GM Hypes Yet Another “Tesla Killer” – the Chevy Bolt

General Motors seems intent on becoming the global leader in producing money-losing vehicles that attempt to compete with Tesla. The latest so-called Tesla Killer from GM is the Chevy Bolt and the hype is beginning with media articles such as With Jab at Tesla, GM Amps Up Chevy Bolt Promotion, Testing. GM shareholders need this latest sequel to the Tesla Killer series as much as movie aficionados need another sequel of Police Academy.

OK, I’m sure there are many fans of the b-rated Police Academy series, just as there are fans of the previous GM versions of Tesla Killers. The difference is, b-rated movies are produced with low budgets; not so with GM Tesla Killers. GM (and taxpayers) have spent billions of dollars to produce the initial series of much-hyped electric vehicles which were never a hit with mainstream consumers. That growing list of vehicles includes the Chevy Volt (less than two years until President Obama buys one), the Cadillac ELR, the electric Chevy Spark and now the Chevy Bolt.

It should not come as a surprise that GM management believes that it should continue the wanton spending on electric vehicle development, given the company’s government DNA. And this is the management team that believed doubling the price of the Chevy Volt and putting a Cadillac badge on it would make it a viable competitor to Tesla. No big surprise that the plan didn’t work out very well.

GM goes on to lose even more than the initial investment in the Volt and ELR as they have to continue to lower prices to drum up demand to meet supply. More money was blown on ad campaigns for the unwanted vehicles with the philosophy that consumers would rush into showrooms to check out the electric wonder-cars and leave with another GM vehicle. In addition, the misguided managerial minds at GM seem to believe that the company’s public image is improved by their money-losing strategy of developing “green” cars. It is also a diversion to news that GM is under criminal investigation for covering-up the ignition switch defect which now is blamed for 117 deaths.

What GM shareholders should be asking is, why is the company putting so much emphasis on competing with Tesla in the first place? Tesla expects to sell about 55,000 vehicles in 2015. GM should be focusing on competing with the world’s leading automaker, Toyota, which sold over 10 million vehicles in 2014. Given GM’s ludicrous focus, is it any wonder that the company’s share price has languished for years?

The pipeline of hype is filled at GM as the company has a back-up for the Bolt. Stay optimistic, suckers, I mean shareholders, because GM now has a “mystery” vehicle in the works. From the previously mentioned Chevy Bolt article:

All-new mystery vehicle “unlike any” to date: The Bolt will be assembled at GM’s Orion Assembly plant in Michigan where the company is making a sizable investment to support the launch of another “all-new” vehicle.

“General Motors will invest $245 million and add 300 new jobs at its Orion Assembly plant to support launching an all-new vehicle program unlike any in the plant’s 32-year history,” GM said in a statement.  “Orion Assembly is a breeding ground for manufacturing innovation,” said Cathy Clegg, GM North America vice president of Manufacturing and Labor Relations, in a statement.  “The plant is up to the challenge of building this brand-new product, something it’s never seen before,” she said.  There are few clues so far on what that vehicle is.

GM has yet to figure out that the key to survival in the highly competitive auto industry is to offer vehicles with the best value that appeal to mainstream consumers. Costs must be kept down to achieve this and the focus has to be in the right place. This is business, not politics. Spending billions of dollars to develop niche vehicles that are perceived to be green along with mystery cars is not going to cut it once the inevitable cyclical slowdown hits the industry. When that slowdown comes, we will see which automakers have the right focus; there are many clues that it will not be GM.

Mark Modica is an NLPC Associate Fellow.

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