Tesla’s plans for a battery “gigafactory” will transform the EV market. Cutting production costs could make electric cars more accessible to the mass market while raising challenges for other manufacturers.

We know from the Economist that Tesla has recently announced plans to expand its business operations and open a new battery “gigafactory” in the United States. At the same time, the automaker is planning to introduce a more affordable, mass market electric car by 2017. These ambitious projects are setting a challenge for the main players in the electric vehicles market, specifically other electric car manufacturers and battery manufacturers.

At the moment, Tesla’s only electric car, the Model S, is expensive and belongs to a niche market. The Model S has shown that EVs can have style and performance. So Tesla’s decision to extend its product range and appeal to the mass markets with a less expensive car could support the wider adoption of EVs. I personally find this an ambitious project that will influence people’s perceptions about electric cars, seeing them not just as a “green” option but genuinely desirable and affordable cars.

With many new EV models coming available, the public experience is changing. But to make EVs’ mass adoption possible and transform the market, battery costs need to be reduced. Batteries represent as much as 30% of electric cars’ cost and Tesla’s plans to achieve economies of scale could cut battery costs significantly.

I am becoming increasingly excited about seeing this happening as I reckon that this kind of competition can only influence the market positively. I simply think that Tesla, as a trendsetter, will stimulate greater competition and lead to a new phase for electric cars globally.

But what implications can Tesla’s own battery production have for other key players in the EV market? Right now, some of the main issues that battery manufacturers face are energy management, to increase range and performance. If Tesla manages to successfully cut  batteries price, the real challenge for battery manufacturers will be to optimise batteries performance and enable them do more for less.

It will take time to assess the impact of Tesla’s plans in the market. Hopefully this will lead to an increased innovation in battery management technology and supporting systems, issues that Dukosi are currently working on and aims to help overcome with its battery optimisation technology.