Is The Market Taking GM’s Electric Car Threat Too Lightly?

by Trefis Team
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General Motors (NYSE:GM) recently announced that it is developing a new electric vehicle with a range of 200 miles – more than double than that of the Chevrolet Spark. Moreover, the car will be priced near $30,000, which should be affordable for middle and upper middle class Americans. [1] Inconvenience caused due to a limited electric range is one of the major reasons why GM’s electric vehicle sales have failed to pick up. This could finally change if the automaker delivers on new technologies or designs to extend these vehicles’ ranges and speeds up charging times.

Tesla will introduce the high volume Gen III in another two to three years time. No official pricing has yet been announced, but Tesla says it should cost the customers about $35,000 after the federal incentives. At the moment, the market does not consider GM to be a real threat to Tesla, at least in the electric car segment.

Bankruptcy proceedings, pension costs, high labor costs, political interference etc are the reasons why GM is considered too bureaucratic to introduce a vehicle that is technologically miles ahead of its competition. Tesla on the other hand, is seen as the new face of America – innovative, entrepreneurial and cool. While the Model S evokes awe and admiration, the Chevy Volt evokes mediocrity. [2]

See full analysis for General Motors

Are Investors Taking GM Too Lightly?

But what about the needs of a typical middle class American? If GM can roll out an electric vehicle that has an electric range of 200 miles and a price point near $30,000, will that not appeal to a middle class American? GM also has more than 100,000 employees in North American alone who along with their family members get a discount on every GM vehicle purchased. With the discount, the new proposition could become even more attractive.

Apart from the enhanced electric range, GM is also taking steps to make it easier for its customers to charge the batteries, which is the biggest inconvenience for most electric car owners. Tesla’s cars have the edge here too –  two-third of the battery can be charged in thirty minutes. Volt, on the other hand, takes four hours to charge using a 240 volt charger (and up to 10 hours using a 120 volt charger). [3]

However, automakers including GM and BMW are pouring in a good amount of money on making DC chargers more feasible. Chevrolet already offers a DC charging in its new Spark EV which could reduce the charging time significantly. DC charging can reduce the charging time substantially since 80% of the battery can be charged in 20 minutes. [4] This could significantly reduce the hassle of charging the cars overnight and would make on-the-go charging possible.

GM’s new vehicle might not be the one to show off, but as long as it caters to the needs of the general public, it should be taken seriously by competitors and investors alike. It does not necessarily need to design a vehicle that is a generation ahead, and as long as the car fulfills the practical needs of the people, it should do fine.

We have a $38 estimate for General Motors, which is about 5% above the current market price.

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Notes:
  1. GM planning 200-mile battery car, September 21, 2013, cnbc.com []
  2. Musk: Why Model S is Better Than Volt Or Leaf, August 21, 2013, hybridcars.com []
  3. Chevy Volt FAQs, gm-volt.com []
  4. G.M. and BMW Adopt D.C. Electric Car Charging, June 11, 2013, nytimes.com []
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  • commented 12 months ago
  • tags: TSLA F DAI GM TM HMC
  • GM trying to compete with Tesla will only hurt itself. It will surely be an inferior car, without a supercharger network and will only take away business from its own cars. How is it going to justify its many gas models when this "great electric car" comes out. This is the same reason Tesla doesnt have dealerships and doesnt have to. The electric cars of these big companies are just to get in you in the door but then they try to sell you the much cheaper gas version. Also when are we going to realize Tesla doesnt compete against other electric cars, it competes against the finest gas cars and quite frankly crushes them in almost every way BECAUSE it is electric. Safer, more efficient, less maintenance, faster, more space, better handling are all results of the battery pack on the floor of the car. Tesla is way ahead of other electrics and thus far, nobody can compete and really shouldnt. They only chance to beat tesla is the gas car that gets 100 plus MPG. But even then, the gas engine makes the car less safe and takes up a lot of space. So, In conclusion, Tesla is the car company of the future. in 20 years, the leader of all cars, 400 billion Market cap, get in while you can!
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  • commented 12 months ago
  • tags: TSLA F DAI GM TM HMC
  • Apologies, but down there I said, 'These limits to these prices will be based on the costs of alternatives, ...' & what I meant to say was 'The limits to these prices will be based on the costs of alternatives, ...', 'the', not 'these'. Apologies.
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  • commented 12 months ago
  • tags: TSLA F DAI GM TM HMC
  • @Lorenzo, my wife has had a volt almost 10 months. She commutes about 45/day w/it & it now has 11,500 miles, has used 6 gals of gas & that's slightly over 1900 mpg. The battery is epa rated at 38 miles/charge but it's almost always giving 55, that's ~150% epa, go figure. She's not the only one getting these numbers out of a volt & no hybrid out there can beat this. gm knows the volt's biggest problem is ignorant consumers.

