The Kaled dome is destroyed by the Thals’ rocket but Daleks appear and a massacre begins.
The Doctor awakens in the control room of the Thal dome, where a screen shows the Thal chemical bombardment of the Kaled dome. The Thal leader gives the order to start the rocket countdown. In the bunker, the Kaled scientists watch the bombardment with disbelief; who could have given the Thals the right formula?
The Thal rocket fires, and blows up the Kaled dome. The Doctor ruefully observes that he sent Harry and Sarah in there. In the bunker, Davros vows “revenge” beginning with the “Thal spy” Ronson. With an order of “Exterminate!” from Davros, Ronson is shot down by the Daleks. Davros declares the death of the Kaled race and the rise of the Daleks as the supreme being and ultimate conqueror of the universe.
The Thal leader is jubilant that the war has ended, and orders all prisoners to be freed, including the Doctor. The Doctor, however, is melancholy. A Thal woman, Bettan, asks him if he had friends in the dome and the Doctor replies yes. However, he intends to continue to try to stop the development of Davros’s Daleks. Bettan says that Davros is a hero, despite the Doctor telling her that he only betrayed his people because they were about to stop his experiments.
In the bunker, Davros tells Gharman to implement new variations to the Dalek mutants’ genetic structure. Gharman notices that this will produce mental defects, making them devoid of conscience, morality or pity. Davros calls them “improvements” and orders Gharman to carry out his orders without question, but Gharman is obviously disturbed by this development.
Under Davros’s orders, Daleks enter the Thal dome and begin exterminating people. Bettan runs into the Doctor, and the two flee the dome. The Doctor tells her that she has to form what Thal survivors there are into a fighting force and destroy the Kaled bunker.
As the Doctor makes his way back to the bunker to retrieve the Time Ring, he is attacked by Mutos. However, he is saved by Harry, Sevrin and Sarah, who did not manage to reach the dome before it was destroyed. Before they return to the bunker, the Doctor asks Sevrin to join Bettan and help her organize the survivors.
In the bunker, Gharman quietly tries to convince Kavell that they have to stop the Daleks. However, they are overheard by Nyder. The Security Commander approaches Gharman and convinces him that he believes Davros has become a megalomaniac and has to be stopped. He arranges to meet Gharman in the detention rooms on the lower level where Davros never goes. There, Gharman gives Nyder the names of those who oppose Davros, which is all that he really wanted. Davros appears, and Nyder knocks Gharman unconscious. At that moment, Sarah, Harry and the Doctor emerge from the ventilation shaft right in front of the two, and are captured.
Davros interrogates the Doctor, who tells him why he is here. Davros asks him if the Daleks always win in the future, and the Doctor tells him that they have occasionally been defeated. Davros demands to know what mistakes the Daleks make, intending to correct them, but the Doctor refuses. Davros hooks Sarah and Harry up to his machines, and tells the Doctor that if he lies or does not answer his questions, his friends will suffer.