General Motors (NYSE: GM) has proved that it might not be an automotive industry dinosaur by bringing out a game-changing electric car.
GM’s new Bolt concept car, unveiled at the Detroit Auto Show on Jan. 12, 2015, could be a real game changer because of its price. The hatchback will cost around $30,000, or slightly less than the price of an average American car (around $32,000), yet it will have a 200-mile range on a charge of electricity, farther than the vaunted Tesla Motors (NASDAQ: TSLA) S Series, which has a 170-mile range on a charge. It could also have an acceleration rate of zero to 30 miles per hour in 2.6 seconds.
The hatchback will have about as much storage space as a crossover. There will also be high backed seats like a crossover and such amenities as heated seats and next generation cruise control that’s capable of staying away from other cars.
This will also give GM a leg up on Honda and Toyota, both of which have brought out more expensive fuel cell vehicles. Toyota’s fuel cell-powered Mirai will cost around $57,000 and have a range of around 300 miles on a tank of hydrogen fuel. One advantage that the Mirai will have is that you can fill its tank with hydrogen in about three minutes, or around the same amount of time it takes to fill a tank with gasoline.
A big advantage that Bolt, the fuel cells and Tesla will have over the Chevy plug-in hybrid, the Volt, is that they are totally non-polluting vehicles. Volt will still spew out smoke when it is running on gasoline.
Even with its lower price, Bolt could still be a hard sell when it arrives in showrooms in 2017. Gasoline, at $2 or less a gallon, will take away a lot of its appeal. It will also take a long time to charge up, and finding a place to recharge the battery could be difficult.
It is not clear if Elon Musk will let people charge cars like Bolt at the Tesla superchargers. Nor has GM announced whether it will build its own superchargers (filling stations for electric cars) or partner with a large filling station operator such as Kroger (NYSE: KR).
Another drawback will be the time it takes to charge an electric car; it currently takes around 30 minutes to juice up a Tesla S Series at a supercharger. The wait to charge can also be boring; one reporter said that the only thing to do at a Connecticut supercharger was to eat fast food or hang out at the convenience store. That’s hardly an exciting way to spend your time.
The Potential Market for the Bolt
That being said, there is a potentially large market for the Bolt and the improved Volt. The market is in fleet cars for companies and government agencies, ride sharing drivers like Uber and Lyft operators, and taxi cabs.
Uber, Lyft, and Sidecar drivers often operate on a very tight budget and have to pay high car loans. They need every extra cent they can get, so they will appreciate savings no matter how small. These drivers are also on the road for hours a day, so even $2 a gallon gas prices will quickly add up. If they can save $20 or $30 a day by driving a Bolt, they will.
General Motors will be in a great position to service those drivers with its dealer network and financing capabilities. If GM’s CEO, Mary T. Barra, has any brains, she will give Uber boss Travis Kalanick a call about Bolt right now. News reports indicate that Mr. Kalanick has $30 billion in value to play with. If GM is really smart, it’ll start designing a minivan version of the Bolt right now that is specifically designed for ride sharing drivers. A work van version of Bolt that is similar to the Ford Transit Connect could also be a great seller.
The ride sharing vehicles will be excellent sharers in other markets, including taxi cabs, government fleet vehicles, delivery vehicles, short-term rentals like Zip Car, and rental cars. Small scale delivery could be a huge market, with cash-rich companies such as Google (NASDAQ: GOOG), Kroger, Uber, Amazon (NASDAQ: AMZN) and Walmart Stores Inc. (NYSE: WMT) experimenting with same-day delivery options, as in the ride sharing and cab business, the savings from the savings that electric vehicles could offer.
A long-term application could be with large-scale delivery operations such as United Parcel Service (NYSE: UPS), FedEx: (NYSE: FDX) and the United States Postal Service. These businesses are growing because of the boom in e-commerce. Like ride sharers, they want to lower operating margins as much as possible.
Even though the Bolt won’t be in dealerships until 2017, it could be a real game changer for GM. It could also a big money maker, particularly if gasoline prices start going up again.
Disclosure: The Author holds stock in Kroger and does business through Amazon.com.