General Motors’ (NYSE: GM) Chevy Bolt EV plug-in hybrid concept car unveiled on Jan. 12, 2015, at the Detroit Auto Show is a potential moneymaker even though it is no threat to Tesla Motors’ (NASDAQ: TSLA) Model S.
The Bolt is no threat to the Model S because it is a basic, no-frills hatchback, almost an economy car. The Model S is a luxury sedan comparable to the Audi A7 or the Mercedes Benz S-Class from Daimler (NYSE: DDAIF). If the Bolt has a direct competitor on today’s market, it will be Volkswagen’s (OTC: VLKPF) Golf or e-Golf, not the Model S.
Bolt is a potential moneymaker for GM for three reasons: its reported price, its capabilities and its design. One of the main selling points for the Bolt is projected price: $30,000 after a federal tax credit is figured in, according to The Verge. That puts it below the price the average American paid for a new car in 2013, which was $32,086, according to Autoblog.com. It’s also very competitive with the e-Golf, which has a basement price of $27,945, according to Volkswagen’s website. That price is questionable because it includes a $7,500 federal tax credit.
If GM’s claims about the price are true, the Bolt would be well within the price range of average people, although it is hardly a bargain. If you just want to buy a basic car, you can currently buy a Volkswagen Jetta for as low as $17,325 if you’re willing to shop around and haggle with the dealers. If you’re looking for a hatchback, a Golf starts at $17,955.
The best thing going for the Bolt is its projected capabilities. GM claims it can run up to 200 miles on a charge of electricity; in contrast, the e-Golf has an estimated range of 83 miles on a charge, or less than half that of the Bolt. GM’s existing plug-in hybrid, the Volta, has a range of around 50 miles on a charge, and the Model S can run up to 170 miles on a charge. GM’s current all-electric offering, the Spark EV, has a range of around 82 miles on a charge. The hydrogen fuel cell powered Toyota (NYSE: TM) Mirai has a longer range—around 300 miles on a tank of hydrogen gas—but it comes with a $57,000 price tag.
Unfortunately, we do not know many of the Bolt’s other capabilities, including its acceleration time and the time it will take to charge the vehicle. GM has promised fast-charging capability, but it currently takes around half an hour to charge a Model S at a Tesla supercharger. One of the big drawbacks to electrics is charging time; it takes about three minutes to fill a tank with gasoline or diesel fuel and around three minutes to fill the tank of a hydrogen-electric fuel cell car like the Mirai.
The World’s First Car Designed for Ride and Car Sharing
The most interesting thing about the Bolt is its basic design: it can seat five, it has a lot of cargo space and the hatchback will make it is easy to load and unload. From that description, it sounds as if the Bolt is the first vehicle designed specifically for ride and car sharing.
The Bolt has also some features that would lend itself to the ride sharing market. The Verge reported that it will have integrated ride-sharing management and a self-parking capability. Drivers will also be able to select driving styles and adjust vehicle ride height and suspension tuning, The Christian Science Monitor reported. It sounds as if the Bolt is designed for urban driving.
The Bolt seems as if it were designed for an Uber-X driver because the major market for ride sharing is in large cities. Some of its features, including the roomy inside and the ability to start it with a phone app, sound as if they are tailored to that market as well.
Is Bolt the Car for Uber X?
That could be a good business strategy because of the sheer number of such vehicles out there. Uber alone claimed it was providing one million rides a day and was available in 64% of the U.S. in December. Uber’s archrival Lyft is now operating in around 65 U.S. cities.
The ride-sharing industry might be the ideal market for a car like the Bolt because it could reduce operating costs for ride-sharing drivers. Unlike traditional taxi drivers, Uber and Lyft drivers are independent contractors that have to provide their own cars and buy their own fuel.
Even with $2 a gallon a gas, their fuel costs could still be fairly high because they have to drive around all day to make a living. The Bolt’s projected 200-mile range on electricity and the miles per gallon for its back-up gasoline engine could reduce costs for such a driver. A driver might be able to go all day without burning any gasoline, which could be a big savings.
The market may already be there; Uber has a financing program for drivers, and GM is one of the companies already participating in that plan. The cars offered in the plan include Hybrids such as the Toyota Avalon, which is used by lower-priced Uber-X drivers.
The growth of ride sharing could give GM a growing market for electric vehicles even if oil and gas prices stay low for several years. Low gas prices give average people little incentive to go electric, but ride-sharing drivers have a strong incentive to adopt this technology.
Ideal for Delivery
This could also give GM a leg up for entering other new markets, including same-day delivery services like Google Express, which use smaller vehicles. Several large companies, including Amazon.com (NASDAQ: AMZN), Google Inc. (NASDAQ: GOOG), privately held Uber, Kroger (NYSE: KR), and Wal-Mart Stores Inc. (NYSE: WMT) are experimenting with same-day delivery options.
With its 200-mile range, small size, self-parking capabilities and hatchback design, Bolt could be ideal for same-day delivery in a crowded city. An electric powered minivan with similar features to the Bolt could be a money maker in the delivery market. That market could be huge; Google’s Shopping Express has 37 merchant partners, including Costco and Walgreen, and it is now available in the San Francisco Bay Area, New York, Los Angeles, Chicago, and Washington, DC.
GM has not only demonstrated impressive capabilities in electric car design and manufacturing capability but it has also shown an ability to identify potential markets for such cars and tailor vehicles to them. That could make it and not Tesla the real leader in electric vehicles.