Wednesday, June 07, 2017

Tesla Edges GM with Investors

Tesla Edges GM with Investors

When Elon Musk told the world he would make a line of electric cars that people would love, and most anyone could afford, the world laughed. Gas-powered cars were “the thing,” and no upstart idea was going to push Detroit’s best out of the minds and hearts of American drivers. As it turns out, that criticism may have been a bit premature.


Tesla did indeed launch a line of cars people loved, and they are on their way to marketing a midsize car that most folks could manage to afford. Soon, Musk promises, there will be vans, trucks, and SUVs. No real timeline on those just yet, but there have been some broad-brush strokes on that subject. Meanwhile, other traditional American automakers have taken notice, launching fully electric cars of their own. The difference? These are for the most part subcompacts, smaller cars, rather than the sleek sports sedans offered by Tesla. That, as well as the fully electric pioneer’s continued popularity, has led to some animosity between the brands.

This sharpness was on display at a recent tech trade show, when, while introducing the new Chevrolet Bolt, GM CEO Mary Barra threw some shade at Musk and Tesla, “Buyers can be confident because Chevy has 3,000 US dealers to service the new electric vehicle…” How was that a slight? Well, because Tesla currently only has 69 service centers coast to coast. Meaning, the company can’t make the same service promises Chevy can. That’s true, but it sure hasn’t slowed Tesla’s popularity with drivers. Even though Chevy does have a distinct advantage that goes well beyond the service centers.

GM has a long, proud history in the US, and it has a huge following of dedicated fans. And, of course, Chevy managed to get the Bolt to market long before Tesla’s much-vaunted Model 3.

And then there’s the money. GM is raking in billions while Tesla has yet to turn a profit. Not that it bothers Musk very much. He’s a disruptor, an innovator, a long-term thinker who is not worried about today when he can change the future. He wants to cover costs while he changes the world. Profits will come later. And that approach certainly doesn’t seem to be hurting Tesla’s investors. While GM stock has remained essentially flat, Tesla stock has jumped tenfold, and Wall Street officially gave Tesla the nod, valuing the company more than GM by five billion dollars.

So, who’s getting the last laugh? We won’t know that for a while, maybe never. But you can bet the competition is heating up … and the consumers will have the last word.

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