Can GM (NYSE: GM) Beat Tesla (NASDAQ: TSLA)?

Brian Hicks

Written By Brian Hicks

Posted September 19, 2013

I know the title of this piece might have given you a little chuckle, but while Tesla (NASDAQ: TSLA) seems untouchable now, the ride can’t last forever.

Which begs the question: does GM (NYSE: GM) have what it takes to tussle with Tesla?

And I’m telling you it does.

teslaLast Monday, from the General Motors battery laboratory and testing facility in Warren, Michigan, GM announced it had a few tricks up its sleeve to give the electric vehicle powerhouse a run for its money.

Tesla has earned all of the praise it’s given – it has beaten the odds and risen to the top of the EV marketplace. Its stock has soared nearly 400 percent this year, prompting even its founder and CEO, Elon Musk, to say it seems overvalued, as Yahoo! Finance reports.

And you can’t knock the sleek performance and beauty of the Tesla ride, as drivers everywhere have been seduced by an EV that leaves the competition in the dust.

But GM may be inching up in Tesla’s rear-view. And it all starts with its battery – the driving force behind any good EV.

GM’s claim: it can provide a battery that will take a car 200 miles on a single charge and be on the showroom floor for right around $30,000. That’s comparable to the range of Tesla’s Model S at less than half the cost.

The technology isn’t quite ready for today’s models, as it still needs to iron out costs, but the feat isn’t far away.

This could be just what GM needs to put itself back on the map after the government saved the struggling automaker with a bailout in 2009 and the company saw its Chevy Volt labeled as a government-funded failure.

But that’s in the past. GM has the resources to be a formidable opponent for Tesla, who is dwarfed in size by the Detroit giant. If it can pull its resources together, it could spread its technology across a huge sales base and employ its new battery in many different models. Tesla can ill afford that luxury, as it can only focus on a select few models to offer consumers.

And while Tesla is the sparkle in Wall Street’s eye, you must remember that the startup just recently turned in its first quarterly profit. Before that, it was consistently losing money.

GM Out of the Gate

GM’s most prominent EV to date is its Chevy Volt. Any of you who are lucky enough to own one know that for $34,000, you can get the bare minimum and travel roughly 40 miles on a single charge before the car – which is actually a hybrid – switches to gasoline power. With the help of its small gas engine, it can get you almost 400 miles, so I guess it does have a redeeming quality.

GM pushed these things hard with its marketing campaign in 2010, but it didn’t do any good. The cars were a flop, and it seems the only way they’re moving off the lot today is with enticing discounts and incentives. The company has moved about 15,000 units this year through August.

But Tesla’s Model S is on a whole separate level. The company is the only automaker that offers a charge that will take a driver well over 200 miles. The price tag is a bit steeper – starting right under $70,000 – but you get what you pay for. On top of that, Consumer Reports gave the Model S some of its highest marks in driver performance.

Hands down, Tesla wins in every category – except in the wallet.

GM’s Leg Up

Right now, every automaker is facing the same problem: current EV batteries are too expensive, and aside from that of the Model S, they can’t deliver a range comparable to our internal combustion engines.

But GM might be the one company set to change the game. That is, if what it’s telling us is true.

Since the 1990s, GM has been working to develop a battery that would lead a breakthrough, but it hasn’t succeeded. But GM has the staying power, and with its 2009 bailout, it’s here for the long haul. Money is no object for GM, which can just keep feeding the pot until it gets it right.

With GM’s supposed new battery technology, we shouldn’t be shocked to see Tesla get a little tight around the collar.

That being said, we still don’t know much about the battery except for the fact that it still costs too much and it will be a proprietary battery.

Tesla’s battery is different in that it uses off-the-shelf technology and transforms it to work efficiently in its car battery. This is the main reason Tesla’s battery is thought to be the lowest costing battery in the entire industry – and its many patents make it untouchable.


The Competition

Despite all of GM’s woes in the past, it can build a mighty fine automobile. Just look at the Corvette. Even the Volt, while I will kick it around all day long, has its core of devoted owners. And next year, we should be on the lookout for the Cadillac ELR – a souped up version of the Volt – with a price tag similar to Tesla’s Model S.

At the same time, GM has been labeled as the automaker who tries to do everything for everybody, and instead of getting a vehicle worthy of praise, we’re left with a Chevy Malibu. But the potential to consistently turn out top notch vehicles is there.

Entering the EV market could be its saving grace – but then again, other automakers are doing their due diligence as well.

Next year, BMW (OTC: BAMXY) will launch its all-electric i3 hatchback that will pave the way for future BMW models. Nissan (OTCMKTS: NSANY), already the global leader in EV sales, will continue with its Leaf and roll out additional models.

Toyota (NYSE: TM), who leads the way in hybrid sales, will also release an all-electric RAV4 that uses some of Tesla’s technology. And then there’s Volkswagen (OTCMKTS: VLKAY), which has already come out and said it plans to be the world’s biggest electric carmaker by 2018.

So Tesla has a lot more to worry about than some “would be” battery GM might have. But Tesla will improve as well, and with the commanding lead it already holds, I wouldn’t get discouraged.

Tesla has its own plans for at least one smaller, cheaper model called the Model E, which will compete with more mainstream vehicles, to be released in 2016.

By then, GM will do its best to release a Tesla rival with a little help from Envia Systems, a California-based company in which GM invested $17 million in 2011.

Envia claims it can create a battery with greater energy density. This relationship will prove key to GM getting its battery to the masses and making its EV a head of the class.


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