GM: We're Worried About Tesla Motors

The success of the hot Tesla Model S has GM's CEO worried. Photo credit: Tesla Motors.

Unless you follow the automakers closely, you might have missed one of the biggest news items of the week. General Motors (NYSE: GM  ) Vice Chairman Steve Girsky dropped this quiet bombshell in an interview with Bloomberg this past week: GM's brass is worried about Tesla Motors (NASDAQ: TSLA  ) .

Girsky said that his boss, CEO Dan Akerson, has assigned a team to study Tesla and how it might threaten GM's business. That's a move that says a lot about Tesla's success -- but it also says a lot about how General Motors is quickly becoming a very different kind of company from the GM of old.

Old GM wouldn't have cared about Tesla
The fact that a massive global automaker is worried about still-tiny Tesla is a tip of the cap to the Silicon Valley upstart and its CEO, Elon Musk. While it remains to be seen whether Tesla will succeed in the long term, it has already earned considerable respect.

Just by bringing a high-quality mass-produced car to market, Tesla has gone where almost no automotive start-ups have managed to go before -- never mind that Tesla's cars are the best-yet implementation of a groundbreaking new technology.

But Girsky made this little disclosure as part of making a larger point about GM. For decades, GM was famously arrogant, and old-school GM executives wouldn't even have taken notice of an upstart like Tesla.

Even now, it's not hard to find plenty of old Detroit types eager to argue that Tesla isn't worth taking seriously – that they're just a company full of computer geeks playing around with laptop batteries, pretending to be an automaker.

That's how it would have gone at Old GM. Tesla? Who cares!

But what Girsky is saying is that Old GM is being replaced by a New GM -- or, at least, he and Akerson hope that's what's happening.

A major shift in a dysfunctional corporate culture
Girsky's point was that Akerson is pushing hard to change GM's culture, to get rid of that old insulation and arrogance and replace it with something much more competitive.

Clearly, GM needs to be hungrier, more attuned to the reality of its hypercompetitive global business. Here's another example from Girsky: For years, GM had a fantastic research department that won dozens of new patents every year -- but few of its innovations found their way into vehicles.

Akerson and Girsky want to change that. There's much more focus now on real-world innovation, on customers' needs, on technology that can be commercialized quickly, they say.

GM is finally able to build cars that can compete with the world's best, like this Cadillac ATS. But to succeed, it has to do it consistently. Photo credit: GM

And all of this comes in the context of a global reorganization and new controls that have reduced costs, reduced the time it takes to get new products to market, and given senior executives much more data – much more quickly.

GM doesn't have a choice: It has to change, and fast -- GM managed to hold its global lead for decades even as it blundered along, but it can't do that anymore. Its two largest global competitors, Toyota (NYSE: TM  ) and Volkswagen (NASDAQOTH: VLKAY  ) , are well-run cutting edge contenders. Both would have eaten Old GM's lunch. (Arguably, Toyota did.)

To compete, GM has to follow in old rival Ford's (NYSE: F  ) footsteps and reinvent itself as a focused, disciplined, globally oriented company.

That's what Akerson and Girsky are trying very hard to do. Making a point of learning the lessons of Tesla's success is just one sign of that effort. But will it work? We'll find out.

China is already the world's largest auto market -- and it's set to grow even bigger in the coming years. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market," names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free -- just click here for instant access.


Read/Post Comments (20) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 20, 2013, at 9:13 AM, drax7 wrote:

    At tesla, elon is in charge of everything, including innovation. At GM a subordinate is looking into it.

    The model s next to that Cadillac says it all, and its corroborated by consumer reports.

  • Report this Comment On July 20, 2013, at 10:02 AM, c1go wrote:

    Uh, who was it "who killed the electric car" again?

  • Report this Comment On July 20, 2013, at 10:46 AM, sabebrush6 wrote:

    I like my Caddies but the new Tesla is pretty cool. I looked at one and it just might be my next new car. It puts Mopar in the class of Nash and Studebaker.

