Tesla presents both an opportunity and a challenge for traditional auto manufacturers that are undergoing an EV transformation. Various manufacturers have been attempting to enlarge their competitive advantages in EVs from different angles, and for the hundred-year-old car maker General Motors (GM), the target is to produce EVs that are more affordable.
Marry Barra, the CEO of GM, has been very confident about beating Tesla, and had once again emphasized during a recent interview that GM will become the champion of EV sales in the US before 2030 by surpassing all competitors, including Tesla. How will GM achieve this target?
According to Barra, a part of the answer lies in its pricing strategy. “We're not necessarily just selling at the premium end. We're going to have electric vehicles affordable at $30,000,” Barra said.
What Barra is referring to is the Chevrolet Equinox EV that will be released soon. The battery electric SUV will be priced at lower than US$30,000 for its entry model, and is regarded as the most affordable EV in the US market. GM’s current cheapest EV is the acclaimed Bolt EV that can be acquired at a price tag as low as US$31,500. On the contrary, Tesla’s cheapest Model 3 is currently priced at US$46,990, while the SUV Model Y has now risen to more than US$57,940.
Will Affordable Small Cars from China Have a Market in the US?
Tesla occupied nearly 14% of the global BEV market share during 2021, while GM was ranked at fourth with a market share of 7%. Although the gap is not that significant, a large portion of GM’s sales came from Wuling Hongguang’s Mini EV, which sold 390K units. This is higher than the sales of the Model 3/Y in the Chinese market alone.
Although this mini vehicle that costs less than US$4,000 has attained remarkable sales, its sales performance unfortunately cannot be replicated in the US market. In addition, the overall sales of the vehicle, which is nearly a tenth of the price of a Tesla model, are just 20% more than Tesla, and the profitability of the product must be meticulously calculated to avoid excessive losses from additional sales.
GM has already experienced a large amount of losses from selling EVS in the past, and it is obviously not going to repeat its mistakes, as can be seen from its latest products. The company now has the Hummer EV and Silverado EV for the truck category, as well as Cadillac Lyriq for the sedan field. These vehicles are all priced at more than US$50,000 in order to account for the surging battery cost.
GM, which is in a good relationship with the government, is also equipped with many other methods that would help the company to beat Tesla in terms of market share. Barra believes that clients who have been loyal to the GM brand these past years would still lean towards GM’s EVs when switching lanes. According to Barra, the target customer groups of the Chevrolet and GMC trucks alone will be enough to beat Tesla.
The affordable SUV Equinox EV of GM will be available in 2024, although the exact date of its delivery is still unconfirmed. The affordable Compact SUV that will be co-produced by GM and Honda, on the other hand, will likely see the light of day in 2027. According to Barra, GM is in for a long war in the EV market, since Tesla is likely to expand from the four existing models that it offers. Whether GM will able to beat Tesla will become the most talked about topic for US auto fanatics from here on out.
(Cover photo source: Chevrolet)