TESLA MOTORS is the Californian start-up that proved electric cars need not be sloths. Its battery-powered roadster is able to accelerate to 60mph in just 3.7 seconds. But on Monday December 27th the company suffered a nasty slide when its share price tumbled by 15%. One reason analysts gave for this was the ending of a six-month restriction on company insiders being allowed to sell shares after an initial public offering in June. But there were also worries about how Tesla can make the big time and turn itself into a mass manufacturer. That may be determined by a bet on battery technology.

At over $100,000 the Tesla roadster is a niche product. The mainstream vehicle which Tesla is counting on will be its Model S, a seven-seater all-electric car which is due to be launched in mid-2012. It is supposed to cost around $50,000 and will compete directly with many of the electric and hybrid models that will then be on the road from mass manufacturers. Elon Musk, Telsa's chief executive, has big ambitions and he plans to build the Model S in a factory he has bought in California that used to assemble cars in a joint venture between General Motors and Toyota.

However, Tesla's challenge does not involve just the economics of manufacturing. The company is also steering a different course with battery technology than some of the electric cars produced by its rivals, such as General Motors' Volt and Nissan's Leaf. Along with most carmakers, Tesla sees lithium-ion chemistry as the most efficient in terms of energy density for use in the batteries for its cars. But it has a difference of opinion about how best to assemble the batteries. Whereas Tesla uses thousands of small cylindrical cells to produce one of its battery packs, many other manufacturers prefer instead to use large-format cells which are laminated and shaped like tiles. The Leaf, for instance, uses 192 cells, each about the size of a magazine. Four of the cells are combined to form a module and the car's 24kWh battery pack, which is air-cooled, is assembled from 48 modules.

Mr Musk is not impressed and has described the Leaf's battery as “primitive”. Nissan, however, is extremely confident in its technology, not least because it has enabled the Leaf to go on sale as one of the first mass-produced electric cars. The company also supports its battery with a eight-year or 100,000 mile warranty.

Tesla's approach to building a battery is somewhat different. It uses what are known as “18650” cells (which are 18mm in diameter and 65mm long). These cylindrical cells are widely used as the rechargeable batteries in thousands of consumer products. These small cells, reckon Tesla, allow for more efficient cooling and precise management of charging and discharging. For the roadster it assembles 6,831 of them into blocks which are used to build a 65kWh battery pack, which is liquid cooled.

It is the battery which will determine the success of electric cars. Range is the first thing drivers worry about, although the electric cars on or coming to the market will be capable of most daily commutes. Worries about a lack of recharging infrastructure will fade as more charging stations appear, and in any event most drivers seem happy to recharge overnight at home. But the long-term reliability of batteries remains an unknown. Some big firms, however, are backing Tesla. In November, Panasonic, which makes the cells which Tesla uses, took a stake in the company. And Toyota, which also has a stake in Tesla, has asked the company to use its technology to develop a battery and powertrain system for an electric version of the Toyota RAV4. Tesla may well have a mountain to climb before it can become a volume carmaker, but some in the industry seem to think it knows how to wire up a battery well enough to get there.