NEW YORK (TheStreet) -- At its analyst meeting Wednesday, GM (GM - Get Report) announced some big news about its future quest to take down Tesla (TSLA - Get Report) . GM will have -- at a minimum -- three distinct plug-in electric cars, attacking the market in a major way. Production is slated to start in 2015 and 2016.
GM's head of product development Mark Reuss gave a blistering presentation to financial analysts in Detroit. I listened to the presentation via telephone, so I didn't see the pictures of the prototypes shown to the participants in person.
I wanted to be sure that I'd heard Mark Reuss' comments right. So I reached out to GM's PR department for comment, but was unable to obtain any further clarification. Kevin Kelly, of GM PR, told me that "I can confirm that Mark Reuss did show the analysts the CT6 and provided some details on the vehicle and he also discussed a BEV, but did not give any details on that product. I can't give you anything beyond that as we do not comment on future product."All readers should listen to the replay of the conference call, which will be available on the GM investor relations Web site. And I caution the reader that what I write here has a larger-than-usual margin for error. Hopefully we will get further clarification soon.
With those important caveats, here is what I heard from Mark Reuss's presentation.
1. The Cadillac plug-in hybrid luxury sedan.
Reuss talked about one or more Cadillacs that will have unusually light construction. This includes the recently announced flagship sedan, the CT6, which will be shown probably in March 2015 and enter production in November 2015. It sounded like the CT6 could be up to 420 lbs lighter than some large BMWs and have over 400 horsepower. But this would be easy to misunderstand from the presentation.
We could already have figured out the weight loss, however. GM already said that the CT6 would be unusually light.
But here came the big news.
There will be a plug-in hybrid version.
From Mark Reuss' comments, it sounded like it would have a very different architecture than the Chevrolet Volt and Cadillac ELR. You see, in the Volt and ELR, 100% of the power envelope (full throttle acceleration all the way up to top speed) is achieved in 100% electric mode -- the gasoline engine does not come on at all.
This new Cadillac plug-in hybrid would not be like that at all. It would be more like the plug-in hybrids from Volkswagen (VLKAY) , VW's Audi, Mercedes-Benz, Toyota (TM - Get Report) and Ford (F - Get Report) , among others.
In this case, the Cadillac would go up to 75 miles per hour in pure electric mode. And I'm concluding that that would not be with the fullest acceleration. However, if you chose to engage the gasoline engine as well, you would do 0-60 MPH in six seconds, as well as go much faster than 75 MPH -- most likely 155 MPH or more, as I interpret it.
According to some testing standard -- probably a European one, as the EPA doesn't measure it this way -- this Cadillac plug-in hybrid would achieve 70 MPG in some form of "blended" mode, according to Reuss. Obviously this could mean infinite MPG up to a certain number of miles -- perhaps 15-30 miles -- and something a lot lower, say 35 MPG, after that, once the battery had been drawn down.
2. An all-new pure electric Chevrolet.
Mark Reuss wouldn't give any details about this car, but it's obvious that this is the first official confirmation of GM's Tesla Model 3 competitor for 2017.
This thing had been widely speculated about before, but for the doubters we now have official confirmation about something in the works.
By all accounts, a pure electric Chevrolet would include a battery from LG that would make this car yield 200 miles of range and fit five adults.
Surely GM would price this car something along these lines: whatever Tesla charges for its equivalent car, minus a large enough percentage to ensure that Tesla does not make any money. Ever. That's my theory.
We already knew the Volt 2.0 would be shown at the Detroit Auto Show in January 2015, and that it would likely go into production perhaps six months thereafter, perhaps a little later. However, Mark Reuss added some color on what we should expect.He said that the Volt 2.0 would leapfrog the competition and have improved performance metrics all around. This likely means longer electric range and more miles per kWh. It almost certainly means more efficiency in "charge sustaining" mode, i.e., when the battery is down to such a low level that the gasoline engine kicks in.
Furthermore, he talked about an all-new battery with new chemistry and much higher performance. This obviously also means a much lower cost per kWh, as well as lower weight per kWh.Finally, he confirmed that the Volt 2.0 would have a much-improved, all-new interior. No more weird touch-sensitive buttons. My guess is that there will be some more conventional buttons and knobs, combined with more advanced and larger thin film transistor LCD screens.
What is the conclusion from this?
GM has three cars, two of which may enter production in as little as approximately a year from now.
First, a Volt 2.0 which will presumably fix everything that was wrong with the Volt 1.0 -- including ensuring that it can be built to suit GM's standard profit margin.
Second, a range-topping Cadillac luxury sedan that will be a "milder" plug-in hybrid than the Volt 2.0, but more geared for performance if you allow the gasoline engine to kick in. This car will be in production no later than 2016, possibly by the fourth quarter of 2015.
You can draw your own conclusions as to what this means for Tesla.
But here's the conclusion I draw.
Tesla will have more diversified competition than most people had expected, and sooner than many had thought. And that's just from GM.
In my view, this will ensure that it will be very hard to squeeze any outsized net margins out of this business, especially for a certain tiny niche player that can't leverage its R&D or manufacturing and supply economics across a wider base.
Tesla has awakened the bear.
At the time of publication, the author was short TSLA.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates TESLA MOTORS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TESLA MOTORS INC (TSLA) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and generally higher debt management risk."
You can view the full analysis from the report here: TSLA Ratings Report