Skip to main content

GM executive takes swipe at the Model 3 and Tesla for all the wrong reasons

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.

FTC: We use income earning auto affiliate links. More.

Stay up to date with the latest content by subscribing to Electrek on Google News. You’re reading Electrek— experts who break news about Tesla, electric vehicles, and green energy, day after day. Be sure to check out our homepage for all the latest news, and follow Electrek on Twitter, Facebook, and LinkedIn to stay in the loop. Don’t know where to start? Check out our YouTube channel for the latest reviews.

Comments

  1. Komocode - 8 years ago

    “…will be the first to market as a long-range affordable battery electric vehicle.”

    but the Tesla Model 3 will be the first to market as a long-range affordable battery electric vehicle that doesn’t look like shit.

  2. James Rowland - 8 years ago

    GM’s balance sheet is in good shape? Well, any chance they could pay back the ~$12B hole they left US taxpayers in after their bail-out?

    • rennieallen - 8 years ago

      The loss was $11B, but point taken. That said, Tesla has received $4.9B from the government, that it will never see repaid, so the difference between the two is $7B and the bailout resulted in the retention of 1.2M jobs in GMs case. Tesla employs 12,000 so, in terms of the number jobs protected, the GM *investment” was a better value.

      That said there is no excuse for GM management to have gotten themselves into that position, but Mary Barra was not the CEO. Mart Barra has done an awesome job of turning the company around.

      • Crashl82 - 8 years ago

        Tesla paid it back to the government 3 years ago and 9 years early.

      • S'toon - 8 years ago

        I know what article you’re talking about when you say $4.9 billion. It did NOT say that Tesla got $4.9 billion from the government. I suggest you read it again.

      • cwills - 8 years ago

        @rennieallen: Lol. Where are you getting those loan numbers for Tesla? Tesla payed back their $465M loan w/interest, and because of this the Department of Energy actually made money on the investment. People tend to forget that Tesla has only been mass producing medium volume cars for about 8 years.

        And then look at GM, we bail them out, and they recall 1.4 million cars (for the third time since 2007) for fire risk after the previous fix failed. The issue? Oil leaked onto a hot manifold in the engine.. GM said that happens after “hard braking.”

      • Rex Imperatur - 8 years ago

        Complete lie. Tesla has not received 4.9 billion from the government. All they receive was a few tax write of on a land in Nevada that, if Tesla hadn’t decided to build the gigafactory there, would remain an uninhabited strip of desolate desert.

      • Audrey Sayama - 8 years ago

        Did you also calculate all the people GM killed over the years because of their faulty vehicle? How much are those lives in your “revenue”

      • Audrey Sayama - 8 years ago

        What about those people died from GM’s faulty vehicles.. How much are those lives in “revenue”

  3. Tim Neff - 8 years ago

    “Although I’m sure Tesla welcomes the ~$325 million in deposits it received so far” the links goes to the 325,000 in the story. That’s a big difference in deposits made.

    • Fred Lambert - 8 years ago

      325k is the number of reservations, $325M is the total deposit amount.

    • Vince - 8 years ago

      They already did pay back the money and then some when the government cashed out its equity position. But you are right in your implication. GM is and always will be about sour grapes. As a company it has not been able to evolve. No innovation, always a follower. In fairness it is so full of bloat and bureaucracy including labor unions it can’t get out of its own way. We may be witnessing the true beginning of the end of what once was a great American company.

      • rennieallen - 8 years ago

        Actually, no. When the government cashed out in 2013 they’d lost $11B, but, if you count the tax revenue from the jobs preserved, then they come out way ahead, but I don’t really think that flies as a pure investment return (the government did lose $11B, it’s just that they would have lost more if they didn’t spend the $11B). As I mentioned in another post Tesla for $4.9B though other government subsidies (outside of the car tax credit which both teslat and GM get).

  4. jednoucelovy - 8 years ago

    coming from a zombie resurrected by government money with a history of people-killing vehicles

  5. QC - 8 years ago

    I agree with article. EV front needs to work together to push the adaptation rate. With Bolt GM should focus on offering a reliable electric car for urban/suburb use and most of all taking customer feedback seriously when it comes to their future EV development activities

  6. Ed Hart - 8 years ago

    Glad you reminded readers of the “government bailout,” but my preference would be for you to use the expression “taxpayer blackout.” Not only did I help in the bailout, I took a huge hit on my GM stock holdings when GM’s balance sheet was fixed by wiping out us shareholders.

