While Nissan CEO Carlos Ghosn had a welcoming reaction to the unveiling of the Tesla Model 3 and the subsequent storm of reservations for the vehicle, General Motors’ Vice President of Global Propulsion Systems, Dan Nicholson, is not as gracious as his colleague.
The GM executive was critical of Tesla’s reservation process, which requires a deposit and wait time for delivery, and he went as far as to imply financial troubles at Tesla as a reason for the deposits.
USA Today reported Nicholson’s comments at an engineering conference in Detroit earlier today:
“I am very proud of the Chevrolet Bolt that’s coming out, which will be the first to market as a long-range affordable battery electric vehicle. It will have more than 200 miles of range and it will be in production by the end of 2016, so it’s not necessary to put down $1,000 and wait until 2018 or sometime after that.”
The executive then added:
“GM’s balance sheet is in pretty strong shape, so we don’t need to take $1,000 of your money just to hold a spot,”
Of all companies that can taunt having a strong balance sheet, I find it hard to understand why GM would venture into publicly saying something like that in comparison to another car manufacturer, especially when the company itself required a massive government bailout only a few years ago.
Although I’m sure Tesla welcomes the ~$325 million in deposits it received so far, the automaker already had over $1 billion in cash on hand after the last quarter and plans to be cash flow positive by the end of the year. The deposits and reservations are part of Tesla’s made-to-order business model, and always have been, unlike GM’s inventory system, which forces the automaker to maintain inventories since it sells through third-party dealerships.
As I have been writing for a while now, and it’s something I argued in my piece The Chevy Bolt is not a “Tesla killer”, the Bolt and the Tesla Model 3 will not compete in the same segment. GM executives shouldn’t try to draw comparisons between the two, even if it’s only about their ordering process.
“GM is making a $37,500 car that would sell for $20,000 if it wasn’t electric, while Tesla is making a $35,000 car that would sell for $35,000 if it wasn’t electric.”
Interestingly, earlier this month, GM was asked to disclose customer interest during a media briefing, but the company refused to do so citing that they are not taking deposits or reservations for the Bolt.