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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.

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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