General Motors (NYSE: GM ) is charging ahead with a new initiative that lets customers sidestep the dealership when buying a GM car. The strategy is the company's latest attempt to be more like electric-car maker Tesla Motors (NASDAQ: TSLA ) . Up to this point, Tesla's model of selling directly to consumers online was one of the factors that set it apart from traditional automakers such as GM.
In an effort to change the retail rules of a century-old auto industry, Tesla began selling its cars online and through company-owned retail stores located in malls around the country. Dealership associations in various states have since sued Tesla, claiming that state laws prohibit automakers from selling directly to consumers. However, GM doesn't anticipate this being a problem for its new Shop-Click-Drive program because it's working with participating dealers.
Test driving the future
GM has been testing the web-based application since January at select GM dealerships in Michigan, Wisconsin, and Arizona. The company plans to offer its Shop-Click-Drive app to all 4,300 dealers by the end of 2013. However, only 100 certified dealers have agreed to offer the service so far and some dealers have even said no, according to The Wall Street Journal.
On its new Shop-Click-Drive website, GM explains: "We hope Shop-Click-Drive will help make your new vehicle purchase or lease even more enjoyable with less stress, more control and an unequaled level of customization, support and service." That mission echoes the underpinnings of Tesla's approach to selling cars.
With the help of former Apple executive George Blankenship, Tesla is transforming the outdated dealership experience. In addition to its online design studio, the EV start-up now has 42 Tesla-owned stores open in the United States and plans to open more before the end of the year. This strategy, together with its award-winning Model S sedan, has helped Tesla reach a market cap of more than $22 billion today. For comparison, that's nearly half of GM's $48 billion market cap.
Yearning for Tesla-like growth
It's not surprising, then, that GM aspires to be more like Tesla. Earlier this year, GM CEO Dan Akerson organized an internal team to study Tesla and its disruptive impact on the industry. "Tesla is revolutionizing the business model... not just how you put an EV together but how you go to market with something like this," admitted GM's vice chairman, Steve Girsky, to Reuters.
In addition to its new online sales channel, GM is also attempting to mimic Tesla's success in the niche EV market. GM unveiled plans last month to build an electric car capable of traveling 200 miles on a single charge, with a price tag in the ballpark of $30,000.
That would be a major price advantage over the costly $70,000 Tesla Model S. However, GM hasn't said when it expects to get said EV to market, so with no set timeline, it could be years before that happens. On that score, GM can borrow all the strategies it wants from Tesla's playbook. However, the real challenge for GM will be in successfully using that knowledge to its benefit.
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