  • Report this Comment On July 20, 2013, at 10:55 AM, explorerruss wrote:

    Yeah. I remember when they weren't worried about DeLorean. Funny how all those unfounded law suits cropped up.

  • Report this Comment On July 20, 2013, at 10:55 AM, FlyingPigNJ wrote:

    GM has nothing that competes with model S. If he actually thinks GM has something that comes close to competing, he is just delusional.

  • Report this Comment On July 20, 2013, at 10:55 AM, raven76114 wrote:

    oh im sure gm or ford will find a way to sabotage tesla and run them out of business by getting ahold of a part that is essential in the drive train and cause them to go bankrupt paying off ppl for their fam dying in a firey crash! sound familiar? just ask the past car companies that have been bought by the big 2!!!!!

  • Report this Comment On July 20, 2013, at 11:45 AM, FordRules wrote:

    Just a thumbs-down to all the "Tesla robots" and EV "sheeple". Who try to intimidate people who drive REAL CARS the same way they're BEING intimidated. Scratch any of the EV zealots and Tesla cheering section and you'll find that timid teenager who did what his peers told him to do--nothing more/ nothing less--for fear they'd call him (sob!) "mean names" if he didn't.

  • Report this Comment On July 20, 2013, at 11:45 AM, FordRules wrote:

    Just a thumbs-down to all the "Tesla robots" and EV "sheeple". Who try to intimidate people who drive REAL CARS the same way they're BEING intimidated. Scratch any of the EV zealots and Tesla cheering section and you'll find that timid teenager who did what his peers told him to do--nothing more/ nothing less--for fear they'd call him (sob!) "mean names" if he didn't.

  • Report this Comment On July 20, 2013, at 11:56 AM, btc909 wrote:

    PSSST Gasoline is dead tech, you can limp along with Diesel if you want GM. The main killer of gas & diesel is the taxation.

  • Report this Comment On July 20, 2013, at 12:31 PM, InspectorDon wrote:

    Why is GM worried about Tesla? Electric cars are a pipe dream unless the owner lives in a major urban area & never plans to drive more than 100 miles from home! GM needs to concentrate on making autos and trucks that people want to buy & own instead of futuristic crap like the Volt!!

  • Report this Comment On July 20, 2013, at 12:48 PM, readfederallist wrote:

    'Arguably, Toyota ate GM's lunch.' Well,that's an understatement. Tech advances aside, the way Toyota did it was simple. They studied Detroit. Toyota adopted the American concept of 'quality circles' to produce a better, more consistent product. Toyota then stuck to it, while Detroit did not.

  • Report this Comment On July 20, 2013, at 12:52 PM, hunter3203 wrote:

    Dan Ackerson is one of the worst executives in the auto business. While on the board of GM he overruled Fritz Henderson and GM's management who all wanted to dump Opel while they had the chance. GM had been losing money at Opel for a long time and knew that Europe wasn't willing to do the tough restructuring(closing plants & eliminating thousands/tens of thousands of jobs, etc) that has allowed the US auto industry to come back so strong. They also knew it would take Billions of GM's own money to keep Opel afloat. He also decreed that Chevy should rush the development of the new Malibu and bring it to market a year ahead of schedule. They had to cut corners, eliminate features they originally planned on and as a result the Malibu isn't nearly as competitive in the market place. They've had to do an emergency update just to keep the car relevant. He's also gutting lots of current development programs. His only management tool is cost cutting. GM will be a lot better off once this guy finally retires. Unfortunately, he'll continue to destroy GM's long term competitiveness every day he continues on the job.

  • Report this Comment On July 20, 2013, at 1:00 PM, hunter3203 wrote:

    btc909 - So you think EVs will take over the auto world and they'll do it without paying taxes? How do you think road construction and maintenance will be funded? Legislators across the country are already working on new ways to tax road usage. The costs of maintaining our road network won't change with any possible conversion to EV usage, just the way it's paid for.