    @Joe Florio, Musk's superchargers are great as is his model s, but what happens when there's 500,000 Tesla electrics on the road but only 200 superchargers? The answer is 'very long waits'. These superchargers are very expensive & because of this they won't be 'everywhere', their best use will be on big interstates for people taking their electrics long distances. Tesla will have to factor this expense into the price of their cars & I very much doubt they can offer a $30k car & supply it's buyers connectivity to superchargers for free & possibly at all. Non-Tesla public charging is going to be very expensive & it's investors are going to be chasing profit. These limits to these prices will be based on the costs of alternatives, like gasoline in a basket of cars. Ice cars typically cost between 10 to 20 cents/mile in fuel (gas)& ev owners will find that pricey. My volt, charged at home, costs under 2 cents/mile in fuel (electricity) & I have no desire to ever visit a public charging station. That's freedom. It will be miles/charge gains that drive higher ev adoption (w/people charging at home, cheaply), not charging stations.
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  • commented 12 months ago
  • tags: TSLA F DAI GM TM HMC
  • The bigger question can GM install superchargers all over the country like Tesla is? Personally I don't think so simply because they are not thinking like Mr. Elon Musk is, you see GM has other fish to fry, like the other ICE cars they have been building, will continue to build and I don't think for a second that GM is ready to give that business up.
    When I say that GM isn't thinking like Mr. Musk is, that's because he has a mission, and he is bound and determined to change all passenger cars to EV's, simply because EV's don't pollute, and ICE cars will always pollute, they have a tailpipe and EV's never will and are zero emission rated. Mr. Musk is convinced that our World weather problems are virtually tied to tailpipe pollution, and GM and other car companies are not.
    Getting back to Superchargers, Tesla is building them is strategic locations right now, but in three years they will be everywhere, making Tesla vehicles the best car and cheapest on the road.
    I believe Mr. Musk when he says Superchargers will ALWAYS be FREE to charge your Tesla automobile, and that makes Tesla by far the cheapest and best automobile because that equals FREE MILEAGE. Who offers that? NOBODY, and I am excited for AMERICA.....BOO-YA AMERICA we finally have something to fight the oil barons with, and say no to OPEC you can keep your oil, we don't need it anymore. Look at the Billions upon Billions of dollars we would save our country and American people, Wouldn't that be wonderful?
    However, don't bore me with your sob-job story, because in 1980 President Ronald Reagan told the Patco union workers they could not strike, and to find a new job when he broke that union up, he suggested that they go back to School, and Re-train, I think that's a good suggestion now for anyone that's stuck in the oil business, gets laid off and needs a new job. We know science has proved that Co-2 pollution is causing these floods, hurricanes like Sandy, Frances, Jeanne, Katrina and other storms across America and the World leading to tragic weather events, and I see changing to Electric Vehicles as progress, and a necessity to save the World from itself.
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  • commented 12 months ago
  • tags: TSLA F DAI GM TM HMC
  • I really surprised....tha GM even considered releasing the Volt...on the bases of 35 electric mi.
    then going into gas mode...what where your engeniers trying to prove any way...200 electric,miles might be worth itbut with the japanese Prius getting 50miles to the gallon electric/gasoline....at less than $30,000

    you better be working on something even better.....and I also can't believe year the milage you place on your window sticker....on a non electric auto....I own a CTS coupe...and can prove it
    the form auto makers....will continue to out milage GM....and we all know why