GM Aims to Capitalize on Tesla’s Mass Market Stumbles

by - 2 min read

GM Aims to Capitalize on Tesla’s Mass Market Stumbles

by admin - 2 min read

by admin

 

Tesla’s problems with its mass market electric car, the Model 3, have been well documented at this point. Elon Musk’s battery-powered brand recently reported its largest-ever quarterly loss and its stock took a big hit, though that was offset slightly with the announcements of a new semi-truck and high-end roadster. Coupled with the fact that Tesla only produced 260 Model 3s since launching the more affordable, $35,000 model this past summer – a tiny fraction of the 1,500 Musk had promised to build in September alone, before a planned ramping-up to 20,000 cars a month by December – the bloom seems to be coming off Tesla’s rose.

Upstart Enthusiasm vs. Expertise

General Motors appears to be positioning itself to fill that gap. The American automaker has announced plans to launch a new line of more affordable electric vehicles (EVs) in 2021. GM says its new, modular line of at least 20 battery-powered vehicles will be 30% cheaper to make than its current Chevrolet Bolt EV model, and will feature nine different body styles in various sizes, available by 2023. The new GM EVs will be available in North America, China and elsewhere, CEO Mary Barra told a recent investor conference.

This increased competition from an established automaker like GM could be a major problem for Tesla. GM’s area of expertise – large-scale production – is exactly Tesla’s weakness. As Musk chalked up the problems with the Model 3’s production to being mired in “production hell,” it highlighted one of the potential problems with a newcomer to the automotive market throwing itself into mass production without a lot of knowhow or experience. The production bottlenecks hampering Tesla are reportedly due to assembly-line basics like spot-welding, as well as issues assembling batteries at its $5 billion Gigafactory.

Tesla’s Troubles

Some maintain that betting against a visionary like Musk is a bad idea, but the problems facing Tesla have been mounting for months. Beyond the aforementioned Model 3 production hitches, the upstart automaker is fighting against its workers’ efforts to unionize, and is facing allegations that a recent round of performance-based firings were actually layoffs in disguise. There’s also an ugly lawsuit from a former employee claiming that Tesla’s manufacturing facility is “a hotbed of racist behaviour.

Many observers believe that electric vehicles are the future of the auto industry. As oil and gas prices continue to climb, and younger consumers place more and more value on concerns like the environment, the long-predicted shift away from traditional, gasoline-fuelled cars may finally be at hand. Musk had positioned Tesla as being at the vanguard of that change (and he and Tesla certainly deserve a lot of credit), but a more established automaker may be the one to truly bring EVs to the mainstream.

A Changing of the Guard?

If GM can indeed come through with an entire lineup of affordable battery-powered vehicles, including SUVs and the increasingly popular crossover, that may spell doom for Musk’s bold attempts to quickly expand Tesla beyond high-end, six-figure electric sports cars. Interest in the Model 3 remains high – there are 455,000 people on the waiting list for Tesla’s first mass-market car as of August – but it seems like most of those would-be early adopters may find themselves waiting for quite some time before they can get behind the wheel. In the meantime, it looks as if GM is gearing up to try to grab many of those customers right out from under Tesla – and Musk.


 

 

Justin Anderson | The Edge Blog

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