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Who benefits as Elon Musk faces down GM’s “Tesla killer”?

by Greg Klein | January 14, 2015

If anything came close to upstaging celebrity entrepreneur Elon Musk at this year’s North American International Auto Show it was that staid old Detroit establishment standby, General Motors. GM says its Bolt—already dubbed the “Tesla killer”—would feature a 320-kilometre range and cost as little as US$30,000 when it debuts in 2017. That’s the same year slated for Tesla Motors’ own economy car, the Model 3.

Tesla has faced a number of setbacks lately, although with no discernible effect on CEO Musk’s self-assurance. Last year’s sales for Tesla’s current product, the Model S, are expected to total 33,000 or less. That’s down from a previously forecast 35,000. Yet the cars sell as fast as they’re built. Customers who order now have to wait for delivery.

Who benefits as Elon Musk faces down GM’s “Tesla killer”?

GM calls the Chevrolet Bolt “a game-changing electric vehicle
designed for attainability, not exclusivity.” Photo: © General Motors

Musk claims his company will finally reach profitability by 2020 with annual sales of half a million cars, after its Gigafactory begins battery production and the mid-range Model X and economy Model 3 hit the road. Morgan Stanley, however, last month downgraded that sales estimate to about 297,000.

Oil and gas prices don’t help. But Musk maintains “huge societal pressure” will drive consumers to fossil-free fuel, according to the Washington Post.

Underneath his flamboyant exterior, what does Musk really think about the Bolt? “Bring it on,” the WP paraphrases him. The journal portrays competition as a “new victory for his mission to accelerate the advent of electric cars and, as he said, ‘make a difference in the world.’”

The WP adds that Musk “reiterated the real environmental benefits will only happen ‘if the big car companies make risky decisions to make electric vehicles. I hope they do.’”

But Business Insider looks at risk from GM’s point of view, saying the giant “could put Tesla out of business tomorrow if it wanted.” So why doesn’t GM do just that?

“GM—and the rest of the auto industry—is delighted that Tesla is out there on the edge of the envelope, taking the monumental risk of creating an electric car company,” writes transportation editor Matthew DeBord.

“It costs Tesla everything to develop and build the car of the future. It costs GM nothing. On top of all that, Tesla is building the charging infrastructure that’s necessary to make widespread electric car travel in the U.S., a large country, viable. That doesn’t cost GM anything either.”

So despite the oil and gas price plunge, both sides believe electric vehicles have a future. But if DeBord is right, GM wants Tesla to pave the way.

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