Tesla Motors Inc (NASDAQ:TSLA)’s celebrity, Elon Musk likes to talk about his plans for the company and new products that customers can expect from the all-electric car maker. As the Wall Street Journal reported, a hybrid car offered by rival General Motors Company (NYSE:GM), Chevrolet Volt, comes across as Tesla Model S’s main challenger in the U.S. and Musk has not been talking much about it.
According to market numbers from Autodata, Volt is in front of the Model S in the U.S. in terms of sales by a huge margin. Although General Motors Company (NYSE:GM)’s Volt has been marked as a slow-selling brand with sales falling in recent times, the car still outsells Model S. In July, for example, GM sold 2,020 units of Volt at a time when Tesla Motors Inc (NASDAQ:TSLA) sold 1,500 units of Model S, the Wall Street Journal mentioned.
However, comparing Volt and Model S is like comparing apples and oranges, since Model S is more in the category of luxury cars, having many features that Volt lacks, being a mass-market product. Nevertheless, recent developments must have left Musk wondering what’s next for their flagship car and even future brands. As WSJ pointed out, the problem for Musk and Tesla Motors Inc (NASDAQ:TSLA) in general stems from the recent announcement by General Motors Company (NYSE:GM) that they are preparing a refreshed version of the Chevrolet Volt, which will be debuted at the Detroit Auto Show, in January next year. The next generation Volt is expected to come with extended range, which remains a concern for customers buying hybrid and electric cars.
In addition to that, another problem for Tesla Motors Inc (NASDAQ:TSLA) is that GM also prices Volt competitively such that the car falls within the cost range that most American car buyers are willing to spend on purchases. For example, last year GM announced a 13 % off the Volt’s price to bring the cost to $35,000 from $40,000. The car also benefits from federal incentives. At the same time, Tesla’s Model S is priced in the range of European luxury sedans.
Nonetheless, Tesla Motors Inc (NASDAQ:TSLA)’s answer for Volt is likely to come in the form of Model 3, which is expected to debut in a couple of years and will have mass appeal in terms of cost and even range. Till then, both Volt and Model S keep competing, even though they are priced in different categories, and should be addressed to different types of consumers.
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