuters) - Mercedes-Benz and

U.S. battery startup Factorial are working on a solid-state

battery that should dramatically increase electric vehicle range

and be ready for production by the end of the decade, the

companies said on Tuesday.

The new battery, dubbed Solstice, should extend EV range

about 80% above today's average, with an energy density of 450

Watt-hours per kilogram, the companies said in a statement.

Solid-state batteries have been billed as a game-changing

technology for EVs, as they should reduce fire risk and allow

for lighter, lower-cost cars than can travel further on a single

charge.

But they have proven harder than expected for major

automakers and battery making partners to develop at scale.

Auto groups are urgently seeking ways to cut costs and boost

EV range as sales have stagnated in Europe in particular.

Factorial has already developed a quasi-solid-state battery

that automakers including Mercedes are testing and should be in

EVs on the road in 2026.

Mercedes has invested in Factorial, which raised $200

million in 2022, alongside rivals Stellantis ( STLA ) and

Hyundai.

Factorial developed quasi-solid-state batteries first

because they can use similar production lines to conventional

lithium-ion batteries, meaning they can scale up faster, CEO

Siyu Huang told Reuters.

In a solid-state battery, the liquid electrolyte through

which the electrical charge passes should be replaced with a

solid substitute, reducing fire risk and shrinking battery pack

size.

Huang said that solid-state batteries would not require

expensive, heavy cooling systems needed for today's battery

packs, allowing automakers to further reduce costs.

"We're not just focused on the cost of (battery) cell, but

the cost of the overall vehicle," she said.

The challenges of developing solid-state batteries include

poor performance in cold weather and the battery pack's tendency

to expand.

Mercedes Chief Technology Officer Markus Schaefer told

Reuters that Factorial's solid-state batteries could provide a

40% improvement in energy density over the German premium

automaker's high performance batteries today.

This would enable Mercedes to either significantly reduce EV

battery pack size - batteries are an EV's most expensive and

heaviest component - or provide long-range electric cars for

those who want them.

He added that lighter batteries would allow Mercedes to use

steel for EV bodies instead of far more expensive and carbon

intensive high-strength aluminium.

Mercedes is also working with Taiwanese battery maker

ProLogium, in which it has invested, on solid-state batteries

and is researching high-silicon anodes as an alternative

solution to increase EV battery density.

"There are some challenges that you have to get under

control, but ... we have great engineering solutions to address

them," Schaefer said, adding that he believed Factorial's goal

of developing Solstice at scale by the end of the decade was

realistic.