Tesla winning a war no one else is willing to fight
Not for lack of trying, Elon Musk managed to keep his car company afloat during a much rapid and risky expansion that gambled everything on this week: the week his dream-come-true mass-market electric vehicle finally starts shipping.
For years Tesla managed to find more investors, injecting billions in the company while going through no less than 13 (thirteen!) consecutive quarterly losses † 2. Sales of the much vaunted Model S (putting to shame V8 blocks in the get-go) somehow kept the company alive just long enough for the «3» to show it’s face last year in a reveal event that had a Steve Jobs-y feel to it (minus the on-stage charisma). While some find the Model X cool, even Elon Musk himself finally admitted Tesla went overboard with it. This «Homer Car» was over-engineered and caused much suffering and embarrassment to the company—a subject for another column. The Model X, however, only has marginal effect on the company bottom line and we can safely ignore it for the time being. So, the Model 3 reveal was very important for the company, giving some hope for the investors and buyers alike for the future of the company that refuses to sink into the dealer chasm that Detroit have dug themselves into. And that may explain some of what follows.
During Tesla’s short existence (a little more over a decade), they managed to go from a niche player utilizing a Lotus Elise -based chassis with some electricky stuff jammed into a hand-built wide body, to a company with a world-class (mostly-automated) factory and it’s own solar-based battery factory. All while losing money until late last year after they merged with another of Musk’ brainchild: SolarCity.
One would think that the many opportunities presented in this period would have allowed one of Detroit’s leading manufacturers to hit back with a vengeance what a V-Hate electric Corvette or Mustang could have been. While Ford has had limited experience with electrification in its century churning vehicles, it's not the case for it’s major competitor. And while some of you may think that an electric Corvette would be sacrilegious, there’s talk in Detroit about its return.
You read that right: I did say «return» of the «Electrovette». GM is no stranger with electrified cars and surely enough the EV-1 was seen as a bastard child who was sacrificed and bled on the oil drum altar in a documentary † 3. But beyond the EV-1, GM has had MANY electric cars over the years. From failed platform receptions to World Expo showcases, the list of GM electric vehicle may surprise many:
- Electrovair (1964)
- Electrovair II (1966)
- The 3 lunar Rovers (1971-1972)
- GM Urban Electric Car (1973)
- Electrovette (1976)
- GM Impact (1990)
- GM Saturn EV1 (1996-1999)
- GM S10E (1996)
- Chevrolet Volt (2011-2015)
- Chevrolet Spark EV (2012-2015)
- Chevrolet Volt Gen 2 (2016-)
- Chevrolet Bolt EV (2016-)
The Chevrolet Volt (first generation) was build as a «compliance car» by then-CEO Bob Lutz in a sort of mea culpa for killing the EV-1 in what he regards to be one of his biggest failures. Though, as compliant as the Volt was to the emissions regulation of that time, GM did a fantastic job with it and the model became so popular that it went full-retard and rebuilt the whole thing from scratch for it’s second generation. A GM engineer mentioned that the only part shared under the hood was a plastic retainer clip used only during shipping to the customers. In October 2016, less than a year after it started shipping, GM had sold more then 100,000 units in US soil alone. The two generations combined, more than half a million had shipped. Those are impressive numbers for a segment still shunned and misunderstood by most conventional car drivers. Bob Lutz, after leaving GM, ended up partnering on VIA Motors, a niche company that uses GM Sierra 1500 pickups and retrofit a Volt-inspired powertrain in it, exclusively for fleet use.
In perspective, as per the full presentation † 4, Tesla has 500,000 Model 3 reservations and is ramping up production from the current trickle of 100 in August to 20,000 units by December † 5 from a single factory that is expected to achieve a maximum throughput of 500,000 units yearly. And Tesla is planning more factories in Europe and Asia.
As for Ford and FCA, their approach to “compliance car” is as timid as the EV-1 rollout was almost three decades earlier, with FCA even ditching their Dodge Dart and Chrysler 200 model in order to reclassify as a different target segment company in order to change Carbon emissions class while continuing to purchase other manufacturers’ carbon credits, such as Tesla in 2015 and 2016 (a major contributing factor to the company still having a postal address).
So, strong of it’s experience with the Volt and it’s near-cult following (including myself † 6), why is it the Chevy Bolt EV is failing while it had a full 6 months head start to the finish line?
