Key Takeaways from General Motors’ Global Business Conference
Automobile companies around the world have been selling gasoline- and diesel-powered vehicles for more than a century. However, electric and hybrid vehicles make up only a fraction of total vehicle sales globally. Tesla’s (TSLA) success and soaring market capitalization encouraged several automakers to rethink how to play the alternate fuel space.
During its global business conference, General Motors (GM) outlined the company’s plan for the alternative fuel space. Currently, General Motors forms 1.51% of the Wisdom Tree Dividend Ex-Financials ETF (DTN).
General Motors is currently not a major player in the electric vehicle (or EV) space. In 2014, the best-selling EV was Nissan’s (NSANY) Leaf. The automaker sold more than 60,000 units of the Leaf, more than twice that of Tesla’s Model S. Even in 2015, Tesla (TSLA) is not expected to sell more than 55,000 units.
However, General Motors is planning to take on Tesla with its upcoming model, the Bolt. The Bolt would offer a range of over 200 miles and would directly compete with the Tesla Model 3.
The battery is a key component for EV makers, which is the reason Tesla is building its Gigafactory. General Motors has partnered with LG to source batteries for its EVs. GM’s battery pack costs are expected to decline further in the coming years, as shown in the chart above. Lower battery costs are crucial for offering an affordable electric vehicle.
Fuel cell electric vehicles
General Motors is also working on fuel cell electric vehicles and has partnered with Honda Motors (HMC) in this space. Fuel cell electric vehicles offer longer range, however, the technology faces several challenges. According to GM, the technology would require “comprehensive hydrogen fueling infrastructure” that would “require financial commitment from governments around the world.”
Looking at the initiatives General Motors is taking, the company is placing itself well in the alternative fuel space. Meanwhile, alternative materials have been another point of innovation in the automobile industry. We’ll discuss more on this in the final part of this series.
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