General Motors
said something surprising at its investor day in New York City on Thursday. Fixing Teslas is a growing business for the 114 year-old auto maker.
That’s right. GM (ticker: GM) dealers are fixing Teslas. Since 2021, GM dealers have fixed more than 11,000 electric vehicles from
Tesla
(TSLA), according to GM President Mark Reuss.
“That’s a growing business for us,” Reuss told the assembled analysts and investors. “I gotta say it’s a new business.”
It’s a surprise for everyone, especially
Tesla
investors. But GM has a long-established dealer and service network. The company says most Americans live within 10 miles of a GM dealership.
Tesla, of course, has a service network too, but it doesn’t have traditional dealerships and is growing quite quickly, making it tough for its service network to keep up.
Through September, Tesla has shipped 908,583 vehicles around the world. That’s up from 627,350 shipped over the same span in 2021.
Tesla’s lack of a traditional dealer network adds some extra profit on each vehicle sale. A dealer makes a few hundred to a few thousand dollars selling a new or used vehicle. That’s an advantage Tesla has over traditional auto makers.
GM doesn’t own its dealers. They are independent franchises.
A dealer network has its advantages for a traditional auto maker, too. Take GM’s service statistics for starters. GM is also putting in charging ports at its dealers to create its own network of EV chargers.
Tesla owns the largest network of direct current EV chargers in North America.
Along with the Tesla service business, Reuss detailed plans to make dealerships, and GM, more profitable by streamlining how EVs are stored, test-driven, and sold. Using predictive analytics can streamline the entire process, which frees up working capital for both dealers and GM.
“We are leveraging our dealer network for the competitive advantage that it is,” said Reuss. “We’re going to take out some of the cost of selling a vehicle to the tune of about $2,000 per vehicle.”
That’s real money for dealers and GM. In the third quarter,
General Motors
generated operating profit per unit sold of about $5,000.
GM stock rose about 50 cents a share after the event started, but closed down 0.1% at $38.64. The
S&P 500
closed down 0.3%. The
Dow Jones Industrial Average
finished flat.
Tesla shares dropped 2%, closing at $183.17. Service issues aren’t the reason. The overall market was down and investors are still closing watching how much time CEO Elon Musk is spending at his newly acquired social media company, Twitter.
GM stock was up 1.4% in premarket trading Friday. S&P 500 futures gained about 0.9% and Tesla stock added 1.1%.
Write to Al Root at allen.root@dowjones.com
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