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The all-electric Chevy Bolt

posted Mar 19, 2017, 6:28 PM by Frederick H. Schuchardt   [ updated Mar 19, 2017, 6:49 PM ]
We just drove the all-electric Chevy Bolt — and Tesla is officially in trouble

Matthew DeBord

Business Insider March 19, 2017

The Chevy Bolt.Hollis Johnson) 
NBA superstar Charles Barkley made a now-legendary comment prior to the US Olympic basketball Dream Team playing Angola in 1992. 

"I don't know anything about Angola, but I know they're in trouble," Barkley quipped. The US went on to win by 116-48.

Tesla isn't the automotive equivalent of Angola, but at times I get the sense that General Motors considers itself the Dream Team: the car company that symbolizes US manufacturing might.

Both Tesla and GM have been to hell and back since the financial crisis. Tesla nearly went bankrupt in 2008, but was saved by a last-minute funding round on Christmas Eve. And GM did go bankrupt in 2009, after being bailed out by the federal government.

Fast-forward to 2016, however, and Tesla has a market cap of $40 billion and GM has been raking in cash for two solid years amid an SUV sales boom in the US.

While both companies have bounced back, there's no question that GM is better positioned financially to compete in the mass market EV space. 

Staggering cash burn

Tesla is burning through impressive amounts of cash as it gears up to launch its Model 3, the company's first mass-market vehicle, later this year. Last week, the company announced a new capital raise, to get another billion in the bank as it commits to spending $2 billion or more in 2017.

GM also spends plenty of money, but according to Dan Ammann, the automaker's President, it's bringing in a billion a month. What's more, the company's recent sale of its European Opel division, for about $2 billion, means it can also reduce its balance-sheet cash cushion to $18 billion from $20 billion.

Being basically cash-flush means that GM can take some huge risks. And that's what it did when it committed to bringing its own mass-market electric car to market a full year ahead of Tesla's $35,000 Model 3.

Tesla Model 3


(The Tesla Model 3.AP Photo/Justin Pritchard) 

As with most major automakers, GM has been content to let Tesla get all the headlines while taking all the risk. Electric vehicle sales have been abysmally disappointing, making up only about 1% of the annual global market; five years ago, there were predictions that we'd be headed toward 15% to 20% by now. 

Tesla's own sales have steadily increased, proving that there's solid demand for at least for Tesla electric cars, but it's still delivering fewer cars in the year than a big carmaker does in a month. CEO Elon Musk has charted an ambitious trajectory to sell 500,000 vehicles annually in 2018 and a million by 2020. But the company is very far from achieving those goals.

With the Chevy Bolt EV — priced just under $30,000 once tax credits are applied, with 200-plus miles of range on a single battery charge — GM has decisively stepped off the EV sidelines. From debut to production, which commenced last October, GM took about a year and a half to steal some of the Model 3's thunder.

Tesla still has the sexy

In early 2016, I attended the reveal of the Model 3 in Los Angeles, and the prototype vehicles that we saw there were compelling: sexy, fast, and high-tech. Last week, we got our first crack at a few days with the Bolt, and while I'd be hard-pressed to call the boxy four-door hatchback sexy, it is fast, and it is high-tech.