GM and Tesla have du­el­ing elec­tric ve­hi­cles on the way, and this fight could get nasty

GM and Tesla in­tro­duce ve­hi­cles that tar­get the same cus­tomers “Think of the Model 3 as … re­ally com­pet­ing” with BMW and Audi

Bloomberg Businessweek (Asia) - - CONTENT - −David Welch

For­get about old grudge matches like Chevro­let vs. Ford or Honda vs. Toy­ota. The fight brew­ing be­tween General Mo­tors and Tesla Mo­tors is shap­ing up to be nas­tier. Both will soon be go­ing af­ter the cus­tomer who can spend $30,000 or more on an elec­tric car, as GM launches the

Chevy Bolt at the end of this year and Tesla be­gins sell­ing the Model 3 in 2017. GM showed off the Bolt in Jan­uary, and Tesla un­veiled the Model 3 on March 31.

GM is po­si­tion­ing the Bolt to sell to the masses, which will help the com­pany meet reg­u­la­tory targets for re­quired zero-emis­sion ve­hi­cle sales, and to high­light tech­nol­ogy GM de­vel­oped with its first elec­tric car, the EV1, in­tro­duced in 1996. When GM stopped EV1 pro­duc­tion in 2002, Toy­ota be­came the dar­ling of green-friendly buy­ers with its Prius hy­brid. Tesla, mean­while, is look­ing to the Model 3 to prove it can sell bat­tery-pow­ered cars to a mass mar­ket and turn a profit.

Both cars will start at $30,000—or less af­ter fed­eral tax cred­its of $7,500 are ap­plied. And both go at least 200 miles on a fully charged bat­tery. The Bolt is a five-pas­sen­ger hatch­back that boasts cargo space and more legroom for rear pas­sen­gers—frontseat backs are an inch thin­ner than in most cars. Tesla has kept de­tails un­der wraps, but the Model 3 is ex­pected to be about the size of a BMW 3 Se­ries.

At the Con­sumer Elec­tron­ics Show in Las Ve­gas in Jan­uary, GM Chief Ex­ec­u­tive Of­fi­cer Mary Barra, de­scrib­ing the Bolt’s virtues, said, “Bolt cus­tomers won’t have to drive to an­other state to buy, ser­vice, or sup­port their ve­hi­cle.” Tesla own­ers out­side Cal­i­for­nia must some­times travel long dis­tances for main­te­nance and re­pairs; the com­pany has fewer than 100 stores na­tion­wide, while Chevy has 3,000 deal­ers.

In Fe­bru­ary, Tesla CEO Elon Musk said he wel­comes the Bolt to the mar­ket, but doesn’t see it as a ri­val. “You should think of the Model 3 as sort of re­ally com­pet­ing in kind of the BMW 3 Se­ries or Audi A4 mar­ket,” he said. Musk has suc­cess­fully tar­geted lux­ury brands such as Audi, BMW, and even Porsche with the Model S, Tesla’s first full-size EV, which hit U.S. streets in 2012. It now starts at about $75,000 and can go well be­yond $100,000.

Chevy will mar­ket the Bolt on its value and prac­ti­cal fea­tures. “Friv­o­lous gad­gets” won’t cut it, says Darin Gesse, mar­ket­ing man­ager for elec­tri­fied ve­hi­cles at GM. Are the fal­con-wing doors on the Tesla Model X friv­o­lous? “They’re in that neigh­bor­hood,” he says. Musk has said that the doors aren’t just for show; open­ing up­ward, they make it eas­ier to get in and out of the car.

Tesla first pushed its cars as sporty and unique, and then as elec­tric and green, says Alexan­der Ed­wards, pres­i­dent of San Diego mar­ket­ing con­sul­tant Strate­gic Vision. That’s why sales have in­creased even as cheap fuel has bat­tered hy­brid-elec­tric cars like the Prius. De­spite the com­pa­nies’ dif­fer­ent mar­ket­ing ap­proaches, Ed­wards says, the 8 per­cent of new-car buy­ers in­ter­ested in an elec­tric car will look at both the Tesla and the Chevy mod­els.

The bot­tom line GM and Tesla have a lot rid­ing on the re­lease of their new­est EVs, as both com­pa­nies go af­ter the mid­dle mar­ket.

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