"See if the Volt has legs"??? Is that suppose to portend an early demise for the Volt? Talk about a ding in GM's reputation. Why not get that engineering team back on the design and figure out a way to make the batteries smaller and take cost off the BOM?
I know automotive development cycles are far longer than other products, but isn't agile and iterative engineering what it's all about, especially when you're talking about new technology like EV vehicles. Obviously, you need to strike a balance so you don't have the market sit and wait until you finally get it right. Maybe there's some sort of rebate or upgrade plan for brave early adopters. But it is far too soon to give up on the Volt, PR problem or not.
Am I the only person left who still uses a spreadsheet these days? Take a 2012 Volt w/ leather, and Bose. Skip the chrome rims and Nav for now. Take a comparable 2012 Prius (i.e. leather, stereo upgrade, tele-whatever (whatever their onstar equivalent is), and other comparable features. Apply the tax credit. Good? Now assuming typical driving habits, cost them out year by year for gas purchase and electric cost. Amazing what happens in year five right? VOLT IS CHEAPER. Change the price of gas to $4 or $5 and that savings kicks in on year 4 or 3. So if after 3-5 years of ownership the Volt equals or is lower in cost than a Prius, why is the Volt 'priced out of market' and a loaded Prius is not?
Let's take it one step further. Assume you LEASED both cars. Well, in that case the Volt is cheaper day ONE, since the Volt's attractive lease deal puts it ahead of a comparable Prius lease (assuming similar mileage and down payment).
Do the numbers before you try blasting the numbers.
@rickman: Your point about long-term cost of ownership may be valid, but most peoples' cash flow doesn't allow them to make decisions which take five years to pay off. I need to pay my bills from month to month. So money which is available right now is worth much more to me than money which I might have five years from now. (Besides, if the car gets totalled in an accident, or some other unforseen event happens, the long-term savings which the spreadsheet predicts might never materialize).
You may have a point when it comes to leasing. But in any case, I'm not in the market for a fully-loaded Prius, either. I might consider a $19,000 Prius C.
I agree, if you can keep the Volt under 40 miles and only drive on the battery, the numbers are compelling. Concumers should be buying the Volt based on overall costs. The real problem for the Volt will happen when Toyota offers the plug-in Prius. Then the Prius will again win out.
Its hard for consumers to kick out 32-40k for sucha small car and on top of that, most consumers cannot do the math to figure out long term costs.
rickman, your analysis is good. On the other hand, you leave out one other consideration. New gasoline powered compact cars are much cheaper to purchase still, and get very good gas mileage. Their TCO, even with much higher gas prices, is what puts the Volt and Prius out of reach. Another interesting phenomemom in this market is the used car. Even a used car with modest gas mileage is cheaper to own. Driven by Toyota, all car companies have improved their vehicle quality so that these used cars are a reasonable alternative. As a result, used car prices are through the roof. Frankly, mileage figures for new cars are not much better that they were ten years ago. Do your analysis on a good used car with half the mileage of a new gasoline powered compact and you get better TCO.
It is interesting to note that the existence of different types of technology for transportation has spurred people to do these TCO analyses for their vehicles. This would not have been the case ten years ago.
naperlou Your point on used cars is true with EXCEPTIONS! Those being it would be VERY hard to convinve certain previous Toyota owners to take back certain cars they traded (RATHER than pass to other family membert) just so they could get rid of ONGOING problems. Probrems by the way mostly in high end models that have VERY HIGH repair costs to fix.
This may be a corporate approach dictated by Toyota to multi tier their store lot pricing but, in any case CURRENT quality is not what it once was as fleet miles grow. Also your comment IS 100% TRUE "all car companies have improved their vehicle quality" although I seriously doubt this came about from the reason you state! (An opinion NOT an argument.)
Actually, Beth, I think the automotive industry is taking lessons from the consumer electronics industry. When considering the price of the Volt (and Leaf and Prius) you have to look at the target market. These are early adopters. In consumer electronics you need to have a presence in the market to establish credibility. I think this is what the car companies are doing. The Volt and Prius are reasonably prectical since they use a gasoline engine to supplement the electric. These are all first generation products. They are certianly not the answer.
A good example from the consumer electronics industry is the flat panel TV. We just got a fairly large one for under $1K. It was also the latest technology. We paid well over twice that several years ago for two much smaller flat screen TV's. We got those smaller models becuase we did not watch much and did not want to shell out $4K for a larger one. At those high prices, the market was limited for the large models and projection type TVs were still around for the larger formats. They were not that good. The interesting thing to note is that we bought the TV to watch the occasional movie at home, and so the kids could use it with their game console. We don't have cable and do not watch broadcast TV. We would never have bought the early models because of the cost vs utility equation. Of course, if others had not been willing to pay the price, the technology would have been a lot slower to develop.
I think we are seeing the same type of thing in the automotive industry.
"the Volt is a car for those with an untraditional sense of luxury -- well-to-do people who are willing to spend the extra money to clean up the environment."
A slight correction is in order: I know of a lot of other Volt and LEAF owners for which using made-in-USA fuel is their main reason for purchasing an electric vehicle. When one realizes that 70% of our oil is imported, it's a great feeling to be using 100% made-in-USA fuel.
