The Consumer Electronics Show in Las Vegas has become a bona fide car show in recent years, and many automakers now take the stage to show off what they have in store. Last week, that included General Motors (NYSE:GM), which rolled out an early prototype of its Bolt EV that it teased in concept form in early 2015.
On paper, the Bolt looks like a direct competitor to Tesla's (NASDAQ:TSLA) forthcoming Model 3, which is on track to be unveiled in March. Both cars should offer range of about 200 miles and cost $35,000 to $37,500 before federal tax incentives. But that's where the similarities end, and even though GM should technically beat Tesla to the market with a mainstream and affordable EV with 200 miles of range, the two cars are unlikely to be direct competitors.
Competing only on paper
Tesla has long maintained that the Model 3 will go after the BMW 3 Series, which starts around $33,000. Which is to say that the Model 3 will be positioned as an entry-level luxury sedan. The Bolt, on the other hand, is clearly a non-luxury compact car. Even though no one has publicly laid eyes on the Model 3, we already know how the car will be positioned and there's a good chance it will share design aesthetics with the pricier Model S.
The Bolt will sit at the high-end of the compact car market, while the Model 3 is at the low-end of the luxury sedan market, which is why they will be priced so comparably. That product positioning also suggests that the Model 3 will offer more value, since it is expected to be a luxury vehicle and buyers may arguably get more for their money.
None of this is to say that Bolt and Model 3 won't compete. Considering the specs, some overlap in prospective customers is inevitable. Rather, they won't directly compete since they are each intended for different markets.
The $35,000 question
Of course, all of this is predicated on Tesla's execution. Elon Musk has already said that Tesla needs the Gigafactory to be "fully operational" in order to hit the target price point, and that Model 3 should begin production in late 2017.
Model 3, our smaller and lower cost sedan will start production in about 2 years. Fully operational Gigafactory needed.— Elon Musk (@elonmusk) September 2, 2015
Tesla's track record at hitting launch deadlines leaves a little to be desired, so there's some justifiable concern about whether or not Model 3 will launch on time. Musk has a tendency to overpromise on timelines, even if he does always end up delivering the end product.
In contrast, GM has no shortage of experience developing, manufacturing, and launching cars in volume, and Bolt is expected to enter production in late 2016. In fact, most investors have been rather impressed with how quickly GM has been able to develop the Bolt. Chevy surprised everyone by unveiling it a year ago.
If both companies are able to hit their production timelines, then the Bolt and Model 3 will be released about a year apart, which is a fairly short period of time in the context of the relatively slow-moving auto market. However, Tesla does plan to begin taking reservations for Model 3 when it unveils it in March, and Tesla customers do have a history and willingness to endure delays, so the upstart automaker might still get a head start.
Even if Tesla "loses," it still wins
Either way, Tesla actually welcomes the competition. While GM CEO Mary Barra tried to take some underhanded jabs at Tesla during the presentation, Tesla took the high road and pointed out that it's whole goal all along has always been to get the big automakers onboard the EV bandwagon. Here was Tesla's official statement in response:
Commitments from traditional car makers to build electric vehicles advances Tesla's mission to accelerate the advent of sustainable transportation. We hope to see all those additional zero-emission vehicles on the road.
Having the traditional automakers making EVs only supports Tesla's overarching mission of transitioning the world to sustainable transportation. The most tangible benefit to Tesla would be the expansion of charging infrastructure, which large automakers can help catalyze.
This is very much a situation where a rising EV tide lifts all EV automakers. Sure, there will be some healthy competition, and even if the Bolt outsells the Model 3 in units, everyone wins.
Evan Niu, CFA owns shares of Tesla Motors. The Motley Fool owns shares of and recommends Tesla Motors. The Motley Fool recommends General 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.