Commentary

Tesla Challenged On Pricing

More signs that the Tesla is more than a passing figment of one entrepreneur’s obsession arose yesterday in the forms of two attacks on the highly regarded and suddenly profitable all-electric vehicle whose list price currently starts at 70Gs for the long-range Model S and vroooms upwards to 95Gs with options.

General Motors said that it is developing a vehicle that also could go 200 miles-plus between charges and cost about $30,000, which is $5,000 less than Tesla CEO Elon Musk recently said “won’t require a miracle” to bring to market in a few years, according to the Wall Street Journal’s Mike Ramsey.

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In Sacramento, meanwhile, the California New Car Dealers Assn. asked the Department of Motor Vehicles to investigate Tesla’s advertising, which it charges “fails to provide required information and shatters the notion of comparison finance shopping by including the potential availability of incentives, gas savings, and tax savings into final payment quotes for prospective customers,” Jerry Hirsch reports in the Los Angeles Times.

 “The association, for example, claims an available $7,500 federal tax credit is ‘completely irrelevant’ to the price of the Model S, which has a $71,070 base price, according to the request for an investigation,” writes Vince Bond, Jr. in Automotive News. “The group cited the Congressional Budget Office, which said that only 20% of potential tax filers qualify for the full $7,500 credit.” 

So basic arithmetic tells us that the claim is misleading to 80% of taxpayers, the dealers claim.

Tesla spokeswoman Shanna Hendriks declined to comment on the matter, according to Bloomberg’s Alan Ohnsman, who reminds us that the company sells directly through its own stores rather than through franchised dealers, as other automakers do. “That’s spurred opposition from dealers across the country,” he writes.

Others might tell you that the charges are like a CO2-emitting engine calling a lesser-CO2-emitting engine black. Rosemary Shahan, president of Consumers for Auto Reliability and Safety in Sacramento, tells Hirsch: “They want you to have to go to the dealer where they will mark up your loan, do bait-and-switch financing and engage in all sorts of practices that I am far more concerned about.”

One thing you can say for sure is that Tesla has put together a nifty infographic on how “you START SAVING on day one” in “TIME, MONEY & EMISSIONS” after you’ve signed the contract. 

Back in Warren, Mich., meanwhile, Doug Parks, GM's VP of global product programs, talked about that company’s plans to develop a long-range, battery-powered vehicle for the mass market without naming a target date for completion.

“He said while the technology is available now, the cost of the batteries remains too high to be able to pull off the feat today,” reports the WSJ’s Ramsey.

Although the Cadillac ELR coupe, which will roll out in early 2014, is a more direct competitor to the Model S, “the automaker wants to improve the performance and lower the costs of the [Chevy] Volt and its future siblings,” reports Reuters’ Ben Klayman.

“We're trying to put more stress on getting this right for the lower-priced vehicles," Parks told reporters yesterday.  

Parks and other GM executives and public officials were announcing the completion of an additional 50,000 square feet to its battery research and development headquarters, which nearly triples the size of the facility, Michael Wayland reports on Mlive.com.

“This additional real estate is filled with new capability that will help us improve speed to market and our next generation of battery systems and help us improve the value equation to our customers around the world,” Parks says in a release.

Sebastian Blanco writes on AOL’s Auto Blog Green that researchers are benchmarking batteries from seven manufacturers in the facility but “notably missing were any packs from Tesla.” 

“GM representatives did say there are Tesla vehicles on the grounds that have been tested and taken apart,’ Blanco reports.

“‘There is nothing in the Tesla battery that we don't know,’” Parks told reporters. “He added that Tesla's strategy is ‘very intriguing’ and that GM is taking a close look at it, but that simply ‘matching what Tesla did is not that exciting,’” Blanco writes.

“Several automakers already sell electric cars for $35,000 or less that go up to 100 miles per charge,” the AP points out, but electric vehicles make up only 0.3% of U.S. sales at present. “That may rise if companies can give people greater range at a moderate cost.”

There’s a lot of money and real estate riding on the prospect that it can and will.

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