I'm a Volt owner since March, 2011. Before that, I estimate that I 'donated' over $2000 each to the Saudis and Hugo Chavez since 9/11/01. Since I bought my Volt, my 'donations' to anti-US regimes have declined by over 90%.
Thank you, Charles. One other reason for buying an electric might be the completely silent, vibration-free drivetrain. My neighbor with an E-series Mercedes noted how my Volt is quieter and smoother than his 'benz. I actually believe the Volt should have been branded as a Caddillac or even a Buick. People tend to pay the premium for performance and lack of Noise Vibration and Harshness, and the Volt excels in these areas.
And Rob, I agree: high prices will keep most Americans away from cars like the Volt and Leaf, UNLESS gas prices rise substantially. Then electric cars could actually be cheaper to own and operate than gasoline cars. The main reasons American cars fell behind in the 1970's was the jump in gas prices, and the fact that there were really no competitive, reliable U.S. small cars (i.e., Pinto, Vega and Gremlin). If GM can cut the price down below $30K, and gas prices go up, GM would have to run triple-shifts to keep up with Volt demand.
Actually, Jim, the Arab oil producers are very well aware of your logic. The Saudi oil folks noted last year that high oil prices have spurred oil alternatives. They said they could stop the development of alternatives if they could keep oil down to $80 per barrel. So far, they haven't been able to pull that off.
One reason that the Volt is not selling well is that really does not appeal to any type of family transportation. The large battery and fuel tank do help with the range of the vehicle, but the relatively small backseat limits the comfortable trip range. Pile on the easily googled fire issues on the vehicle, and most families would steer clear of the Volt
Actually, the Volt works well for my family. We have a 25 year-old daughter, and she and her 6-foot fiance regularly sit very comfortbably in the back seat of my Volt. And, actually, the 'trunk' is quite large since the Volt is a hatchback. In fact, when we need to move larger items, we use my Volt instead of my wife's Fusion or daughter's Camry.
You're right about the 'fire' non-issue. It's too bad that so much negative press was made out of such a non-issue, because it will probably cause people ot avoid the Volt.
Good point, Jim, but I would think the number of Americans willing to spend these high prices in order to buy American is very limited. There have been a number of periods when buying American cars would have helped our economy and kept Americans in jobs, yet consumers were still rushing to non-American cars.
jhankwitz: Thank you for the link! I was repeating the numbers I hear in the media which are usually in the range of "6 million BPD U.S. production vs. 20 million BPD usage". I see these numbers don't include bio-fuels and other liquid sources, which puts U.S. production of liquids to 9.7 Million BPD. Soooo, my 'donation' numbers from my first post are inflated - i.e. I only gave $1400 each (roughly) each to the Saudis and Chavez over the last ten years, not the $2000 that I thought I did.
And also a good point: Oil over $80/barrel will spur alternatives. It's my opinion that the Saudi's have lost control of the market because they don't have the spare capacity that they used to have.
Other interesting facts from your link:
Top Sources of Net Crude Oil and Petroleum Product Imports:
I agree that price is the problem. I'm always looking to save money but alternatives such as hybrids and electric will save me gas but not money. Usually my analysis tells me what I'll save in gas I'll spend on higher payments.
I think area utility prices have a lot to do in the decision as well. For the person who did the spreadsheet where VOLT pays off in 5 years I'm guessing you have a good electric rate. GM advertises $1.50 per day charge based on 12 cents per kwh. Here in NY, thanks to the corruption and graft, I pay 25 cents per kwh. Only another $1.50 per day, but it still makes a difference.
Diesel cars and domestic natural gas powered cars are the answer.
Wrong. The US is running out of cheap oil. Whats left is expensive to extract. Lots of oil in ND and Colorado but extraction costs are $60-80 a barrell. Politicians are not preventing extraction except on teh coast of California.
Extraction costs really don't matter that much. Middle East oil, which costs very little to extract, costs just as much. Sure, there is a greater profit, but that goes to national governments. These typically don't spend it very efficiently.
The oil extracted here would provide more profits here and royalties paid here. From a national economy point of view, this is useful.
The other thing to remember, though, is that gasoline powered vehicles are still cheaper to own than the alternative. There have been many articles in Design News and other publications discussing this. Even in Europe, where gas was at $4 per gallon ten years ago, when I lived there, the vast majority of vehicles are gasoline or diesel powered. The price of gasoline is significantly more there now.
Until the battery issue is solved, electric and hybrid vehicles will be more expensive to own. The interesting thing is that these are all smaller, or perhaps, mid-sized cars. At least in most of the US, this is a small segment of the market. We have also not really seen the end-of-life costs of these vehicles. What happens to the batteries when they are retired?
Sure middle east oil is cheap to extract. What does matter though is the cost to extract the last 5-10% of oil we are using. If it runs $100 a barral to extract the last 5-10% we are using and there is a demand for that last 5-10%, then the rest of the oil supply rises until we hit the highest bidder. So extraction costs do matter. Its supply and demand and as long as one group is able to pay, the price will rise until demand falls.