    Frankly, GM’s language – this story, plus the CEO bragging that GM is successfully backing dealers to keep Tesla out of some states – suggests that they are NOT on board with electric vehicles. I know…I know…the Bolt looks like a very practical car, but the attacks on Tesla and the insistence that they will not support a charging network suggest that Bolt is simply Compliance Plus.

    I should add that we now know the dinosaurs did not have enough time to lobby against comet impacts!

    • Nøderak - 8 years ago

      the only way for EV’s to win, is for the General to die.

    • rennieallen - 8 years ago

      Backing dealers as a barrier to Tesla is just a company using whatever advantage it has against a competitor. Tesla would do the same thing if they had this particular advantage. That’s business, if you can’t hack it, then find another occupation. Tesla absolutely has the business smarts to compete with GM, don’t worry about them in this regard.

      It is our job as voters to take this advantage away from GM by telling our reps that we won’t be voting for them if they don’t vote to repeal these stupid dealership laws, until then I expect nothing less than for GM to continue to get every advantage they can from these laws.

      • quiviran - 8 years ago

        As I recall, Tesla had a huge advantage with their IP on electric vehicles. They did not restrain the competition by enforcing the IP, they gave it away (June 12, 2014) so everyone could advance clean transportation. So Tesla doesn’t try to keep competitors down, they try to bring them into the party.

        GM will never get over the fact that they had a 10 year head start in EVs and killed it off deliberately, going so far as to sell the IP rights to large format batteries to an oil company, which promptly buried them by never producing batteries and denying all requests for licenses. I keep hearing “The first time somebody shows you who they are, believe them” yet we keep trying to believe something else about a lot of things, GM being one of them.

  7. amp - 8 years ago

    GM say it is not necessary to take customers’ money to hold a reservation spot. Why don’t they open up a reservation list then and see how many $0 reservations they get, still less than 10% of Tesla’s is my guess, even at $0 vs. Tesla’s $1,000. The simple fact is that if I wanted a Bolt I think that I could probably walk in and buy one or in the worst case order one just after release for delivery a couple of months later. But I stood in the rain for 3 hours outside Tesla because I was confident that if I didn’t then I wouldn’t get one of the best cars ever made until years later AND possibly forego the government incentives.

    GM are also just missing the simple economics. If you have a $0 reservation then absolutely any unqualified buyer with any hint of intent to ever buy might as well make a reservation just because it is something to do or talk about with their friends. A $0 reservation would be quite literally worthless. By asking for real money and creating a barrier to entry you limit the list mainly to serious people that can largely afford to purchase the vehicle and many will do so. The reservation list then gives a reasonable estimate of initial demand which is very useful for production planning especially, if like Tesla, that future production level is a significant jump from current levels.

    • Jens - 8 years ago

      Opel, the german branch of GM, don’t even have a „keep me informed“ button. Just the press release announcing the Bolt/Ampera-E.
      They don’t even want to now if people are interested. And I’ve just learned, that a DC-Charger will be optional. How can they do that??? Who wants a 40k € car that takes 8 hours to charge? I would be faster on a long trip, if I took a Renault Zoe or a Nissan Leaf, even though I had to take twice as many charging stops…

      I liked my Opel cars so far. But I don’t think, they will take me into the electric age.

  8. miburnsblog - 8 years ago

    Every time GM opens their mouth they stick their foot right in it.

  9. miburnsblog - 8 years ago

    Every time GM opens their mouth they stick their foot right in it. They would be better off saying nothing.

  10. danfrederiksen1 - 8 years ago

    GM is obviously being a sore loser here but I don’t agree they wont compete in the same segment. They obviously will and if Model 3 is reliable, it will murder the Bolt.

    • WalksOnDirt - 8 years ago

      If it weren’t for the Bolt I would probably buy a Model 3.

      • jim - 8 years ago

        U R a Fool!

  11. David - 8 years ago

    Just another hatter out there….lol

    • Mitchell - 8 years ago

      Meaning?

      • WalksOnDirt - 8 years ago

        I guess someone is a milliner. I’m not sure who.

  12. Nøderak - 8 years ago

    There is a latin saying, whom the gods would destroy, they first make mad. GM is crazy

  13. V12Tommy - 8 years ago

    It isn’t like the deposit process is new for Model 3. That has been the way Tesla has done things for years. I believe the deposit for a Model S is $5,000 once you place your order.

    • Mitchell Burns - 8 years ago

      That’s absolutely correct. The way I look at it is in this economy legally you could only make a couple of dollars on that money if it was invested. To me, I have invested it, in the future.

  14. Dan - 8 years ago

    Beating A Dead Horse Department: “… this just in from the company that killed the EV1 …”

  15. Matth - 8 years ago

    I think the main reason for the long lines for the model 3 was the possibility of running out of incentives. Since with the bolt that will not be anytime soon there will be no lines, even if people want to have the car. Anyway I also think GM should open up $0 reservations and see how those roll.

    • Vince - 8 years ago

      You are partly right. Sure people are trying to get the maximum tax rebate they could get. In addition though, I think many put a deposit down (I stood in line at a store and talked with people. Disclosure: I own a Model S) because emotionally they want to be a part of something they view as the future of technology as it traverses into the physical realm of automobiles. Up to this point technology has been mainly a contributor toward providing information and therefore productivity. But the car. Cars are a part of the fabric of society and so to witness much less participate in what could be a quantum leap in something so important is something everyone wants to share. Uber, Tesla, Amazon, others are all part of the transformation. Going to take a heck of a lot of adjustment but in the long run it will all be good.

    • Mark A. Tipping - 8 years ago

      We had long lines here in Australia and we have zero government incentives. We had 30 people in the queue outside the Richmond, Victoria service centre at 5.00am. The first person in the queue arrived at 7.00am Tuesday morning (around midday Monday in LA)

      People WANT this car regardless. My wife will own whatever the PxxD version for her next car. Will work well with my P85D Model S 🙂

  16. Matt R - 8 years ago

    I recently went to a media driving event. GM has, BY FAR, improver their product offerings more than any other company. They have taken weight out of pretty much all their new chassis. The CST-V is a better BMW than many BMWs, the Alpha platform is a dream.

    Say what you want, but the GM product line is getting better and better. All those Tesla deposits don’t mean the owners will get the rebate, that cuts off at 200k units. And that will be early in Model 3 deliveries.

    We have a 500e that goes off lease in 3 months. We will probably get another electric, as it’s not the only car, it’s the wife’s commuter. Sadly, I don’t think the Bolt or the Model 3 will be ready. But if they were, you can bet we’d cross shop them both.

    You don’t have to get a Tesla to be part of the future. That’s just self-serving a big glass of Kool-aid. That said, it’s a stupid quote and the exec shouldn’t have said it. Bad PR for sure. I have no clue why anyone would want to be over 100k in line. A lot in the electric car market place is going to change by the time the 100,001st car is delivered.

    • Taylor Marks - 8 years ago

      The incentives don’t end immediately when Tesla sells 200k cars. The incentives continue at 100% for the rest of the quarter, plus the next quarter after that. Then for two quarters it’s reduced to 50%. Then for the next two quarters it’s reduced to 25%. Then it’s over.

      If Tesla is able to make 500K cars per year like they say they can, then they’ll be able to sell 125K cars each quarter. So that would mean that the first 100K would get the full incentives because they’re before Tesla hits 200K total, then the next 250K would get it because they’re in the two quarters that still have 100%, then the next 250K would get the 50%, then the next 250K would get the 25%.

      So the first 350K Model 3 owners will get the full incentive, and another 500K after them would get a reduced incentive.

      Plus other countries have their own incentives. The 325K deposits are global. That 200K is only talking about US sales.

  17. Kevi - 8 years ago

    You mad bro!….lol

  18. Audrey Sayama - 8 years ago

    GM just want to remind you that taking a jab on Tesla doesn’t bring back all the people your faulty cars killed over the years. Rather than spending that time attacking the competitor, why not spend more time going back to school and learn how to build safer cars.

  19. Craig Froehle - 8 years ago

    Maybe this is why GM won’t talk about consumer interest in the Bolt: https://plus.google.com/u/0/+CraigFroehle/posts/XbqLGxRhJWM

  20. Damir - 8 years ago

    Sorry GM but Tesla makes a better looking car and it is a startup company that decided to make electric wheecles without destroying them because of fuel companies that dipended on them. And sorry that this people don’t belve in GM and don’t want to spend their money on you. Hahahahahaha what a company can’t believe they don’t support the efforts of smaller startup companies.

  21. aadityashah - 8 years ago

    Tesla actually isn’t even adding the reservations to their balance sheet. They are being held in a different account until those reservations are transferred to purchases. http://blog.caranddriver.com/tesla-ceo-clarifies-model-3-features-reservation-tally-via-twitter-we-explain-what-happens-to-all-that-deposit-money/

    Also, they paid back their loan in full with interest way ahead of their term end date.
    http://money.cnn.com/2013/05/22/autos/tesla-loan-repayment/

    And not to mention, even though they offer less jobs, Tesla has more stock in being an American brand cause you know, all of their cars are made here vs GM whose cars are made in? http://www.autoblog.com/2010/10/06/is-your-car-really-american/
    https://www.teslamotors.com/about

    And the Bolt is horrendous looking.

