Tesla Motors Inc (NASDAQ:TSLA) is getting ready to introduce a new, more mainstream EV and it looks like it will have a legitimate rival – the Chevy Bolt. Less than a 12 months ago, many observers were asking why no other car makers were building cars to compete with the popular Tesla Model S. At that time, no car could match it in many regards, and few car makers seemed to have anything in the works that could compete. As the Model 3’s unveiling quickly approaches, however, it appears we are finally starting to get some answers.
While Tesla was still essentially a startup, its Model S sales numbers actually topped those of luxury sedans that run on gas from established car makers like the Jaguar XF. Despite the car’s remarkable popularity, nobody has really come up with another EV worth writing home about.
Many of the EVs that have been released so far have short range or limited availability. For example, the 2015 Spark EV has a range of just 82 miles. The Nissan Leaf might be doing well among city drivers, but its very short range means it’s not realistic for many drivers. Why isn’t the market being flooded by Tesla copycats?
One big reason other car makers might not be following in Tesla’s footsteps is that traditional gas cars continue to be very profitable for them and they have everything set up to keep churning them out. They also have to please shareholders. On top of that, while gas remains somewhat inexpensive, many consumers are not feeling an urgent need to make the switch to electric.
Another big thing Tesla has in its corner is its extensive charging network. The wide availability of Tesla superchargers and the 200-plus mile driving range of the Model S mean owners can go wherever they want without worrying about charging. Even if other car makers start launching long-range EVs, they’ll need a thriving charging network if they really want to compete on Tesla’s level.
Is Tesla (TSLA) about to face its first real rival?
On paper, the upcoming Chevrolet Bolt and Tesla Model 3 seem like very similar electric cars. Both are expected to offer driving ranges of around 200 miles and cost somewhere around $35,000.
Tesla has already said that the Model 3 will be going after the BMW 3 Series, making it an entry-level luxury sedan. While its design has yet to be revealed, it is expected to share at least some aesthetics with the Model S. In contrast, the Bolt looks a lot more like a compact car, albeit a higher-end one. This means that many buyers might feel the Model 3 provides more value for a similar price.
Even though they might not be direct competitors in terms of target markets, it’s possible both cars will appeal to a certain overlapping segment of potential buyers and that’s where things could get interesting.
Chevrolet’s Bolt EV is expected to hit the market at the end of the year with a sticker price of $37,500 that will drop to $30,000 after tax incentives. While it’s certainly not an elegant beauty on the level of the Model S, it does look a lot better than the current non-Tesla EVs on the market. Nevertheless, it’s fair to assume that the Model 3’s style will trump the Bolt EV given Tesla’s strong emphasis on sleek design. One of the things that drew many buyers to the Model S is the fact that it’s an electric car that doesn’t actually look like an electric car, and the Model 3 will likely follow suit.
Supercharging could set the Model 3 apart
The Bolt might also fail to keep up with the Model 3 when it comes to charging. The Bolt will have a quick-charge outlet through which 30 minutes of charging should provide the ability to drive up to 90 miles. However, the car takes nine hours to reach a full charge using a 240-volt charger that has to be professionally installed. While no one knows the Model 3’s numbers yet, they are less important given the wide availability of Tesla superchargers.
In fact, many people who buy cars in this price range might keep their cars parked on the street overnight and not have garages at all, which would make the superchargers a huge plus for Tesla. Even if unlimited free charging is ultimately not extended to Model 3 buyers, having the network available could be the deciding factor for many buyers.
Chevrolet has experience and infrastructure in its corner
Chevy’s parent company GM is highly experienced at producing cars in volume, and the Bolt is expected to hit the market right on time. On the other hand, there have been some concerns about whether the Model 3 will launch on time given Tesla’s track record when it comes to delays.
Even if everything is released on time, the Bolt will still hit the market about a year before the Model 3 comes out. However, with Tesla taking reservations for the Model 3 starting on March 31, a number of buyers could go ahead and commit to the Model 3 before the Bolt hits dealerships. Of course, just to make things even more unpredictable, those $1,000 Model 3 deposits are going to be refundable.
While it’s not clear yet if the Model 3 will offer the same autopilot technology that the Model S boasts, GM is aggressively pursuing self-driving tech so both cars could end up being even on that front either way.
Some experts feel that Tesla’s strengths – building smaller numbers of fast, innovative luxury cars with plenty of high-tech swagger – will not translate well to its mass market ambitions. Luxury car owners tend to be more forgiving of technical and reliability problems than people who rely on affordable sedans to get to work each day.
The firm will need to ramp up its production quite a bit if it wants to be truly competitive outside of its current niche, and it will have to do this with just a fraction of the scale its competitors have when it comes to global platforms and products. Moreover, the high cost of Tesla’s batteries means they may need to leave out a number of the features that make the Model S so sought-after to keep the price point low on the Model 3.
In a story on Bloomberg with a headline touting that Tesla is about to get “trampled”, writer Edward Niedermeyer opines: “Established automakers with scale and profit margins that Tesla can only dream of are preparing vehicles that will take on the Model 3 directly. How will Tesla maintain its hype and prestige if its $35,000 car feels less luxurious than a $20,000 gasoline car … or even a comparably priced electric Nissan Leaf or Chevrolet Bolt?”
Any competition a win-win situation?
Any competition is actually good new for Tesla. The firm’s long-stated goal has been to get big carmakers to switch to EVs. An official statement by Tesla says: “Commitments from traditional car makers to build electric vehicles advances Tesla’s mission to accelerate the advent of sustainable transportation. We hope to see all those additional zero-emission vehicles on the road.”
Another effect this would have is the expansion of car charging infrastructure, which Tesla and consumers alike would benefit from. Finally, the biggest winner in all of this could well be consumers, who are increasingly clamoring for more choices when it comes to alternatives to gas cars.
As Tesla starts accepting Model 3 deposits and the Bolt EV’s release approaches, we might finally have an interesting competition in the EV market.