Don't forget the massive oil reserves in Alaska, off the east coast, and the Gulf of Mexico that are essentially off limits to us. Although, Cuba and China are having no issues drilling off of Florida. These are areas that don't cost as much to extract as the oil shales.
I concur - There are risks, as BP was so kind to illustrate for us, but the issue quickly becomes sensationalized and makes rational debate almost impossible. In that climate, policy makers find it easier to do nothing.
The gulf thing really gets me though; we could extract it more safely than our adversaries to the south, but by not drilling we have the same risk of spill without getting any oil in return.
Good point, Watashi. The BP problem could have been solved with decent oversight. Now, popular opinion is going against this form of drilling. With oversight and safe practices, a large portion of risk could be reduced.
re: "I'm a Volt owner since March, 2011. Before that, I estimate that I 'donated' over $2000 each to the Saudis and Hugo Chavez since 9/11/01. Since I bought my Volt, my 'donations' to anti-US regimes have declined by over 90%."
Taxpayer 'donations' to GM for each Volt are on the order of $250K
Even at $25K per Volt (you didn't really mean $25, did you) it's obscene that the general public has to foot the bill for a product that would not succeed on its own. It is certainly not succeeding even with subsidies, whether they be $25K per, $250K per, or somewhere in between.
Businesses don't work that way. Well, real businesses, not UAW welfare programs anyway.
It's all cheerleading to move investment dollars. The house (market) needs marks (indie investors, consumers, etc) to get their percentages. Average NYSE trading volume is way down - anything that is remotely novel is pumped like crazy. Trying to create positive buzz about products with fundamental flaws (technical or market) to prod investors into getting back into the market.
At the end of the day, we have a noble concept (a more efficient vehicle reducing oil dependence) being hamstrung by corporate / political / financial favors, that the taxpayer is stuck picking up the tab for. The bondholders who got the shaft are just another poke in the eye.
The Volt's problems run far deeper than cost, although that is perhaps the most visible shortcoming. It is representative of the intractable mess that business in this country has become. For those of us that design products without government largesse, that have to succeed on their own merit, it's rather offensive.
Gas consumption is way down - bad economy (no job - don't have to drive to work) bad credit (no shopping trips) no savings (no vacation trips) - if one is not driving much, the ROI on a high-priced Hybrid or all-electric vehicle stretches way out.
PghEE interesting comments that I would like to otherwise explore.
Firstthe Market is run by MARKETING types, remember this; accept the fact!
You, as an EE know that the ROI of TODAYS EVs isn't worth considering but, you might also like to know YOU can personally do something about this The EVs CAN win this race over the Petro industry if they JUST KEEP MOVING AHEAD..... ENGINEERS that understand the MAJOR SOURCE of polution IS FOSSIL fuels, LIKE YOURSELF and ALL OUR PEERS, need to take proactive steps to help make this happen.
HOW 1. Attend and participate in IEEE, SME, SPE, etc. events, ESPECIALLY those visitations to 8th and 10th graders to encourage them to take the harder courses enabeling them to get a technical education that WILL allow them to conquer the challanges now and in the future that face our planet.
HOW 2.REALIZE there IS other ways to get ENERGY other than batteies!
I'd do the opposite with school kids. I'd tell them to stay away from college and learn a trade. College is a huge waste of money IMO. The "shortage of engineers" is false if you ask me. Maybe "shortage of engineers who'll work for the pittance we want to pay" is a better way to phrase it. I have a masters degree, a license, and make 5th percentile pay. Please tell me where design news found these people that average 90 something thousand/yr and average a $9k per year bonus.
That said, the auto industry is not about innovation in my mind, it's about making money. For three years I made a good salary in the auto industry and it was miserable. I got denied my bonus and lost my 401k match among other things. I worked with a lot of talented people. Some worked on developing new technologies. Most of us worked on making the current product or the next generation product cheaper than the one it replaced. We moved backwards technologically. Changed things from aluminum to steel. From plated steel to unplated steel. If it doesn't rust through in 3 or 36 it's good to go. Another example involved throwing out 2 years of work on state of the art control software and using 1998 vintage software because it was the cheapest way to fix a hardware problem.
That kind of business thinking will be the end of the Volt. If the ROI isn't what they want they'll pull the plug [I know lousy pun] on it. They should stay the course with it for the sake of developing the product further as well as the public exposure. GM will axe it. Just like they did with the diesel for half tons and SUV's (Duramax LMK). It's not a good idea unless it's good for the bean counters.
nyeng YES you have a point BUT.... What trades exist today that are NOT computer based or driven? AND of those what pay would you exspect? The REAL problem is our whole system is screwed up.
The guy in the auto repair shop has a plug-in smart reader to READ out the problem. The parts man delivers (to the door) parts AND a pre-print "Parts Cost" sheet to "show" (legally falsify) to the customer his cost. Mr. repair man marks up everything in his computer and renders the customer the computerised "bill" (normally 2 to 3 times) the ESTIMATED cost. You either pay up or have your vehicle empounded until the mechanics lien is released. THESE ARE the people who MAKE/TAKE GOOD MONEY for BAD REASONS.
