We've known for some time that General Motors (NYSE:GM) was looking to make a stronger push into the electric-vehicle market, even claiming it had a team to specifically study electric-vehicle maker Tesla Motors (NASDAQ:TSLA).
GM opened media days at the 2015 North American International Auto Show in Detroit in January with a bang, announcing a long-range, all-electric vehicle designed to offer more than 200 miles of range and with a price tag of only $30,000, slated to hit the market by 2017. This week GM confirmed that the idea wasn't just a concept, and that it would indeed produce the vehicle, saying the consumer response was clear: "Build it."
On paper, this news seems like it should have Tesla investors and fans shaking in their boots. In reality, though, that isn't the case.
Introducing the Chevrolet Bolt
I'm quite sure after a quick glance at the Chevrolet Bolt, many Tesla fans are probably in tears from laughing so hard, because the Bolt sure doesn't look like it could compete with a future Tesla Gen 3 vehicle. (Despite not knowing exactly what that will look like, we can assume Tesla will continue with a modern, sporty, and sleek design like the one the Model S is widely known for.) And somewhere out there, CEO Elon Musk surely mumbled politically correct phrase, "We welcome all electric challengers to further the acceptance of electric vehicles" -- but he, too, is probably amused at the idea of the Bolt stealing market share from Tesla in the future.
General Motors, however, is not laughing, and believes the Bolt will be a game changer. "The Bolt EV concept is a game-changing electric vehicle designed for attainability, not exclusivity," said General Motors CEO Mary Barra in a press release. "Chevrolet believes electrification is a pillar of future transportation and needs to be affordable for a wider segment of customers."
Detroit's largest automaker is putting its money where it's mouth is, investing $200 million to support the Bolt's production at GM's Orion Assembly plant. GM's next-generation pure electric vehicle will attempt to compete directly with Tesla's Gen 3 mass-affordable vehicle, but it has a long uphill battle ahead of it.
While Tesla's lower-cost Gen 3 vehicle likely won't have the performance upside of the Model S, the Bolt certainly won't be confused with a luxury vehicle, or sports car, which Tesla's Model S is often compared to. Because of that premium, first-mover brand image that Tesla created with its Model S, it's hard to imagine how the Bolt will steal much of Tesla's Gen 3 market in 2017, even if it is price-competitive.
GM's three-pronged attack
Perhaps because of the difficulties the Bolt will face challenging Tesla directly by itself, General Motors' real hope hinges on a multiple-car strategy. In addition to the Bolt hitting the streets in the years ahead, GM unveiled the all-new 2016 Volt electric car, which will get extended range -- 30% more range, to be exact. However, it should be noted that this increases the all-electric range of the vehicle from 38 miles to roughly 50, before its gasoline motor takes over.
Despite not being a direct competitor to Tesla's all-electric vehicles, the Volt is certainly a substitute product that will hold more competitive weight as gasoline prices continue to drop. The Volt is also a more sleek-looking ride than the Bolt. On top of the Volt and Bolt, which make a decent one-two punch, GM also offers a $75,000 Cadillac ELR plug-in car, though so far it hasn't put a dent into Tesla's Model S in terms of converting luxury electric-vehicle consumers.
While GM's strategy of a three-pronged attack on Tesla's stronghold in the high-end electric-vehicle market is the right move, it's hard to imagine GM having much success by the end of this decade. That seems especially true when you consider the progress Tesla has made expanding its Supercharger network and innovating with concepts like battery swapping. Tesla even updates and fixes software issues automatically "over-the-air," without users having to go to the dealership.
Tesla has the brand image and leading technology that will almost certainly keep GM's lineup of electrified vehicles at bay, at least for the near term.
On the face of it, sure, the Bolt has the ability to compete with Tesla's Gen 3 electric vehicle; but when you look at it more closely, not so much.