There can be many attributions to that and I personally doubt any single one is responsible for that but lets explore some of the issues…
In Canada, half of all electric vehicles are sold in my home province of Quebec, where purchase incentives for EVs were always pretty good but since, equaled and surpassed in Ontario, the second largest EV market of Canada. Eastern Canada really likes EVs and it’s no surprise. Our electricity is dirt cheap (Quebec has a single tarif of 8.6¢/kWh) and gas being rather expensive (today: 1.16$/L— that’s 4.39$/g, or $3.51 in US currency).
Local dealers, mimicking Tesla, started making reservation lists when the Bolt EV was unveiled. This was strictly off-the-record, as GM never wanted to officialize and order the list, preferring to do it’s own roll-out by markets. GM even had the clout of delivering the very first in Freemont—Tesla’s home town.
This arrogance was short-lived, though. The initial rollout in Quebec was a few hundred cars. Reportedly less than 400 † 8. That was not enough to cover the initial demand. Meanwhile, many dealers in what we could call the «SUV Belt» of continental US, have has as-few units and yet, still have cars on their lot. So much so that GM mentioned having 111 days of inventory left, prompting them to put a hold on manufacturing † 7. Shockingly though, some US markets (let alone Canada altogether as well as other international markets) are starved for Bolt EV units.
An area where Tesla doesn’t have to contend with is the apparent reluctance of dealerships to sell EVs, having no dealers per se. With notable exceptions, most dealers have been using their EV and PHEV units as bait-and-switch lures. With the very low maintenance required on EV components, absence of oil changes and near infinite durability of disk brakes, the usual after-sale income of dealerships is near zero from EV sales. In fact, as a means of forcing it’s users to visit their dealers, GM decided not to opt for over-the-air software updates, unlike Tesla, despite having all the infrastructure to do so through OnStar. Despite my dealer sales rep being knowledgeable on the Volt he was trying hard to sell me (he came to pick me up at home to go test out a Gen1 model), he did not miss the opportunity to wave the Chevy Cruze. He did not insist, neither would I had let him to. End of story (I took delivery of my Gen2 Volt in December 2015).
Where dealer traction may cause Bolt EVs overstock in some markets, GM is to blame for the slow rollout of the vehicle, showing overall more demand than is offered during a time where they choose to halt production. It’s a non-sensical move that only shows one thing and one only: GM is only interested in delivery as many EVs than it HAS to and not as many as it can, going so far as warning it’s dealers to not sell their inventory outside their markets or export them.
While I vaunt my Gen 2 Chevrolet Volt (best car I ever had) and would have probably opted for the Bolt EV had it been available when I made my purchase in December 2015, the current situation is a major turn off. I bought my Gen2 Volt because I thought it showed active interest in the EV field from GM with the then-projected arrival of the Bolt EV as insurance for the future.
Dealerships have shown extremely little foresights in the EV markets. They have a unique opportunity to gradually re-invent themselves to become local charge points for their customers and other passing drivers, but choose not to even acknowledge their charging infrastructure—usually hidden behind their building or in their closed-door delivery rooms like my dealer. By offering fast-charge outlets on their premises and having a small cafe waiting room for those 15min charges with WiFi access points, they could become central to other commercial opportunities like selling aftermarket parts (cruelly missing in the EV market) or, dare we think it, SUVs. But they decide to remain silent and just look the train pass by, while Tesla is growing it’s own Superchargers network and offering this wait time to other adjacent businesses (Welcome to Timmies!).
But the way things are actually done shows another, grimmer, more timid envy to be part of the future. The one thing I’m certain of, though, is that my next car will not be from Detroit.
Martin-Gilles Lavoie is a professional desktop and mobile software developer by day, car and EV enthusiast by night.
- 1996 Pontiac Sunfire
- 1999 GMC SAFARI AWD Extended
- 2003 Kawazaki Ninja SX-6R
- 2007 Dodge Caliber R/T AWD
- 2009 Dodge Caliber SRT4 2009
- 1995 Saturn SL1 (beater car while I rebuilt my SRT4 engine)
- 2016 Chevrolet Volt
† 1 ) If you think an iPhone is just an iPhone, you’re missing the greater picture
† 2 ) Time
† 3 ) «Who killed the electric car»
† 4 ) Youtube
† 5 ) Elon Musk Tweet
† 6 ) See how my Volt stacks up at Voltstats
† 7 ) Fortune
† 8 ) FleetCarma