It's official: General Motors (NYSE:GM) confirmed on Thursday that it will build the all-electric Chevrolet Bolt at a factory near Detroit.
GM surprised the world when it unveiled a concept version of the Chevy Bolt, a compact electric car, at the North American International Auto Show in January. The Bolt is said to use a new type of battery pack that will give it an estimated 200 miles of range on a single charge. It will have a target price of about $30,000, after incentives.
The automaker didn't announce a production start date, but it has previously hinted the Bolt could go into production late next year as a 2017 model. If so, it will likely hit the market well before Tesla Motors' (NASDAQ:TSLA) long-awaited "mass market" Model 3.
Coming soon, a 200-mile EV built by GM in Michigan
GM said it will build the Bolt at its Orion Assembly plant, located just north of Detroit. Orion Assembly currently builds the Chevrolet Sonic subcompact and the premium Buick Verano compact. The Chevy Bolt is believed to be based on the Sonic's architecture; if so, building it on the Sonic's assembly line makes sense.
The Bolt is a small four-seater that bears a passing resemblance to BMW's plug-in i3. I was present when GM CEO Mary Barra unveiled the concept version in Detroit last month, and my sense was that it was a "production-intent" concept -- one GM actually intended to mass produce, rather than just a flight of designers' fancy.
It's a handsome vehicle, if a bit utilitarian in appearance. But the Chevy Bolt's real appeal is the combination of price and range that GM is promising. The Bolt will use a new type of battery being developed by GM and partner LG Chem, one that should provide more range than the current lithium-ion units used in most electric cars -- at lower cost.
The company estimates the Bolt will have about 200 miles of range, though it has been careful to say this is a "GM estimate" and not an official number. It also expects to sell the Bolt for "around $30,000," a price that likely includes the effect of a $7,500 federal electric-car tax credit.
A modest investment scaled for a niche product
General Motors said it will invest $200 million as it gears up to produce the Bolt. That's not a huge cost for a new model: $160 million of that will go toward tooling and equipment for the Orion factory, while the remaining $40 million will pay for stamping dies at a GM metal-stamping plant in nearby Pontiac.
GM was likely able to keep its investment relatively modest by developing the Bolt on an existing gasoline-powered vehicle architecture. It's also likely that keeping the investment modest was a requirement of the program: Several reports, citing supplier sources, have said GM expects to produce 25,000 to 30,000 Bolts a year.
For context, GM sold 18,085 Chevy Volt-with-a-V plug-in hybrids in the U.S. last year. That makes the Bolt's production numbers a little ambitious by plug-in vehicle standards. But it's a far cry from the 273,060 Chevy Cruze compacts the automaker sold in the U.S. in 2014, suggesting -- or maybe shouting -- that GM doesn't see electric cars replacing gas-powered models in the American mass market anytime soon.
Tesla is aiming for a lot more than "niche market" status
That stands in stark contrast to Tesla Motors, which has said it expects to sell half a million of its premium-priced electric cars by 2020, just five years from now.
A substantial portion of that sales volume is expected to consist of Tesla's upcoming Model 3, which should be sized (and priced) in the same general vicinity as BMW's compact 3 Series. The 3 Series starts at $32,950, but prices on loaded models can exceed $50,000.
Who's right? Is the world primed for an electric-car boom, as Tesla and its investors hope, or are EVs likely to remain a niche market as GM seems to expect? We'll find out.
But the good news for electric-car fans is that GM is now formally committed to making a car that should raise the bar for a mass-market electric vehicle. And that could invite some interesting competition.
John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors and Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.