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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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GM Seeks to Burst Tesla’s Bubble

You know you’re getting somewhere when General Motors takes a dangerous interest in what’s under your hood—that’s likely the general sentiment floating around Tesla Motors these days, as GM seeks to pick apart a small company that in different times it would have shrugged off as inconsequential.

Now look what’s happening. This year, Tesla’s stock is up 400% and it seems to be threatening to lure American drivers away from the traditional power houses with a sense of suave progress. In mid-2010, with its initial public offering, Tesla shares were trading at under $20. Today, we’re looking about over $180 per share, and a market capitalization of about $22 billion.

The threat is emanating from Tesla’s Model S electric vehicle, which has a range of up to 265 miles on a single charge. By comparison, GM’s Chevrolet Volt has a range of about 50 miles before it needs a recharge, though it’s working on a new version that promises a 200-mile range.

Related article: Tesla in Driverless Car Race

GM sells about 9 million cars globally every year. Tesla has only sold 11,000 Model S cars as of the end of August this year—for about $70,000 at the low end and upwards of $100,000 at the high end.

Looking at the figures, one wonders why GM is so concerned about Tesla—concerned enough, according to Reuters, to order a special internal task force study into Tesla’s Model S to determine what the automotive giant might be missing.

The concern is in the bubble that just doesn’t seem capable of bursting, and GM is looking at a different set of figures: its market value has risen only 25% this year, compared to Tesla’s 470%. If this keeps up, Tesla could be the new GM—so the theory goes.

What GM will be looking at specifically is Tesla’s cheap battery pack, its long range and its innovative plans to provide free electricity to consumers through its own network of EV charging stations.

With all of this in mind, GM might find some small amount of relief in the news that Tesla’s stock dropped 6% Wednesday following a negative analyst report and a crash in one of its Model S sedans.

Related article: DOE Under Fire over Clean Car Loan Loss

All it took was the posting of a video of a Model S on fire near Seattle, Washington. The vehicle collided with a large metallic object in the middle of the road and caught on fire after the driver had exited. The fire in the battery pack was contained to a small section in the front of the vehicle, according to Tesla.

That said the incident isn’t likely to burst any bubbles. Tesla’s Model S has recorded outstanding performance in government crash tests, and continues to get rave reviews in key consumer magazines.

In the end, some analysts believe that GM—and indeed Detroit--does indeed have something to learn from the likes of Tesla.

"Tesla could teach GM how to 'small' a problem rather than 'big' a problem," Reuters quoted Matthew Stover, auto analyst for Guggenheim Securities, as saying. "They've done that well — solve problems quickly with a small group of people."

By. Charles Kennedy of Oilprice.com




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  • David Hrivnak on October 16 2013 said:
    Having driven a Tesla for the last 30 months GM along with all other companies have much to be worried about. Tesla is truly a transforming technology. Every time I get back into a gas burning car I feel like I am leaving my smart phone for a rotary dial phone.

    Going 200 miles on $4 of electricity combined with the terrific acceleration is an impressive combination.
  • Gary on October 25 2013 said:
    If you completely drain the battery of a Tesla the car it totaled. You need a new battery which costs roughly $50,000 to $70,000 and neither Tesla nor your insurance company will pay to fix it. The Volt which costs less than half as much doesn't have this problem because it has a small backup gas motor so you don't have to constantly be worried about running out of juice. In a nutshell Elon Musk is a big mouth small penised billionaire who swindled half a billion dollars of tax payers money so his company could build a car only rich people and celebrities can afford. It's not even a good car it's an ugly pos with crappy range, but it gives the faggity enviroqueers a boner because they think they're saving the planet thus making them better than the peasants with their gasoline motors.

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