Yup, which is why any entrenched player is going to have to both build an incredible car and fight against their dealerships to sell it.
GM is investing in what sells, and right now (i.e. for the last decade or two), that's SUVs and light trucks. Which doesn't bode well for Tesla, at least in the near term.
You can certainly argue that fuel prices are going to go up and make electric cars popular. The question is: does it happen before Tesla goes broke?
(Edit: downvoting doesn't change facts. From GM's own 2017 outlook [1]: "Ten all-new or recently redesigned crossovers are expected to drive GM’s sales and share higher in 2017, including the Chevrolet Equinox and GMC Terrain, which will compete in the industry’s largest segment." And they're not joking about that last part. As of February 2017, SUVs and Trucks dominate the list of most-popular vehicles sold in the USA [2].)
[1] https://www.gm.com/investors/sales/us-sales-production.html
[2] https://www.cars.com/articles/top-10-best-selling-cars-febru...
I wouldn't worry about Tesla, anyway. Tesla has huge brand clout and advertises by making really awesome, inspiring vehicles. You want the fastest production sedan? There's only the Model S. And Model X is, after all, an SUV/crossover. And Model 3, which isn't, will be the basis for the Model Y, which /will/ be a crossover and/or light truck. Again, Tesla will be perfectly fine on the demand front.
You can't push on a string. Consumers buy bigger cars when gas prices are low, and more efficient cars when gas prices are high. It's why Toyota (which has built a brand identity around fuel efficiency) does worse when fuel prices go down.
Marketing can influence consumers' affinity for brands and perception of product quality. It can't change economics.
"Tesla will be perfectly fine on the demand front."
I'm sure there's a market. After all, Lamborghini is "perfectly fine on the demand front", too. But will the demand for electric vehicles justify a valuation on par with General Motors? That's the rub.
Actually, I would say marketing is one of the few things that actually can change economics, since it affects perception. Marketing can make someone think they need a new car when they don't, or that a car is affordable than an alternative when it really isn't (given financing, fuel economy, services, etc which are not always taken into account).
People don't make decisions based on reality, they make decisions based on their perception of reality. If you can change that perception, you may change their decisions.
You think car companies want to change their assembly lines and tooling, if they can magically change consumer buying habits with a bit of advertising? Come on.
If I was attempting to make an argument against that, I would have done so. You seem to have mistaken my comment as some rebuttal to your entire argument. I just thought one specific point was interesting, but not entirely correct from my point of view.
> You think car companies want to change their assembly lines and tooling, if they can magically change consumer buying habits with a bit of advertising? Come on.
Since you're asking, no, I don't think car companies want to change anything. That doesn't mean they won't be forced to change, and I think being forced to change rarely works out as well as noticing the trends and changing along with, or better yet, slightly in advance of those trends.
It's obvious by the change in types of cars bought based on gas prices that gas prices influence buying decisions for many people. But influence does not necessarily mean control. Many factors go into the decision of which car to purchase, electric or not. Fuel cost is but one of those factors. Tesla has shown that there are people that buy based on other decisions, since the price of a Tesla means that fuel costs are basically moot. Luxury, performance and status are all factors that the automakers and intimately familiar with marketing towards and selling to, usually each to varying degrees with different products. That they've left these areas mostly untapped for electric vehicles after Tesla has shown there is a market, since there were 400k+ Model 3 preorders as of roughly a year ago, leaves many people confused, and I don't think it can be entirely explained away by gas prices. That's enough presales a year ago to be on par with yearly Camry sales. GM is obviously doing something to try to tap into this with the Bolt, but that's still one entry and at the low-end.
Yep. Building cars for the mainstream is a low-margin, capital-intensive business. That doesn't go away because Musk is brilliant.
https://www.cars.com/articles/top-10-best-selling-cars-febru...
But yes, trucks are on the rise again.
GM already has a crossover line. In fact, it has a bunch, and they sell really well:
http://www.gmfleet.com/vehicle-search/by-body-style/suvs-cro...
Point out Tesla's crossover SUV with the range of a gasoline vehicle and the price point of a Chevy Equinox ($25k). I'll wait.
Whoa — you have to realize what you just did there, right? This is a massive shifting of the goalposts from what you said Tesla's problem was earlier, which is that SUVs and light trucks are what sells.
Anyway, I don't think most people with SUVs actually go through a full tank of gas a day, so having completely equal range doesn't seem like that big an issue. So now it sounds like Tesla's major problem is that they're competing with the Range Rover rather than the Equinox.
It's not about what market segment that sells, it's that dealers have no incentives to sell electric vehicles since there's no margin on services and maintenance.
The topic's GM and GM dealerships. You said GM has to fight the GM dealerships due to conflicting interests, whereas, he's saying GM and the GM dealerships don't want "non" mass-markets customers to begin with (i.e. no conflict).
Tesla on the other hand, lives and dies by its EV performance, and their approach to the market at higher end kept them alive along with loans from US with few strings attached (for various reasons).
Tesla did not "break through" any thing. If any thing, existence of BoltEV and Volt does demonstrate couple of things, a legacy car company when there are profits are going to turn on dime and make shit ton of EVs, if that is what market wants.
Tesla has brand recognition behind it, but again as some one pointed out when the market for EVs in high demand and profitable, from BMW to GM, you will have them roll EVs in millions.
The cost is coming down. Chevy is now selling the Bolt, which has pretty good range, for under $40,000. Tesla's Model 3 is coming soon. More will follow. The high cost comes from the batteries, which are getting cheaper all the time.
I'm not sure that "unpopular" is quite the right word. A lot of people really like Teslas. Most of them can't afford them. The desire is there, the means is not (yet).