A good education is the best way to baet a street wise panhandler! Now I don't say everyone is like this, nor having a trade is not a valid option but, one must choose wisely. As to the car companies or any other business under our capitalist system they either MAKE money or get sold off. EP: BIG OIL
Hybrids and pure EVs are nothing but politicians and bureaucrats trying to direct commercial enterprise based on some misguided vision of their own mental prowness. The same goes for wind farms and solar cells. Enterprising entreprenuers start smelling the bloody money being waved around (our money) and lo and behold the wagons selling magic potions start lining up down main street. They will sell to the unknowing until everyone figures out that this stuff doesn't work, then the free money will disappear. Pure EVs are so impractical, they will always just be a novelty sold to those who are bad at math. Hybrids at least adress the problem of only being able to drive 30 miles, but at a cost that is illogical to defend. We are always being told that the USA is falling way behind at teaching math and science skills to our students. Perhaps this is being done intentionally by the political class so they can drive their stupid EV agenda without their underlings understanding what is being foisted upon them. It is said that Obama is a brilliant politition, which apparently just means he is a very good liar. The man is so dumb in any area that truly matters it is very scary. Lawyers are good at doing what, arguing about things? Why would we want so many of them in the government?
@PghEE -- No he meant $25.00 per Volt, per the article analysis. The Government loaned the money for the Volt's gas cap. That's all. Oh yeah, it was a loan, not a grant. Once paid back w/ interest, the Government pays nothing.
@Arden -- As confirmed by Kiplinger, the Volt comes within $1,000 of a Cruze after 5 years. Not 20 years. That's without adding leather or other options that increase the Cruze price to better match a comparable Volt.
The problem with electric or hybrid cars is the henn-and-egg problem. Volume in sales helps to drop prices, maturing battery technology helps to reduce prices and volume, and weight in those cars. So applying the standard quadrant method of the market. Only early adopters will purchase electric or hybrid cars today. Once prices and technology have matured you will have the early mayority jump onto the waggon.
Recent studies her ein Germany have shown that, of electricaöl energy is not produced by clean sources the CO2 balance for electrical cars is not as good as that of a modern combustion engine.
So have the early adopters and their experience with those cars help to improve technology at the manufacturers side.
After working in the battery industry and on EVs - the safety issue in EVs still should not be deemed a lower priority. I worked in a battery company whose batteries were the only ones which survived EV testing in Europe - unfortunately the company has now moved to China [due to politics].
When we refer to batteries in EVs, we are talking about batteries with a very high Energy density - basically we are packing lots of energy in a small space - and the energy density is increasing! The energy eventually has to go somewhere..
Asides from overheating - there should be all kinds of safety nets in which a person/technician does not get shocked [such as fast discharge of capacitance]!
I don't believe EVs address all these issues - from what I have seen, EVs are still immature - and basically they are research projects.
@Tony: It does seem like there are parallels between your industry and the EV industry, obviously on a much different scale. I think the overriding takeaway I got from your letter (and one I wholeheartedly agree with) is that any kind of major innovation or transformation is progressive and there needs to be patience and acknowledgement of even the smallest advances. So many times it seems like people are so ready to jump on the naysayer bandwagon and denegrade technology just because it isn't perfect--YET.
You're absolutely right and I believe that is what we are hearing from GM management. They are ready to shelve the Volt because it is not paying off fast enough. That is a typically American attitude. Go for the quick pay-off. Heck, we should be able to get Money-for-Nothing, right? American auto manufacturers are know for their short-sightedness (is that a word?). The Prius was hitting the market when gas prices were flying through the roof and Detroit was cranking out SUV after SUV. The Volt is GM's attempt to get back in the game but again they missed the boat... too expensive.
They had the chance to take over the technology and the desire of the consumer, but they went for the quick bucks. 40 grand?!?! Are you kidding me? I paid 27 grand for my used F150 11 years ago. 130,000 miles later it is now paid for and no matter how I do the numbers, trading it in for a Volt doesn't cut it. Even my wife's 2005 Beetle will be paid for in a couple of months and as much as I dislike that car, I can't see that working out in dollars and cents.
@Beth: You have to be careful pushing a product out before it is ready. Not only the reputation of your company is on the line, but the reputation of the technology itself.
GM perceived a market window for an EV back when they did the EV1. Its subsequent failure set them back over a decade before trying the electric thing again. Only now do we see anyone even attempting to bring an EV to market.
I think Toyota had the right idea with the Prius. They put out a car that was only marginally better than a conventional drive train, in certain circumstances, but it began to socialize the technology. Hybrids are still not that competitive with gasoline and diesel cars designed for efficiency (unless you do a lot of city driving). But they have become widely adopted as a status symbol for those who have the money and want to show they care about the environment.
The problem for GM is that Toyota owns that small market segment. It will be very hard to turn a profit with a little slice of that market unless it expands dramatically; and at the current price point, it will be almost impossible.
Watashi: I'll be curious to see where the Prius PHV comes in price-wise. If it comes in under $30K, then it will probably grab some of the Volt's market share. It only offers 13 miles of pure electric operation, but when people have to reach for their wallets at the dealership, that price difference means a lot.
