At first blush it seems ludicrous to think GM would be afraid of Tesla Motors. GM manufactures a zillion vehicles a year, has operations in dozens of countries, and a long history of automobile and truck manufacturing. But, in an interview with the Detroit News last week, it seems that GM is scared of Tesla Motors and that the company doesn’t seem to understand the threat they’re facing.
As if Tesla Motors were any other automaker that GM already competes with, GM’s CEO Dan Akerson said that GM had to compete with Tesla using Cadillac: “If you want to compete head-to-head with Tesla, and we ultimately will, you want to do it with a Cadillac,” he said.
This seems somewhat rational, but is actually crazy-talk because the Tesla Model S isn’t just any other car. It’s a completely different model for automobiles. Tesla Motors game is to rethink what the automobile should be, rather than iterate upon the same flawed gasoline-powered model that dates back over 100 years.
While GM is doing well in the electric car space with their plug-in hybrid, Tesla is absolutely storming the luxury car market with their all electric Model S. The luxury car market is a lot smaller than the market niche the Volt fits in. For Tesla to be selling 2000-2500 Model S’s a month is a lot more significant, in terms of market penetration within the niche, than the 3000 or so Volts a month that GM is selling.
As a result, Tesla Motors stock price (TSLA) has risen from the $30 level to over $180/share, a six-fold gain, in the last six months. Assuming the market is acting rationally, it’s betting that Tesla is going to completely disrupt the automobile industry. Or maybe Tesla is caught in a hype bubble.
Whatever the reason, at its current stock price Tesla Motors market cap is almost 1/2 that of General Motors.
I’ve written a few related articles over on TorqueNews about this phenomena …
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