The GM vs Tesla Supply Chain competition for EVs

A New York Times article (September 15, 2016) titled “Upstart car, unexpectedly, from an old-line carmaker” describes the launch by General Motors of the Bolt, with a range of over 200 miles. The article claims that GM outsourced battery production to LG Chem, and leveraged the shared production facilities with other cars it produces to create a competitive offering. In contrast, Tesla is integrating vertically by producing its own batteries to lower costs, but has to develop its manufacturing scale up to make the close to 500,000 cars it has promised by 2018. Will GM or Tesla win this battle for electric vehicle production or will we have a split market that is expanded to increase the fraction of EVs overall ? Since GM can subsidize prices for the Bolt because it can increase its fleet miles per gallon (with a Federal target of 54.5 by 2025) and thus sell larger lower mileage cars with greater margins ? Is vertical integration or scale benefits more important ? Finally, will it be optimal for Tesla to sell batteries to GM to go down the learning curve for batteries faster?

About aviyer2010

This entry was posted in Capacity, Collaboration, competitiveness, Cost, disruption, manufacturer, Supply Chain Issues, Sustainability and tagged , , , , . Bookmark the permalink.

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