I agree with you completely, Watashi, about how Toyota was the pioneer which successfully "socialize" hybrid technology. Indeed, I'd say right now in the average consumer's mind, hybrids aren't even something different, they're just cars. With electrics (EVs) that's not the case at all. (And never will be, until range anxiety is ameliorated, either by improved batteries or build-out of a charging infrastructure.)
The importance of technology "socialization" can be seen by analogy to the tablet sector. Microsoft, in 2002, brought out tablet laptops. Actually, the PC hardware vendors made them; MS did the software. They failed miserably, because of price and performance issues. But I think the main reason they didn't catch on is because Microsoft wasn't able to socialize them-- i.e., they weren't differentiated as far as what their advantage was vis-a-vis existing technology and consumers weren't given any reasons to buy them, neither tech nor any "cool" factor.
Then Steve Jobs came along and did for the tablet what Toyota has done with the hybrid.
This is my opinion but based on a manufacture in the US for the past 30 years, and innovating a product, product line, and creating an industry that did not exist. Sounds like a mouthful and a plan right? Very wrong. Sitting here today after three decades in my industry I could pretty much make this reality sound any way I like and none of you would know any better, but I would...
The EV is not new by no means in most any form, and it has been fighting the same fight for many decades, cost and distance, or in the R/C industry cost and run time. It was same problem for my industry for over 20 years until the better source of power was trickled into our grasps at an affordable price, LYPo's. Yep, the computer industry pretty much started it,then the cell phone industry made them a viable "little package", but hear me out MR. President, GM, and those involved, OVER-TIME!
I am an advocate that you CAN NOT Rush Progress no matter how much money you throw into the R&D pot. Progress is a work of time, and over time knowledge is gained and what once were problems are eventually solved and at a continous rate, hence the very meaning of the word.
I innovated R/C gas model boating in 1981, something that didn't exist, and though it was dabbled with a decade or so prior, there wasn't sufficient product and or the availablilty to sustain a viable product much less a market. Just like the Volt, there were a couple of attempts to manufacture a gas model boat similar in nature in the 1960's, but since the engine tech didn't exist, and there was only one to choose from, and that was pretty crude, and radio controlled systems were pretty new with loads of problems and extremely high price tags, the boats boasted a price tag of over $2000.00+ dollars in 1968. Think about what that money looked like compared to today, some 35 years ago.
Now add the fact that no one knew anything about this new and great way of model boating, and the current industry of the day was based on glow-fuel model aircraft engines converted, limited to a small fraction of modelers at best, and to those of whom were financially and mechanically able to be involved. Can you imagine how tough it would be to convince the markeplace to make this type of purchase?
This brings me to point. There is no doubt in my mind that electric EV's and even model boats as big as the one's we manufacture will more than likely do-away with the combustion engine over the next century or so. Yes, and in order for this to become reality we have to get the public on board, no pun intended.
There are so many similarities here that paralleled my business such as; Getting people to accept a new concept, out advertising those in the current industry that did everything possible to make my concept look bad, but most important, make the product available affordable! I can not stress the last point of importance enough.
Sure it costs more to innovate and manufacture on a lesser level, but the cost of time outweights the enevitable if the product as good as it may be fails because a market could not be established, again... GM and the rest know the formula for selling car models but this is different. An EV is not easy to sell on design or body style alone. The consumer has to feel that hey. it's worth trying something new, even though it differs from the norm, and if the product is affordable to where the customer feels safe with the investment, and then it performs as stated, (don't forget to mention the con's, can't have all pro's) only then will you see the EV market come to life and begin to progress into a viable industry.
The irony of it will be, when after those with the biggest balls and willingness to invest and even sell at a low profit, or even break-even level, and responsible for this new and growing market, those that strongly opposed the whole concept in the beginning will become competitiors. I know only to well, but that's their right, and that my friends in progress.
For my President, Mr. O and those involved, who tried so hard to finance the reality of usable solor cells at our expense. There may come a day my friend that society will have a chuckle when looking back at the primitive mortals of which we are today, as they are watching TV in their solar powered home. We can keep it to a chuckle rather than all out laughter if we don't provide more dumb history for them to read. Let's do things smart and right for a change and finance on a realistic level, with the right innovators at hand, allowing progress to continue and not under martial law, with time limits. You yourself should know first hand you can not force people to make change, no pun intended there either.
Simply put, if you want the Chevy Volt and those like it to sell, LOWER THE PRICE, and make me willing to take the chance as well as the hassles of a new innovation. By the way if you do do this, the results will be faster progression, leading to smaller and more powerful battery sources, speed controls, and motors, and becoming more affordable to launch my products and business into the EV marketplace, just like the cell phones put the model aircraft industry on the map with the fastest growing industry on it's way to replacing fuel burning engines.
But what do I know, I'm just a model boat builder.
Good luck, and I hope I don't have to wait another 20 years to write this letter again.
Tony, I concur. I think GM should take a page out of the Toyota handbook of how to launch a new product in a competitive market....witness the Lexus launch many years ago. At that time, the luxury market segment was owned by Mercedez & BMW for the most part. Toyota designed and developed a Lexus car/brand that equaled the German brands in quality and performance, then here is the brilliant part, they deliberatly priced it well UNDER their competitors for 5 years, even though they lost money on every car sold. The strategy was to woo their target market away from Mercedes & BMW by making it price attractive. Once people bought and drove the Lexus, the word got out that it indeed rivaled the German makes for quality, ride, comfort & performance. People converted in droves. After 5 years or so, their prices started creeping up to almost the same level, but by then the brand was established. The Toyota strategy, since verified, was a willingness to sell at a loss for 5 years in order to penetrate the market, and it worked. GM should do the same thing.
You are correct, at least with a loss the outcome would be progress gained, we loose money everywhere else it seems without gains, why not roll the dice on something with meat in i?
I got so caught up in the letter I forgot to mention how import it was changing the mindset of the customer. In the early days I couldn't even get hobby store dealers to purchase my concept, and I had a growing market around my area because the product worked and was I selling them locally, and you know Humans are like sheep, when one has one, then another, and so-on. I knew I had a good product and would base my reputation on it, and still couldn't get enough outside interest to feel my excitement.
I then started contacting dealers and offer the boats at almost my manufacturing cost, and crossing my fingers offered a money back guaranty. I can't tell you how scarry that was and how easily I could of ran the company into the ground if the product didn't live up to my hype. That was also a good reason to make sure that the quality was held to highest of standards. Unlike the auto industry who receives compensation for mistakes, small companies like mine just go under when the money runs out, but that's not the point here, and for another topic.
If I am correct in auto history...At the invent of the automobile, I think that the petrol engine was shunned upon in favor for the obvious at the time, the electric motor. Of course that proved to be not practical for many of the same reasons today, but it's what the public knew and related too.
Anyway we can beat this to death, and the most logical path for them to follow seems to be over-looked for the bottom line. It brings me to an old saying one of my mentors in business told me as a kid. " If you make something for the money, chances are you will fail. If you make something out of passion and better, the money will come". I wish he was alive so I could of thanked him for that advice.
In the last month I have driven hybrids from Lincoln, Hyundai, Lexus (the Ct200h) and just last night, the Volt. (I've rented a Prius, so drove that car a couple years ago)
We all have our sensibilities and internal yardsticks, our mental spreadsheets and benchmarks. Of all the hybrid's I've driven recently, I thought the Volt was the coolest. It feels like something.... different from the get-go. In looking and driving at the car, I am not beaten about the head by the funky edge of Japanese design and I am not coddled by normalcy nor lulled into NOT thinking about what really is happening under the sheet metal.
The Volt is quiet, with amazingly little wind noise. The GM NVH guys did a great job! It moves quicker than you expect, with that lunge of speed you get from gobs of low-speed torque. There is no downchange or kick-down from the transmission, it just goes!
Here in California, Chevy is offering an interesting lease deal. "Quad 0$" is how it's written; no down, no acquisition cost, blah, blah, blah...It means if you have credit they like, you can sign and drive and pay $369/mo to drive a Volt for 3 years or so. We've always paid cash for our cars in the last 30 years of married life, so if we do this it will be a first.
But that is what the Volt is like, at least for me. A first (or almost). I dreamed of an electric car back in the 70's, bought the motor (a 400 Amp aircraft generator) bought the plans for the controller (which had more 2N3055's than I thought possible) and bought two micro trucks (Conys) from my University's central plant, who had worn them out doing maintenance across the sprawling UC Irvine campus. For a variety of reasons, all those wonderful parts never came together. But now, nearly 35 years later, I can lease a very nice electric car with an integrated, on-board generator, heated seats and climate control that makes less noise than George Jetson's car! How cool is that?
We've talked a lot about the Cost, the Payback, the ROI, all the things that matter in our professional lives as engineers. I think about those things too, but I also think about how the car feels, how it looks, how it drives and how cool it is. I like the Volt. The money is reasonable and doable and not outrageous. In three years, Electric cars & hybrids will be better and the Volt's lease will be up. Just think what we can choose from then!
I think I am going to get one and have some fun NOW!
It's a great car, even without talking about the fact that it is a hybrid. Adding that to the mix, it's fantastic!
No, it's not going to be a break-even proposition. It's not going save us money unless you discount the lease cost as the price of admission and only look at the cost of electricity Vs. gasoline. In our case, my wife and I commute together 4 days a week. I drive her to her office and continue to mine for a 29 mile commute. I typically have 8 miles left, all from the overnight charge. I charge at work for 9 hours and then pick her up and we drive home down 101 in the HOV lane, again all-electric miles. We don't use any gas unless we do something on the week-end.
After 4 weeks, I still have a smile on my face every time I drive the car. It's exhilarating and makes the everyday commute something to enjoy again. Backing out of the driveway in the morning and then moving down our very quiet street in the dark is like driving a starship; It's really something!
Oddly, I don't like driving any of our ICE cars anymore, unless it has something to do with the unique nature of the vehicle-our big van for the hauling and towing capability, our '95 Saab convertible for the wind in the face experience. As a result, I can't imagine buying a new non-hybrid electric vehicle ever again!
