GM Refuses to Be a Pawn in Tesla’s Electric Car Game
Tesla Motors (NASDAQ:TSLA) might currently run the electric car game with its Model S sedan, but many automakers are chomping at the bit to oust CEO Elon Musk from his throne, and one challenger is domestic competitor General Motors (NYSE:GM).
According to The Wall Street Journal, the U.S. automaker’s vice president of global product programs, Doug Parks, said Monday that GM is working on the development of a 200-mile range electric car expected to be priced around $30,000. The news reflects significant ambition on the part of GM, because while the automaker has seen success with its battery-powered Chevrolet Volt, it has yet to erect plans to roll out an electric car that could sufficiently compete with Tesla’s Model S — but it looks like that now could soon change.
It is still unclear when such a car would become available, but Parks told the Journal that the batteries necessary for the offering are still too pricey for GM to make significant electric car inroads just yet. Like Volkswagen and Nissan (NSANY.PK), GM has the technology available to produce viable Model S competitors, but batteries are still too expensive.
According to The Wall Street Journal’s report, electric car manufacturers are spending about $500 per kilowatt hour on battery packs, putting a 24 khw pack around $12,000. That’s why it is so hard to make money off of the sale of such vehicles, because their production costs are already too high.
Tesla, too, faces high costs. However, the automaker is different in that its company uses commodity battery casings rather than the specialized batteries. The Palo Alto, California-based automaker’s chief technical officer, JB Straubel, maintained in a recent interview that “battery prices in the Model S are substantially lower than what everyone expects today,” but failed to offer an estimate.
Still, though Tesla might currently be rocking the electric car market with its buzzing $70,000 Model S, the company has yet to prove that it can sufficiently make money off of the vehicle and sustain that success. Sales of electric and plug-in hybrid vehicles only account for less than half of 1 percent of the overall market, so business is still not where it needs to be in order for the automakers’ cars to facilitate significant profit.
Tesla is hoping to sell 21,000 Model S sedans by the end of 2013 in the domestic and international markets, so while consumer interest in the electric car market is undoubtedly growing, automakers continue to face significant obstacles. That’s why GM, like its competitors, is still only in the beginning stages of electric vehicle success.
But although it’s just the beginning, certain automakers have no qualms about erecting major goals for the future — that includes Volkwagen’s assertion that it will become the largest seller of electric vehicles by 2018. It’s hard to say if Musk would agree with such remarks, but only time will tell if the German automaker’s predictions ring true.
Nissan, on the other hand, isn’t so ambitious, and has vocally argued against the advanced technology of electric vehicles that many automakers are already trying to integrate. While GM and Volkswagen are both trying to improve their vehicles’ driving range, The Wall Street Journal reports that Nissan believes such an extension isn’t worth the cost because consumers never drive farther than 75 miles per day anyway. That figure also conveniently translates to the all-electric range of Nissan’s $28,800 Leaf.
The Leaf has sold well in U.S. and international markets, but many analysts believe consumers still want that extended driving range promise, and that’s what GM is gunning for with its newest electric product. As of now, only Tesla can promise up to 200 miles with its electric Model S, but in the future, many automakers could soon make that same assurance.