  • Report this Comment On July 20, 2013, at 1:04 PM, mottledtool wrote:

    GM should be afraid. Tesla is everything that they are not. If GM really had it's way we would all still be driving rehashed 1972 Chevy Suburbans. The only thing that Tesla has to fear from GM is dirty politics. SOP at GM is to try to kill innovative competitors rather than up their own game.

    Let's forget the EV vs. ICE debate for a moment. If Tesla decided to build gasoline or diesel powered vehicles, they would be far better than anything from GM. GM is going to persistently design and build the worst vehicles that the public will tolerate. They have no integrity and no pride in what they do. They chase easy profits from making outdated, parts bin engineered junk. GM has not been remotely innovative since the early 1960s.

    The Federal Gov't should have let GM go down. Rotten management and top heavy bureaucracy is so entrenched at GM that they will never straighten up.

  • Report this Comment On July 20, 2013, at 1:09 PM, devoish wrote:

    "Why is GM worried about Tesla? Electric cars are a pipe dream unless the owner lives in a major urban area & never plans to drive more than 100 miles from home! GM needs to concentrate on making autos and trucks that people want to buy & own instead of futuristic crap like the Volt!!" - InspectorDon

    Urban population percentage USA - 79%, world -51%

    http://kff.org/global-indicator/urban-population/

    Best wishes,

    Steven

  • Report this Comment On July 20, 2013, at 2:17 PM, eightteen wrote:

    gm should have went under and started over get rid of the unions that cost gm millions each year.

    i personally dont care abt tesla electric cars are years far away to coming to be a big hit.we in the us dont even have the power grids that could handle the surge that electric cars would put on the power.are power grids need to become bigger if they thing electric cars are the next big thing.cause face it during a hot summer day 90+ degrees everyone has there ac on in there house.and when everyone gets home they plug in there car to recharge.and another reason gm shouldnt be worried abt tesla gm has cheaper cars.model s tesla starts around 50 grand.

  • Report this Comment On July 20, 2013, at 5:19 PM, jamesdan567 wrote:

    Telsa Motors: "Hard core technology company" - Elon Musk quote

    Tesla Model S - 95mpg EPA rated.

    Telsa Model S - Best car ever made.

    The EV is more than 400% more efficient than the ICE car.

    GM will have to build all EV's by 2020 or they will go bankrupt again.

    Foreign Automaker Market share in the US: 44%

    Foreign Automaker Market share after Tesla gets larger: 10%

    Tesla market share:35%

    Tesla unit sales 2020: 6 million cars

    Tesla sales: 2020 : $300 billion+

    Tesla market value 7-1-2020: $1.4 trillion

    My gain: $100 million

    Thank you Tesla.

  • Report this Comment On July 20, 2013, at 8:09 PM, ericday wrote:

    All you have to do is look at the local economies..

    Silicon Valley? Booming

    Detroit? Bankrupt

  • Report this Comment On July 21, 2013, at 12:44 AM, CrazyDocAl wrote:

    GM should be paying attention to every market. Right now they have nothing to worry about. What nobody seams to understand is that without a better battery the Tesla is going to be nothing more than a toy for the rich. Once a better battery does get developed then Must will be spinning as Ford, Toyota, GM, and every other large auto company quickly ramps up production and swamps Tesla.

    To understand this you must look at the news. For example Toyota is paying out $1.6 billion because of a faulty US made gas pedal. They are just going to write it off. They net over $10 Billion in profit. They could revamp one of their current assembly lines in months and start cranking out twice as many cars in a month than Tesla can make in a year.

    That's just Toyota, Ford, GM, VW, they all will do the same. Tesla is like a small shop owner who's trying to create a new market. Once their sales are enough other larger companies will jump in.

  • Report this Comment On July 22, 2013, at 11:54 AM, JRUwing wrote:

    @CrazyDocAl: "Without a better battery" You mean the battery that gets over 300 miles of range in real world driving, that charges in 20 minutes and can be replace in 90 seconds. The next battery will be better and Gen 3 is looking like 400 mile range that charges in 10 minutes.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2547189, ~/Articles/ArticleHandler.aspx, 11/26/2014 9:00:43 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement