Tesla Motors Inc (NASDAQ:TSLA) has achieved a record-breaking year so far in 2013. The electric vehicle maker’s stock is up more than 400% year to date , and with production of its upcoming Model X on the horizon, Tesla’s momentum looks set to continue.
But General Motors Company (NYSE:GM) has a very different plan for its upstart rival.
General Motors Company (NYSE:GM) aims to challenge Tesla Motors Inc (NASDAQ:TSLA)’s lead in the long-range battery war by introducing an electric car that can travel 200 miles and costs as little as $30,000, according to the Wall Street Journal . Let’s take a closer look at what’s at stake for Tesla, and whether the EV start-up can continue its run despite increased competition.
The power problem
Battery technology today is far from ideal. Lithium-ion cells are currently the batteries of choice for many large companies, although they remain expensive and offer limited range. Tesla Motors Inc (NASDAQ:TSLA)’s Model S, General Motors Company (NYSE:GM)’s Chevrolet Spark EV, and The Boeing Company (NYSE:BA)‘s Dreamliner all incorporate lithium-ion technology .
That said, Tesla Motors Inc (NASDAQ:TSLA) is slightly ahead of the curve when it comes to battery strategy. In fact, Tesla’s chief technical officer claims, “the battery prices in the Model S are substantially lower than what everyone expects today .” On top of this, Tesla’s Model S boasts the longest driving range of any EV on the road. Tesla’s 85-kilowatt battery commands a range of 300 miles . However, it also costs a pretty penny at $70,000 . This is where General Motors Company (NYSE:GM) hopes to undercut the EV maker.
General Motors Company (NYSE:GM)’s vice president of global product programs revealed yesterday that the company is developing a $30,000 option that would compete with Tesla Motors Inc (NASDAQ:TSLA)’s Model S. The only problem is there’s no word yet on when the car would be available . Potential buyers could be waiting a while; just two months ago, GM enlisted a special team of employees to study Tesla’s disruptive technology.
With no known timeline on the table, it could be years before General Motors Company (NYSE:GM) gets a 200-mile range EV to market for $30,000. And at that point, it might be too late. As we know, Tesla Motors Inc (NASDAQ:TSLA) plans to sell its mass-market Gen III model as soon as 2016 . Moreover, Tesla’s CEO Elon Musk says the model would cost around $35,000 without the aid of government incentives, and would be capable of traveling at least 200 miles on a single charge. Depending on the timing, GM’s more affordable EV might not be a Model S challenger at all.