    Just saying.

    • Fred Lambert - 8 years ago

      The article you posted is misleading. The deposits will definitely appear on Tesla’s balance sheet, just not on its income statement. Car and Driver’s explanation isn’t great.

      Model 3 deposits appear in “cash and equivalents” in assets and in “Customer deposits” in liabilities. All on the balance sheet.

      • Neil - 8 years ago

        Cash isn’t on a balance sheet. If anything it will appear on its income statement as a liability for (unearned revenue).

      • Fred Lambert - 8 years ago

        come on people. Stop the misleading information.

        Of course cash IS on the balance sheet: http://i.imgur.com/ICR3Ahj.png

  22. ryan - 8 years ago

    Tesla is the only car company that makes good looking electric cars… have u seen the volt how am I supposed to switch from a BMW to a volt?

  23. Drucifer - 8 years ago

    GM’s balance sheet was in good shape in the 1970s and 1980s too. Their balance sheet is about $16 billion better than it might have been thanks to all of us taxpayers. Reminding us of that fact may not make for the best PR. Times change. Just a thought.

  24. Derek Roberts - 8 years ago

    Is it possible that part of the reason for Tesla’s popularity is simply it avoids going through the pain of a dealership purchase?

    • Dan - 8 years ago

      It was a huge part of the reason we bought a Model S instead of a BMW i3: horrible experience at the dealer, the whole 1980’s vintage tapdance with a sales person who couldn’t negotiate, a Jabba-The-Hutt invisible sales manager in the back room, taking the keys to our potential trade-in for “evaluation” (but in reality to hold us hostage), treated my husband as the inferior “little lady” (when actually he was the decider), “additional dealer markup” on the sticker, yada yada yada. After three hours of this crap, we demanded the keys back and walked out and a week later took a test drive in the S and ordered it from my iPhone on the spot. Mary Barra’s comments on the existing Chevy dealer network as a strength against Tesla are really REALLY disingenuous.

    • quiviran - 8 years ago

      I have a friend, die hard Chevy fan, that desperately wanted to buy a Volt. The local dealer had a previous year model in inventory, so my friend took in the car he planned to trade in, expecting the usual discount for last years model plus a friendly valuation on the trade-in, and got nothing. The dealer was more than willing to “wheel and deal” on any other car on his lot, but no go on the Volt. No deal happened.

      As long as the fossil car industry lives under the shadow of the dealership experience, they will not be successful. GMs customers are the dealers. The end owner is just a bit player to GM, and the dealers only opportunity to increase profits is unwitting customers. It can never work. Ever. To have a car that sells at the same price as an equivalent Tesla, GM must build a car that costs 20-25% less to produce so the dealers have a way to make money. And buyers know that, so they always feel screwed at the end of the deal, they’re just unsure how and how badly. Tesla doesn’t have that parasite to feed.

      WhenTesla is delivering 2000 cars per day instead of 200 they may need something different, but for now, build to order direct sales is where it’s at.

  25. LarChar Welsh - 8 years ago

    The “200 mile range” of the Bolt is actually 100 miles out, 100 miles return. There is no Super Charger network. Long trips would require 200 miles a day max travel. All Tesla competitors are offering the modern day equivalent of a Conestoga wagon.

  26. Jojn - 8 years ago

    Maybe GM don’t gave an ordering system for the bolt because there isn’t enough customer interest.

  27. Lewis Goodell - 8 years ago

    It may be that if they make an electric car that is as good as their gas cars then more people would buy them. The dealers would lose out because of the reduced maintenance. But they are forced to sell through the dealers so they may be stuck making these weaker offerings to get the MPG for their fleets. Or they just don’t really believe in electric.

  28. Priusmaniac - 8 years ago

    I like the paragraph mentioning 20000 $ worth Bolt if it was a gas car versus 35000 $ if the Model 3 was a gas car. Very real indeed!

  29. tommyg - 8 years ago

    FALSE CLAIM: The Chevy Bolt is not a “Tesla killer”
    ARTICLE CORRECTION: American car manufacturer General Motors is not a “Tesla Motors killer”.

Author

Avatar for Fred Lambert Fred Lambert

Fred is the Editor in Chief and Main Writer at Electrek.

You can send tips on Twitter (DMs open) or via email: fred@9to5mac.com

Through Zalkon.com, you can check out Fred’s portfolio and get monthly green stock investment ideas.