While General Motors’ EV technology may have lagged behind Tesla in the early stages, it is quickly catching up. Tesla’s Weaknesses Reveal General Motors’ Strengths Incumbent ICE manufacturers, such as General Motors and Volkswagen, have the necessary manufacturing scale to bring large numbers of high-quality EVs to market that they can sell at a profit. Steep market share losses in Europe and China portend market share losses for Tesla across the world. General Motors’ joint venture in the country launched a new EV in July 2020, which sold 53% more units than the Tesla Model 3 in November 2020. Volkswagen now has 24% of the fully electric market across 27 EU countries while Tesla’s market share is just 13%.Ī similar story is playing out in China with General Motors. In 2020, Volkswagen’s EV sales topped 212 thousand. In 2018, the firm sold just 40 thousand EVs. Volkswagen shows what, at least, a fair number of incumbents are capable of. In 2020, Volkswagen had the most popular ICE model in Europe, the Golf, and the most popular EV in Europe, the ID.3, while slightly expanding its overall market share. Volkswagen Group (VWAGY) has already proven that argument wrong. General Motors manufacturing, marketing, and distribution scale advantages give it the ability to produce and sell a higher volume of cars with lower cost and higher quality, and, as a result, realize much higher profit margins than first movers.īears argue that incumbents will die because they cannot produce ICE and electric vehicles at the same time. These models show the firm’s willingness to integrate EV technology into existing brands across three of its largest categories: trucks, SUVs, and crossovers. A few examples of planned launches are the 2022 Chevy Bolt Electric Utility Vehicle, the EV Hummer truck, and the Cadillac Lyriq. As part of that goal, the firm is committed to launching 30 new electric vehicles (compared to Tesla’s four models) by 2025 in addition to the Chevy Bolt, which is already in production. General Motors is investing billions to convert more plants to EV production and enter the EV market with scale that the first movers have yet to achieve.ĭetails: General Motors aims to eliminate tailpipe emissions from its light-duty vehicles by 2035. General Motors Is Entering the Market With Scale It’s better to wait and enter the market when it can exercise its scale advantages to generate superior profits. For a large company like General Motors, or any of the incumbents, it doesn’t make financial sense to enter a niche market when there’s not enough demand to realize its manufacturing, marketing and distribution scale advantages. Global sales of EVs in 2020 surpassed 3 million vehicles, or ~46% of the total number of vehicles General Motors sold in 2020. Today, General Motors is leveraging its 100+ years of history of manufacturing expertise to build EVs and enter the market when there’s enough demand to justify the number of EVs it needs to sell to be profitable, an achievement that escapes the “first-movers” in EVs. The prevailing narrative was, and remains, that the automobile industry is permanently disrupted, and traditional internal combustion engine (ICE) auto manufacturers will decline in concert with a long-term consumer demand shift toward EVs. ![]() ![]() I first featured General Motors as a Long Idea in March 2018 when I noted the EV market presented large opportunities for future growth.
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