Touchscreen navigation in the Tesla Model S, via Wikimedia Commons
Here's a peak into the future of the car industry. On the same day Motor City historically filed for Chapter 9 bankruptcy, Bloomberg News reported that General Motors is assembling a team to study the Tesla Model S.
If the 100-year-old, Detroit-based carmaker represents the history of the auto industry, Tesla is the future, and GM wants to be on the other side of that equation. “History is littered with big companies that ignored innovation that was coming their way because you didn’t know where you could be disrupted," GM's Vice Chairman Steve Girsky told Bloomberg.
What Girsky failed to add is that General Motors is one of those big companies. A tour through the automaker’s long history shows it ignored the latest innovations more than once.
When Japanese cars started threatening American sales with more-efficient manufacturing, GM set up a partnership with Toyota to study its innovative processes, just like it’s setting out to do now with Elon Musk's little upstart that could.
The Toyota research went nowhere, Forbes pointed out, In fact, in a cruel irony, the factory site for that partnership program is now churning out Tesla cars.
Then in the 90s, GM spent millions developing its first electric vehicle, the EV1, in response to a California emissions mandate. It soon killed the EV1 line because it wasn't profitable.
We all know what happened next: GM went bankrupt in 2009, and the government bailed it out for $50 billion.
That’s when Dan Akerson took over as CEO, and he is the one leading the charge to study Tesla Motors. As Bloomberg reported, Akerson never even liked GM cars, and resented the company's stuck-in-the-mud business model.
Akerson appears determined not to repeat history by writing Tesla off. "In the old days, they would’ve said, ‘It’s a bunch of laptop batteries and don’t worry about it and blah, blah, blah,’” Girsky said, explaining the CEO's perspective. "I don’t know if the Model S is going to work or not work. All I know is if we ignore it and say it’s a bunch of laptop batteries, then shame on us."
No matter how good intentions are, it's near-impossible to transform a corporation as large, old, and connected as General Motors. To put it in perspective a bit, GM sold 2.5 million cars in the second quarter, while Tesla's goal was to sell 5,000. The big automakers aren't exactly in crisis mode yet.
They are starting to get nervous though. Tesla's disruption-promising futuristic design has been around for 10 years, and only now is starting to be taken seriously. That's because money talks, and the Model S is starting to actually cut into profits. Even at nearly twice the price, the battery-powered car outsold GM's plug-in hybrid, the Chevrolet Volt. It recently was reviewed as the best car ever made, and its share price has already tripled this year.
Tesla's success story has been compared to Apple's introduction of the iPhone. As soon as it arrived, although it was too expensive and novel to be considered more than a luxury product for most people, you had an inclining this was the future of the industry. In fact when GM first began developing the Volt, the concept car was called the iCar.
As a recent blog post on Medium put it, "The benefit of being the new guy on the block is you get to be whoever you want." Tesla, like Apple at the time, has the benefit of being independent, small, and nimble. GM on the other hand, enjoying a post-bailout stability, isn't looking to rock the boat.
After Detroit filed for bankruptcy yesterday, GM said in a statement yesterday that it believes this moment can be a clean slate for the city. A clean slate is what it will need too, or its exploration into Tesla will be futile. We'll see if Elon Musk can teach an old car new tricks.