Can Tesla Stock Handle the Chevrolet Bolt?
Tesla Motors Inc (NASDAQ:TSLA) has a lot, ahem, riding on the Tesla “Model 3.” Set to be the first consumer-oriented Tesla vehicle, the car is slated to cost $35,000 when it does release, which—according to the Tesla web site—will be in mid-2017.
A vehicle like this, with mass consumer appeal and affordability, could be a huge boon to Tesla stock. But General Motors Company (NYSE:GM) has struck first with the “Chevy Bolt,” a similarly priced electric vehicle that—while perhaps lacking in some of the finer engineering quirks of a Tesla—hits a lot of the same notes.
The Bolt and Model 3 face many of the same challenges, namely that both vehicles are sold at a loss. Or at least the Model 3, like its predecessors, will likely sell at a loss. The difference for Tesla stock is that the company only makes two models of vehicles, while GM produces dozens that are profitable. (Source: “The Chevy Bolt Is the Ugly Car of the (Very Near) Future,” Bloomberg, December 19, 2016.)
Of course, Tesla stock is not a one-trick pony; the company also makes solar panels and home batteries. But Tesla is still hugely reliant on vehicle sales to propel its share prices, while GM can afford to take a hit on a flyer or two while other more popular offerings make up the difference. GM also has the advantage of infrastructure already being in place, while Tesla has to expand in all directions simultaneously.
But the question is whether the Chevy Bolt is, in fact, the Model 3-killer and, by extension, the Tesla stock-killer. While that has yet to be determined, the future market does seem able to accommodate a good number of electric vehicles. With a number of mandates coming in for emissions limits across the U.S. and in the European Union (EU), electric vehicles are looking to be the cars of future. The Chevy Bolt is one of the first affordable forays into the market, but it’s unlikely to suffocate the Model 3, or Tesla stock.