A Tesla Model S.
Photograph by Johannes Eisele — AFP/Getty Images
By Alex Taylor III
May 12, 2015

It is an outcome no one could have predicted.

In one corner was the Chevy Volt with the clever gasoline engine range-extender. The product of an industry giant with nearly unlimited engineering resources, the Volt bore the imprimatur of GM’s Bob Lutz, was supported by a comprehensive marketing effort, and distributed through a broad dealer network. With a price of $40,000, the gas-electric hybrid seemed destined for popular success.

In the other corner was Tesla, an ego-driven upstart of a company with exactly zero experience in the design, engineering or manufacture of a new car and using unproven battery technology. (Unlike other automakers, Tesla uses thousands of lithium-ion battery cells, like those found in laptop computers.)

Festooned with unfamiliar features, the electric Tesla Roadster was daringly priced at the upper range of luxury brands. To make its adoption even chancier, no dealers were involved; the young company would sell its $100,000 cars by itself.

You know how it turned out. Tesla, the long-shot, goes from strength to strength, selling all the cars it can make while it builds a battery mega-factory in the desert and prepares to launch its third electric model, a crossover SUV. Through April, Automotive News figures show that Tesla has sold 6,800 units of the Model S this year.

The Chevrolet Volt, meanwhile, seems headed to the dustbin of automotive history, like GM’s original EV-1 and the entire Saturn division. Over-engineered and over-priced, its “innovative” technology appears to be a dead end that has been imitated by exactly no one. GM recently cut the Volt’s price by $5,000 in an effort to boost sales, which have totaled a mere 2,779 cars this year.

What accounts for the reversal of fortune? Was the Volt, launched in the midst of the latest Great Recession, buffeted by forces beyond its control? Or did Tesla catch lightning in a bottle as consumers embraced the idea of climate change? Three thoughts:

  • The Volt suffered from the same ills that sent GM spiraling into bankruptcy. In attempting to accommodate every constituency, the committee- engineered car ended up satisfying almost no one. It was expensive, heavy, and slow. Tesla’s Model S, on the other hand, is essentially the creation of a single brainiac, company co-founder Elon Musk, who built the kind of sleek, upscale sedan he would buy for his own family—and succeeded on almost all fronts.
  • With its whisper-quiet powertrain and jack-rabbit acceleration, the Model S provides a unique driving experience. The Volt is relatively joyless. It makes fuel economy and climate-change concerns about as much fun as a carrot-and-kale milkshake.
  • Musk created an entirely new market for high-priced cars that are limited in their specifications (short range, few charging stations, no dealer network) but that deliver bountiful psychic benefits. The compromised Volt, on the other hand, seemed designed for drivers who wanted the benefits of an EV without fully committing to the concept of battery power.

Both sides are preparing for the next round. GM seems determined to make the Volt a success and is launching a second-generation design with better performance and a 50-mile electric range for the 2016 model year. A companion car, the all-electric Chevy Bolt with a promised 200-mile range, arrives a year later. Absent some unforeseen shift in customer attitudes or engineering breakthrough, it is difficult to see them making much of a dent in the market.

Tesla, meanwhile, must launch its twice-delayed SUV while staunching a faster-than expected cash burn. Life will get more complicated as its portfolio grows. But Tesla’s success to date should encourage every upstart business person who dares to challenge the conventional wisdom with a disruptive proposition.

SPONSORED FINANCIAL CONTENT

You May Like

EDIT POST