“He thinks Tesla could be a big disrupter if we’re not careful. History is littered with big companies that ignored innovation that was coming their way because you didn’t know where you could be disrupted.”
These are the words of Steve Girsky, vice chairman of General Motors (GM), speaking of CEO Dan Akerson’s newest initiative—a task force to study the business threat posed by Tesla Motors, the California-based automotive startup that sells America’s only highway-capable all-electric cars.
The remarks are ironic. From the perspective of Elon Musk, the billionaire genius behind Tesla’s popular zero-emission cars, GM is right on the money. He has every intention of making Tesla a ‘disrupter,’ and indeed considers Akerson’s 104-year old firm the epitome of ‘the big company that ignored innovation that was coming their way.’
On The Tonight Show with David Letterman in 2009, Musk chided General Motors for its decision a decade earlier to kill the only viable electric car on the market—the EV1—just three years after launch and amid a consumer outcry. Musk said it’s what inspired him to build the world’s first profitable electric vehicles.
The Cannibalization Of The EV1
Launched in 1996, the EV1—GM’s first attempt to put an all-electric auto into production—was the most advanced plug-in yet seen. The EV1 was hailed as a breakthrough, yet its fate testifies to GM’s true purposes.
The Detroit-based automaker pulled the plug on its own plug-in at the first sign of success in 1999, demanding consumers return their cars or face legal action. A month after executives purchased gas-guzzler brand Hummer, they shut down assembly lines for EV1s and laid off the workers building them.
Turning down million-dollar offers to preserve the last of the electrics, GM hauled the confiscated cars to a remote location and had them crushed. In the baffled consumer backlash, images of the EV1s smashed in the desert emerged to bear witness to the strange story of a major American firm that cannibalized its own baby, for fear of green innovation.
At that time, GM dominated the EV space, partly due to its controlling interest in technologies like NiMH batteries, which promised to make EVs more cost-effective compared to traditional polluter commuters. In retrospect, the company’s assets seem not at all designed to promote electric success, but rather to keep it in check.
GM’s strategy of keeping its friends close and its EV competitors even closer led to the literal crushing of the first modern generation of American EVs—to the dismay of hundreds of lessees already fiercely attached to the gasoline-free way of life.
Observing the senseless downfall of the EV1, Elon Musk decided he would take the barn door-sized opportunity GM missed to meet and nurture domestic demand for electric powertrains.
The premium Model S electric sedan gets the equivalent of 95 mpg with zero emissions, clips to 60 mph in under 4 seconds, and recently earned the distinction of being the safest car ever tested by government regulators.
Speaking to David Letterman, the Tesla CEO recounted how GM had actually credited his cars with inspiring the hybrid Volt—GM’s first post-bankruptcy effort to make an energy-efficient automobile. And yet, it was GM’s disinherited EV1 that first inspired Tesla Motors.