Could GM Benefit from Tesla Model 3 Production Delays?



GM versus Tesla

In 2015, General Motors (GM) announced Chevrolet Bolt EV, its first high-range all-electric vehicle (or EV). Chevrolet Bolt EV’s price point and range are similar to Tesla’s (TSLA) first mass-market electric vehicle (or EV), Model 3.

In 3Q17, Tesla Model 3 production was expected to be around 1,500 units. However, TSLA produced only 260 due to temporary production bottlenecks at its plant. Let’s see how GM could benefit from the Model 3 production delays going forward.

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Advantages for GM in the EV segment

Despite similar price point and range, Tesla Model 3 offers additional features such as Autopilot. Tesla claims that the Model 3 could be capable of reaching 0 to 60 miles per hour within six seconds and it would be equipped with hardware capable of full vehicle automation.

However, Model 3 production bottlenecks could hamper the availability of these vehicles in the near term.

On the other hand, GM seems to be taking advantage of the delay in the Model 3’s availability in the market. In the first 11 months of 2017, GM has sold about 20,070 units of the Chevrolet Bolt EV in the US market.

Future plans in the EV segment

Consumers might debate the luxury car appearance and appointments that are available in Model 3 that are not present in Chevrolet Bolt. However, GM plans to launch 20 new all-electric cars by 2023.

Two of these EVs are likely to be launched in 2018, which could take on Model 3 and help GM acquire the largest market share in the US electric vehicle segment.

In recent years, legacy automakers (IYK) Ford (F) and Fiat Chrysler (FCAU) also have shifted their focus toward vehicle electrification. Nevertheless, GM still seems to be far ahead of the competition in EV segment with an assertive and more practical strategy.

In the next part, we’ll look at GM’s valuation multiples ahead of 2018.


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