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[video] GM: Six Years Ahead of Tesla

NEW YORK (TheStreet) --When is 90% good enough? How much are you willing to pay for the last 10% of anything? In this article I make the argument that General Motors (GM - Get Report) beat Tesla (TSLA - Get Report) by at least six years to make the $40,000 de facto electric car.

The main product goal for Tesla is to deliver the cost-reduced, smaller version of the current Model S. This car would have a range of 200 miles (when new) and cost something like $40,000, before tax adjustments.

Originally, this "Generation 3" $40,000 Tesla car was meant for 2015. Then it became 2016. Now it looks like perhaps 2017. Judging from the commentary on a recent Tesla quarterly earnings call, Tesla remains mostly busy perfecting the current Model S, and finalizing the Model X which could reach volume production as early as 2015. Significant resources spent on the "Generation 3 program" would begin in 2014.

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Meanwhile, GM showed the original Chevrolet Volt prototype in January 2007, the final design in September 2008 and production started in November 2010. The car cost approximately $40,000.

Lets first establish the timeline here: Tesla will have its $40,000 car in late 2016, at best. The Volt entered production in November 2010. That means that in terms of reaching that magic $40,000 price point, GM will have been at an absolute bare minimum six years ahead of Tesla.

I can hear the protestations from the Tesla fan club already. Let's deal with these objections in turn:

"But the Tesla is 100% electric; the Volt isn't."

The Volt goes an average of 38 miles on 100% electric power, then another 342 miles using a fairly regular gasoline engine for a total of 380 miles worth of range. In contrast, the current Tesla Model S can go 265 miles on its only electric/battery power source; the third-generation car for 2017 would be able to hit 200 miles.

Based on this, Tesla fans cry foul: "A pure electric car isn't the same thing as a car that can only go 38 miles on electric." Per definition, they are right -- but I also argue that for most people, this doesn't matter much, if at all. Why?

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