Even if you are not in the market for a new car, go drive a Volt. The experience is well worth it!
Common sense started to say it but didn't get there before going into the political rant. (Much justified) The fact is that there is little justification for any EV when you consider that almot every manufacturer make a car that gets equal or better milage running straight gasoline. Sometimes much better if you don't drive in the hybrid around town nitch. If you are forced by the economy to drive more than 30 hiway miles to work a Cruse or a VW TDI or a Toyota Yaris etc... are simply better for the environment than almost any Hybrid or EV. Most will produce better MPG than the Hybrid equivelent on the highway.
HYBRIDS AND EVs ARE SOCIAL ENGINEERING PERIOD. As an engineer I am interested in the technology they make available, but I'm upset by the non-science used to boost them by the government rooters. EVs are not "zero pollution" they are NIMBY (not in my backyard) vechicles. Hybrids are at besst a partial solution, and can usually be equaled or bested by straight gas and diesel cars built for mileage. Lastly the batteries are a disposal HAZZARD. When lots of these things reach end of life we will have a major toxics problem.
Points well made on the Volt. Pricing is deffinitely the concern slowing the Volt going mainstream. For those that can afford the $40K price tag, why not consider the Tesla Model S? for another $10K you can get 160 miles instead of a 40 mile range. Plus, the Model S seats up to 7 instead of just 4. The price is still in the luxury class, but Tesla is doing a much better job of solving the range anxiety problem.
I believe the issue is NOT Volt versus Tesla, but Chevy versus Cadillac !
Volt is a nice car, and I do like driving it (but only test drives at Volt promo or a car owned by one of our customers) but I do NOT need it, and thus no matter what the price I am not in a market for it.
However if it was a Volt Cadillac, I doubt that anyone would care to discuss the "COST" - while you can buy a Chevy with any and almost all features that you can have on a Cadillac for far less; still thousands of people buy Cady every year.
Same goes for Lexus v Toyota; Infinity v. Nissan; Acura v. Honda or Lincoln v. Ford.
Simply making very expensive Chevy seems to only work if it is a Corvette but not when it is a Volt.
So the Failure of GM marketing is the "brand" positioning, that is unless they plan to have the entry price to Chevy be at "premium".
There are customers for BMW, Mercedes, and even Maybach - while none of them make any "financial" sense if compared solely on "Cost per Mile" to comparable vehicles of other brands that are made in greater volume.
Some people even buy FIAT 500 when for thousands less they could have had bigger, safer and more fuel efficiant car - so PRICE alone, if the car is unique really does not matter that much.
But the BRAND image sure seems to have big effect, just look at MINI versus any other small car that also can be had for thousands less.
MIROX your brand approach is interesting and valid. Taken a step further it becomes interesting. Supose Tesla a) does well and b) Caddy decides to release their EV to compete in that market. Lets also supose OTHER UNRESTRICTED RANGE eneregy systems hit the market alowing Tesla and Caddy to offer extreemly lower operating cost & ROI that became the game changer. Now that WOULD BE EXITING!
Re: Tesla doing a better job solving the range anxiety problem
I need to disagree. In the Tesla, you get 160 miles and then you simply are out of energy. In charged Volt you get about 40 miles from the battery but then it switches to generating electricity from gasoline, using a built in generator that runs at constant speed for efficiency, whcih GM calls the "range extender". The Volt can use the existing infrastructure (gas stations) and drive clear across the country before recharging, if necessary. THAT is what gets rid of range anxiety. Tesla's 160 mile range does not get rid of it. Try driving one from NYC to Boston (about 300 miles). At the 160 mile mark you are in the middle of nowhere, certainly no where to recharge. A Volt can make it all the way easily, using gasoline (at about 40mpg) most of the way.
Good point, Brentlim. The Tesla buy would also support a new automaker. I'd like to see Tesla become a real factor in the auto industry just to show the industry is not a closed shop. Nice to see that a new idea can still make its way into the market.
I have yet to see a succinct cost analysis on an electric vehicle or hybrid... or solar power system for the home or wind power or injecting power plant emmisions into the ground or gasahol.
I feel that the media have chosen not to cover these issues honestly. I am not against new technology but I feel that indirectly I am being required to pay for a lot of questionable "science". And it is disappointing and somewhat un-nerving that our "free press" conspire to remain silent on the facts.
When I was a young engineer I read a pamphlet on how a professional engineer should conduct him-/herself and they key point was that primary among an engineer's required qualities is honesty.
If you do the calculations, you'll see that the financial "break even" point for a LEAF vs. PRIUS (using the reasonable assumptions in the article) is over 170,000 miles. For a VOLT (in EV mode) vs. a PRIUS, it's over 350,000 miles! For a VOLT vs. the Corolla, it's over 300,000 miles.
Therefore, it is a fact that when people buy a VOLT or LEAF, they are paying a large premium to have the appearance of being green, and putting up with a lot of disadvantages. Even though electricity is indeed cheaper than gas, you'll probably never financially recover your investment.
