General Motors Company (GM)’s Plan To Take On Tesla Motors Inc (TSLA) and Electric Cars

Share on FacebookTweet about this on TwitterShare on Google+Share on RedditShare on LinkedInPrint this pageEmail this to someone

While everyone believes that Tesla Motors Inc (NASDAQ:TSLA) is the pioneer in electric vehicle making, the reality is quite different. The popularity of electric vehicles is much more currently because of the importance given to emission and the resultant changes in climate. However, it was General Motors Company (NYSE:GM) that pioneered the concept of the electric car way back in the 1990s. Unfortunately, the Detroit automaker failed to get credit for its innovation more than two decades ago or create interest in plug-in cars. Today, the number of electric vehicle makers is growing among the existing automakers. However, how the biggest car maker in the Americas is planning to face the onslaught of Tesla can be seen here.

New Breakthroughs To Position Itself As A Leader

For its part, General Motors Company (NYSE:GM) is not ready to leave the electric vehicle platform and give it on a platter to Tesla Motors Inc (NASDAQ:TSLA). The company indicated that it was making fresh breakthroughs as far as battery technology is concerned. As a result, it will reposition itself as a leader in the segment. Its Product Development Chief, Mark Reuss, said that the company has already started to scale battery technology at a rapid pace. He is confident that it will bring down the costs to make electric vehicles more affordable. Also, it would increase the distance of performance on a single charge.

General Motors Company (NYSE:GM)’s Product Development Chief was confident that its cost would be lower than several of its rivals and would reach the market quickly. Reuss said that the breakthroughs can be seen in its Chevrolet Bolt that is slated to go on sale late in 2016. Earlier this year, the company unveiled the concept of the Bolt car. There are already skepticisms shown by a section of the industry circle since the company failed to meet the sales target of its Chevrolet Volt, which was its first electric vehicle for the mass market. That was despite the hype it was bestowed as Trumpian zeal. Similarly, there are also critics who wonder the logic behind in selecting a name that is similar to Volt as they argue that it would likely confuse the potential buyers.

First Electric Vehicle In Tesla Range

In any case, General Motors Company (NYSE:GM)’s Bolt would be the first electric vehicle that will be launched in the range of Tesla Motors Inc (NASDAQ:TSLA), but at its price. The company indicated that its mileage would be over 200 miles on a single charge. The starting price is expected to be approximately $37,000, and a tax credit of $7,500 is also available from the Federal Government for buyers of electric vehicles. That means the net price would be less than $30,000. The company’s product development chief stressed the need for charging times to improve, i.e. below the 45 minutes to refill a battery at a recharge station.

General Motors Company (NYSE:GM)’s Reuss said that the idea of attracting and convincing ordinary families was to improve range, price, and charge time. That will make them realize its Bolt is a practical, as well as affordable electric car to serve them as a primary car instead of using it for short trips only. Recently, the company took measures aimed at cutting down the cost of making lithium-ion batteries for cars that can give a mileage of $145 a kilowatt per hour. That would mean that it reached the levels achieved by Tesla Motors Inc (NASDAQ:TSLA). However, it would be lower than the other makers. The company has also set a target of the year 2020 to bring down the costs to $100 per kwh.

Developing Happening Quickly Surprising Analysts

The kind of development that is happening currently in General Motors Company (NYSE:GM) has surprised many analysts. Two years ago, they did not expect this kind of development rate. Their efforts are bound to boost the appeal of electric cars sharply. The advantage of Bolt would be that it will be built as an electric vehicle purely, like Tesla Motors Inc (NASDAQ:TSLA), enabling it to maximize regenerative braking and the overall efficiency of an electric car. Currently, most of other makers’ EV is ‘donor architectures,’ which were gas-powered models earlier.

As a result, both General Motors Company (NYSE:GM) and Tesla Motors Inc (NASDAQ:TSLA) would be targeting the same buyers after the latter launches its Model 3. Tesla is planning to price its Model 3 at $40,000 or less with similar 200-mile-plus range and is due in 2017. However, the past indicates that the company has always been behind schedule in launching its models. Also, the Model 3 is very important for the electric vehicle maker since it would be entering the mass-market product segment for the first time. The success of Model 3 would enable the company to report a profit in 2020 or so. Anything opposite means a big headache for it. The current indications suggest both Bolt and Model 3 would be available more or less at the same time.

Difference Between Bolt And Others

There are also other electric vehicles available in the category of Chevrolet’s Bolt. For instance, Nissan’s Leaf, the Kia Soul EV, Volkswagen AG (ADR) (OTCMKTS:VLKAY)’s e-Golf and others. The difference is going to be pricing and the range of miles it can run on a single charge. Tesla Motors Inc (NASDAQ:TSLA)’s Model S can go over 200 miles, but the starting price is $71,000 and can exceed $100,000 with options. In respect of Model 3, it will try to show its stamp of class features. However, the company has yet to test the mass-market and never faced competition from the big automakers.

Conclusion

General Motors Company (NYSE:GM) appeares to have addressed most of the issues and comes now on par or even higher with Tesla Motors Inc (NASDAQ:TSLA). The advantage in favor of GM is its pricing, and that is a crucial factor in mass-market. While GM has enough experience, it would be a testing ground for Tesla. GM can easily enjoy a leadership position if it’s Bolt turns out to be a grand success.

Disclaimer: The opinions and data expressed herein by the author are not an investment recommendation and are not meant to be relied upon in investment decisions. The author is not acting in an investment advisory capacity, nor is this an investment research report. The author’s opinions expressed herein address only select aspects of potential investment in securities of the company or companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies’ SEC filings, and consult a qualified investment advisor. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

You may also like...

  • taballas .

    Get your units straight. The unit is not killowatt per hour. It is killowatt-hour. V
    ery different!

    • danwat1234

      and Ithink $145 per KWh of battery is incredibly low… $4500 for a ~30KWh battery pack. We aren’t there yet. So that must be a typo in the article or weird units I don’t get.

  • Dave_SRQ

    Wow. All this comparison between GM and Tesla and absolutely no mention of the Tesla supercharger network or the Tesla destination charging network which will extend the usability of the all electric Model 3. There are currently no plans for a similar high speed charging network that the Chevy Bolt could use, therefore usability will be limited.

    • danwat1234

      Chademo, J1772 combo, but not as fast as Tesla’s superchargers.

  • daveman1

    Your conclusion is quite obsurd…”General Motors Company (NYSE:GM) appeares to have addressed most of the issues and comes now on par or even higher with Tesla Motors Inc”
    How is it that a company that doesn’t even HAVE an EV is on-par with Tesla, which has sold ~60,000 EV’s, and continues to do so at a pace of more than 1,000 cars per week, AND has an in-place recharging network that is by far the best/fastest charge?

    • danwat1234

      They have the Spark EV, Chevy Volt 2.0, CT6 plugin hybrid coming out

  • Jeffrey Lee Virgin

    “GM pioneered the Electric car. ” You Sir are a special kind of idiot. There were electric cars 100 years ago. As for GM’s EV1, they abandoned the project. GM is just playing catch up as usual.

More in GM
GM Logo
General Motors Company (GM) Is Poised For Higher

The auto sector has witnessed an uptrend in last five years aided by the prolonged lower interest rate adopted by...

Close