Their argument was that a pure electric car was going to be too expensive and too heavy, and at the end of the day it was still going to need too much time to recharge. On the other hand, if you designed an electric car with a smaller battery and 35 miles of range, you could put a small gasoline engine behind it so as to take away the so-called "range anxiety" and drive as far as you wanted, just like any other car. It would still drive like an electric car 60%-90% of the time for most people.
The Volt architecture has some drawbacks: It's not a "pure" design, so it adds space and complexity with gasoline tank, exhaust system, and so forth. In contrast, a Tesla Model S can be made with a far bigger luggage space.
Basically, as it turned out, there was room in the market for both: GM has been selling approximately 50,000 Volts since inception, and Tesla is selling 5,000 cars per quarter right now.
Another way to express it is this: The market for plug-in electric cars remains illiquid, in that there aren't enough variants in the market to cover every single need in terms of size and performance. Therefore, some people are happy paying $40,000 for a Volt whereas others are equally happy paying $100,000 for a Tesla.
As it turns out, however, for the purposes of a test drive, the Tesla is obviously the more exciting car. For all of us who have driven it, there is just no comparison. It's easy to see how so many people go from being excited about the car, to being excited about the stock.
As a result, Tesla is enjoying a dramatically superior multiple on every conceivable metric. The market cap is close to $15 billion based on really no meaningful earnings to date.
GM will never enjoy Tesla's multiples. However, perhaps GM could sink Tesla's multiples for whatever reason? What I mean is that if GM is jealous of Tesla's huge market cap in relation to the size and profitability of its business, it could blow a hole in it -- if it just wanted to.
Let me tell how.
It's simple, really. As I mentioned above, the market for plug-in electric cars -- of all variants, broadly speaking -- is illiquid. There is only one pure EV with anywhere near 265 miles of range. In fact, the closest competitor in the pure EV market is the Tesla-based
with only a shade over 100 miles of average range. Everyone else is mostly in the 70 to 95 miles category.