It's smart to invest in what sells right now... until things change and that's no longer what sells. GM is investing in what sells today. Tesla is investing in what might sell in a decade or two. Tesla's approach isn't certain but if they're right then GM is going to relive their experience of the 1970s where they take way too long to react to a changing market.
So, nobody pays the full price of an EV at the moment. You can currently buy 1-2 year-old, certified Nissan Leafs for less than $13,000.
I think you can only say EVs are a success when a used market is thriving. Many people can't afford new after all.
I've been looking at cheaper used EVs for a second car. There are lots of used LEAFs out there, some Smart EDs, and a couple of Focus Electrics, which look really nice if you don't mind the short range, but aren't very popular at all. These cars seem to drop in value a lot for the used market. I saw several that were not all that old going for under $10,000.
Teslas seem to retain their value better. I'd guess it's partly because the car is more desirable, and partly because Tesla treats their batteries a lot better, so they can be expected to last longer. The LEAF in particular was known for a while for losing quite a bit of range in just a few years.
As far as how they'll retain their value in the long term, it's hard to say. EVs should lose less value due to things like drivetrain wear, since you don't have a bazillion moving parts in an engine and transmission to go wrong. But they'll lose more value to battery degradation. Much will hinge on how well the batteries age and how much they cost to replace in 10+ years.
This is not really great news for the low-end EV market, though - if the average person isn't interested in a midly used <$10,000 EV, how well will a $35,000 (With no frills - the average vehicle will probably be closer to $40,000) EV sell for?
Keep in mind that after years of making cars, Tesla is still struggling with quality control, supply chains, and repairs.
If we took a time machine, and traveled back to the early 00s, would you have dropped $40,000 on a vehicle made by Kia?
That's roughly where Tesla is today, in terms of maturity. I'm sure it will get better - but it may take a decade.
I don't understand this. The <$10,000 EV in question has a range of maybe 80 miles, probably less at this point. The $35,000+ EV will have a 200+ mile range and access to an extensive fast-charging network for trips beyond that.
Personally, I've stopped looking at the <$10,000 EVs in favor of waiting for a Model 3, because even though it's far more expensive, it's also far superior.
Tesla has no trouble selling Model Ss and Xs today even though they start at $68,000 and go up well into the 100s. They have a metaphorical line out the door for the Model 3. Tesla is struggling with quality control and such, and it could come back to bite them down the road, but it's not making it hard for them to find customers now.
Anyway, there are plenty of used electric cars out there if you're happy with the models that have been out for a few years.
I haven't looked too hard at the used market, but it looks like a decent way to get one for less. This web site lists a bunch that Tesla is selling through their CPO program if you want to see what's out there:
For what it's worth, I have an early 2015 Model S and it's had a few minor problems, but nothing close to leaving me stranded.
The story is so reminiscent of Kodak. Huge 'titanic' of a ship that saw the writing on the wall, actually released digital cameras but the bulk of their infrastructure, employees and expenditures were in traditional film cameras. Once the industry fully shifted they still couldn't change course and died a slow agonizing death as taking pictures became a commodity that came 'free' with your cellphone.
GM doesn't get money from gas (though their dealers do get money from maintenance which is hypothetically(?) lower with electric vehicles. Different anyway.)
It seems to me that the Bolt and Model 3 should be pretty similar in terms of cost, range, and price. The main difference is the Tesla brand / visual design and probably more self-driving tech in the Model 3. Am I missing something?
I regularly make a ~300mi roundtrip with our Tesla, I wouldn't own one today if that wasn't possible.
[edit]
Before anyone brings up ChaDeMo(I have the adapter), SAE combo neither are nearly as fast(120kW) in real-world use and have nearly as much market penetration.
The super-charger network is also something that's planned and built-out with the intention of being to make the major arterials rather than having a patchwork of various companies providing chargers.
The self-driving/driver-assistance tech gulf is pretty big. The Bolt is fairly basic, while the Model 3 will have at least Tesla's Autopilot 2 hardware, which they say will be sufficient for full self-driving once the software is done. Even if that doesn't work out, it'll have excellent traffic-aware cruise control and lane keeping at the least.
I'd say the brand is also fairly important. Not (just) because Tesla is "cool," but because Tesla is committed. Supposedly GM is planning for something like 50,000 Bolts per year, so it seems like yet another car where dealers will try to steer you to a nice pickup truck or something instead, and finding someone willing to service it could be tough.
Putting it all together, and it seems like GM is putting their toe in the water, while Tesla is balls-to-the-wall (forgive the mixed metaphor).
I probably shouldn't be sharing this but I know someone who is working on the Bolt and he told me they've been having a lot of trouble integrating self-driving tech that's close to Tesla's
This of course completely ignores the potential effect of self-driving cars. I'm still skeptical we'll see large scale automated driving for at least 10-20 years.
However, if EVs become widely used, then the lower demand for gasoline will mean gas prices stay low. So long-term, EVs need to compete with low gas prices anyway, even if prices creep back up in the near-term.
But yeah. Once batteries are cheap enough, then electric vehicles may actually become cheaper than internal combustion engine vehicles /upfront/, in addition to the much lower running costs.
Even though I whole-heatedly recommend Volt esp. Gen2. The market is not ready yet, and GM is doing what an established Car company does. Tesla's life depends on pushing EVs, so they are who they are.
Yup. They haven't adopted the Andy Grove/Bill Gates/Larry Ellison philosophy of "Only The Paranoid Survive," yet. They are banking on the expectation that if/when consumer interest spikes they'll be able to use their influence to jump to the front of the line, like they did with past ICE competitors.
The question is... will the electric car market be more like the ICE market where paranoia is (apparently) unnecessary, or the semiconductor/software markets where it is (apparently) quite important.