Chevy Volt a Failure - GM to Layoff 1,300

Right about now they have two basic choices: 1) Cut the cash burn rate and start producing cars on time and profitably, or 2) Find a way to raise more cash to burn through. Number one doesn't seem like it is possible. Number two doesn't seem like it SHOULD be possible at this point, with the $10 billion of debt it already has run up, the number of times it has already diluted its stock float, etc. But we are in an extraordinary time, in which the monetary mandarins have built the biggest house of cards ever, so maybe the madness can go on long enough to enable another Tesla debt offering or convertible bond offering or equity dilution. Although, honestly, I think things have turned and Goldman Sachs is going to have a tough time finding the muppets willing to fund more madness. We'll see soon, probably. Either way, that China plant isn't happening unless he can find some money. They have maybe a year of cash left at their curent cash burn rate, unless he cuts back, which would preclude building plants in China. The government subsidies / term-free loans, are no longer there, and his cars can't be produced profitably at the equlibrium point for demand of them relative to what he can supply. So unless he can borrow more money to waste. ... Alrighty.

 

The cost of the battery technology makes it cost prohibitive for most people when they are making a rational choice between a gas-powered vehicle and an EV. The place there is a genuine niche market, has been in luxury cars. You make it fast, luxurious, etc. and you can charge $100K, and there is a small market there. The Model S was that car, because it attracted a small cult following of stock market millionaires who saw it as a status symbol. Unfortunately for Elon Musk, he wasn't a good enough business man to actually produce those $100K cars profitably. He's lived on government handouts, debt and equity dilutions. Mercedes, BMW and Audi are all very close to offering those $100K cars, and I think you likely are correct about what happens next. They may not be able to find huge margins in the cars, but they are not companies that are in the habit of selling cars for a loss, while they borrow more and more to keep a ghost company alive.

As for a mass-market EV, I think that is just pie in the sky, whether it is the Model 3 (which is really just a slightly cheaper luxury car in reality), Chevy Bolt or otherwise. The economics are not there with gas at $3, $4 a gallon, let alone with gas at $8 a gallon. The batteries to give you any amount of range are just too expensive and they don't have enough of a useful life, as the technology exists today. But that doesn't mean there isn't going to be competition there trying. The Model 3 -- that $35,000 car -- is obviously more like a $55,000 car to take delivery. And even with that, he's losing money on every one he delivers. Few companies are there yet to deliver what he was actually promising -- an everyman EV. You have Chevy. You have the Nissan Leaf. Neither of those have really captured too many people's imagination, because with the features you get practically relative to the cost, it's just not a great sell for people who aren't evangelical about EVs. Already announced, though, you have Suburu, Volvo and Volkswagen working on EVs that they hope to have available over the next few years. And again, those are companies that actually know how to produce cars on a mass scale and do it profitably. If there is actual demand at the cost those cars are going to have to fetch, I'd have more confidence in their ability to squeeze out some margins and meet the demand, than I have in Elon Musk ever being able to.