This is why I think the trend in EV's and plug-in hybrids doesn't make much sense. Regular hybrids are great - they increase efficiency and only moderately add cost (check out the new Prius C). EV's (and plug-ins) do not actually increase net energy efficiency (when tracking back to the fuel at the power plant), and add a huge amount of cost. But that is a different discussion... With today's power grid they are, in my opinion, a tremendous waste of money and technology. The amount of misinformation out there (even from the EPA) surrounding EV's is stunning.
GM has got to be tearing their hair out. I'm not a fan of GM but this is getting annoying. This article refers to Volt 'fires'. The reality is that one, count 'em, 1 Volt caught fire much after a collision test as a result of improper storage. Two more were then subjected to still more agressive testing and 1 - count 'em - 1 actually caught fire while the other smoldered a bit. No Volt has caught fire in an actual vehicle collision. So depending on how you count it either 0% or 0.013% of all Volts have been involved in a vehicle fire. The stats for internal combustion passenger vehicles, which I invite the author to read, show that a much higher percentage of these vehicles catch fire as a result of accidents and still more spontaneously combust and - this is somewhat important - many people die as a result. Statistically, EVs are much safer than internal combustion vehivles both when involved in a collision and when parked.
I personally had a car catch fire while parked and witnessed another ignite seconds after a minor front-end collision.
You're preaching to the choir, GeorgeG. I actually agree with you, and have written about it over and over again. Please see below from an earlier article.
But if we're worried about the safety of electric cars, we shouldn't be. Consider this: Every day, most of us sit in vehicles that burn gasoline. The gas runs through fuel lines beneath us and around us to an engine, where it explodes repeatedly.
"If that was a gasoline car that was not properly constructed, and the gasoline burst into flames, it would have been a far worse accident, because of the big difference in energy," says Cairns of the University of California. "Yet, we accept the tank of gas, and the energy that it represents, and the type of fire that it represents, every day."
Yes, we accept the tank of gas because we trust the engineers to beat the risks. And the situation should be no different in the case of the Volt.
Good point Chuck. There are certain risks were get accustomed to -- like the high death rate associated with driving cars. It's not a death rate we would accept in airline lights. Likewise, the EV is new and any associated danger is new.
Rob: Consider this thought from the New York Auto Show of 1900.
"When the first gasoline-powered cars rolled on stage at the New York Auto Show of 1900, showgoers were said to be appalled. The sight of them prompted Albert Augustus Pope, a manufacturer of electric cars, to proclaim: 'Man will never sit on an explosion.'"
That's funny, Chuck. He's right, we do sit on explosions. I can imagine the gas engine seemed strange at first. Early autos used to terrify horses as well. This was a problem in the early days since autos shared the road with horses and buggies.
That's funny. The decades-long period before seatbelts was also deadly. I remember as a kid standing up on the front passanger seat. I remember my dad saying he didn't need a seatbelt because he had the steering wheel to protect him.
Yes, that logic was more than just false. Now it's hard to imagine being in a car without a seatbelt. Safety measures such as seatbelts, airbags, even braking systems have collectively driven down traffic fatalities significantly as compared to miles driven annually.
Good point, Rob. For years, this country's annual highway fatality count continously came in at 40,000. But in 2010, I noticed that it dropped to 32,000. So the fatality numbers are declining, while the number of cars on the road is increasing. The use of seatbelts probably has a lot to do with it. Other safety features, such as electronic stability control and airbags, are probably having an effect, too.
Yes, it's good to see the fatalities go down, Chuck. From all the stories on auto safety you've covered recently, it looks like fatalities will continue on a downward trajectory. This is one area where government intervention seems to have worked.
I think it's a kind habit to denegrate government regulation. Without government regulation in auto safety, annual traffic fatalities would probably be 60,000 to 70,000 per year -- which is simply taking the annual fatalities of the pre-seatbelt rate and adjusting for a larger population and greater miles per year.
Is anyone aware of any "Dirt to Dirt" studies of the actual impact of hybrid vehicles?
By that, I mean the true total cost, both monetarily and environmentally of engineering, building, selling, purchasing, operating, maintaining, and recycling/destroying/landfilling the final remains when it's no longer feasible to keep a hybrid running?
Why do I suspect that the total bill will be far higher for something like the Volt, vs. a gasoline powered version of the same thing - such as a Cruze? (the standard platform the Volt is built on)
I think that the whole hybid 'solution' is merely more marketing hype. It in no way improves our 'footprint' on the planet.
And since that seems to be the only rationelle for building the things in the first place, I think that common sense should prevail when contemplating the purchase of one of these engineering/marketing exercises.
The end may not yet be near, but recent statements by two of the world’s biggest automakers point to the fact that the industry has begun to plan for a dramatic decline in vehicles that are powered solely by internal combustion engines.
At the recent Autodesk Accelerate event in Boston, the director of product development for a niche hypercar firm replied "no, no, no" to three answers he got for what makes a car go faster. What was the right response?
Focus on Fundamentals consists of 45-minute on-line classes that cover a host of technologies. You learn without leaving the comfort of your desk. All classes are taught by subject-matter experts and all are archived. So if you can't attend live, attend at your convenience.