The Chevy Bolt will be a big test for the EV market (GM)
The Chevy Bolt will be a major test for the electric car market.
That's because when it comes to electric cars, there are two major issues that have historically held them back: the range limitation and price. The Chevy Bolt will be the very first car to address both those issues head-on, but whether people will clamor for the Bolt is still unclear.
"We don't know, obviously, how big that market is, no one knows," GM President Dan Ammann told Business Insider. "We'll know a lot more in a year than we know today. We're going to go out with this intersection of range and price and learn something."
The range conundrum
To really understand why the Bolt is such a big deal in the EV space, it's important to note the issues that have thus far held electric cars back.
Take the Nissan Leaf, for example. The Leaf is an affordable electric car with a low starting price of $29,000. But with a limited range of 107 miles, it's hasn't been able to garner mass appeal in the US beyond that from EV enthusiasts. So far in 2016, Leaf sales are down 32%.
On the other hand, take Tesla, which has really dominated the EV space with the Model S and Model X. In the third quarter, Tesla delivered 15,800 Model S sedans and 8,700 Model X SUVs. Those deliveries combined mark an increase of just over 70% from the last quarter's deliveries, and Tesla is planning to keep growing.
The company also recently showed its intention of tackling the range issue when it announced a battery upgrade that gives the Model S with Ludicrous 315 miles of range and the Model X with Ludicrous 289 miles of range.
But the cost of Tesla's cars without the battery upgrade already start at a hefty price point of $66,000. For the extra range, you're looking at shelling out more than $134,000. It's for that reason Tesla's cars have appealed strictly to the luxury car market.
That's the issue. Those looking to buy an all-electric car with an attractive range have had to shell out a lot of cash, and those looking for a cheaper electric car have had to compromise on how far it can go before needing a recharge.
But, it seems we are starting to see the end of the range conundrum, and that's where the Chevy Bolt comes in.
The Bolt was rated at 238 miles of range by the EPA and is slated to arrive in dealerships before the end of 2016. It has a very consumer-friendly price of $37,500 before federal tax credits.
But as Ammann told Business Insider, while the Bolt may hit it out of the park when it comes to range and price, we can't be sure consumer demand will inevitably follow.
"So far, we haven't had anyone solve this problem of how do you solve the range problem at a price point that's actually affordable for a lot of people," Ammann said. "With the Bolt, we will be the first to put [out] a vehicle at the intersection of those two things."
"If we're sitting here a year from now, we'll have a much better view of what the real, underlying consumer demand is for an affordable EV that I can actually use as my normal vehicle," he said.
The counter argument, of course, is that pre-orders for Tesla's Model 3 indicate that there's huge demand. The electric car maker has received about 400,000 pre-orders for the Model 3, which will have a range of 215 miles and will be priced at $35,000.
But, it's important to remember that these are just pre-orders. Customers may back out, and that's probably something GM is banking on by getting out its consumer-friendly car out earlier.
But let's say no one were to pull their Model 3 pre-order. That still doesn't speak truthfully to demand for an affordably-priced, electric car. Tesla has garnered brand loyalty akin to Apple. After all, the Model 3 got 115,000 pre-orders before anyone even saw the car.
It very well may be that people are looking for an affordable Tesla, specifically, not just any electric car.
And considering electric cars make up roughly 1% of global auto sales, GM still has a tough hill to climb.