The new company, called 24M, has been spun out of the advanced battery company A123 Systems. It will develop a novel type of battery based on research conducted by Yet-Ming Chiang, a professor of materials science at MIT and founder of A123 Systems. He says the battery design has the potential to cut those costs by 85 percent.

The battery pack alone in many electric cars can cost well over $10,000. Cutting this figure could make electric vehicles competitive with gasoline-fueled cars.

The new company has raised $10 million in venture-capital funding, and about $6 million from the Advanced Research Projects Agency-Energy (ARPA-E), which will fund collaboration between the company and MIT and Rutgers University. A123 Systems will work closely with the new company, and owns stock in it. The name stands for "24 molar," referring to material concentration levels that Chiang cryptically calls "technically significant" to the company.

Chiang isn't saying much about the details of the new battery--such as exactly what materials it's made of. But he does say that it uses a "semisolid" energy storage material (rather than the solid electrode material used in most batteries today), and that it combines the best attributes of conventional batteries, fuel cells, and something called flow batteries, while avoiding some of the disadvantages of these technologies.