Tesla is the undisputed leader in electric vehicles (EVs), and for good reason. The company makes some of the best performing vehicles on the road, electric or not. It has also managed to make itself synonymous with an entire industry while other automakers have struggled to keep up.
Despite all of that, GM's announcement last week that it's working on a new type of battery technology with increased flexibility and capacity is bad news for Elon Musk's company. And it's not the fact that GM's new battery is larger than anything currently in production at Tesla.
To be fair, Tesla has already said it is working on batteries with increased range, and GM's claim that this new battery will reach 400 miles on a charge isn't that much more impressive than the 390 you already get in the long-range version of Tesla's Model S.
That said, GM's soft-cell battery is less expensive to manufacture than Tesla's, and the company plans to license the technology. In fact, GM's battery is expected to cost less that's $100 per KWh, which is the threshold at which electric vehicles come in line with their gasoline-powered brethren.
Not only that, but GM's battery, compared to Tesla's metal-encased version, is far more flexible and allows carmakers to pack more cells into non-standard spaces. That means it can be more easily adapted to a variety of vehicle shapes and sizes.
General Motors, unlike most of its rivals, has doubled down on electric-powered cars, and has said it plans to launch EVs from Chevrolet, Cadillac, Buick, and GMC starting this year.
However, GM also said that this technology could reach beyond its own brands. In a statement, the company made clear that " by vertically integrating the manufacture of battery cells, the company can reach beyond its own fleet and license [the] technology to others."
At this point, Tesla has the first-mover advantage in that there aren't many viable alternatives right. In fact, Tesla's Model 3 outsells every other electric vehicle combined. Right now, the closest competition to what Tesla is making suffer from either extraordinarily high price tags, or miserably low range in comparison.
Both of those advantages will change as GM starts to roll out what it calls "Ultium" batteries in both its own vehicles, as well as licensing them to other manufacturers. Even if a fully electric XTS adds $10,000 or $20,000 more than the current models, that would still be less expensive than a comparable Model S.
Personally, I don't think Telsa is going anywhere, and I still think the company makes great vehicles. I also think that in many ways, as the overall market grows and EVs gain wider adoption, that's good for Tesla. But, as all businsesses know, first-mover advantage only works if you keep moving. Right now, GM has upped the ante and made it clear it plans to go after Tesla's market in a big way.
Your move, Tesla.