Prius Personal Log #912
January 4, 2019 - January 7, 2019
Last Updated: Sun. 2/24/2019
page #911 page #913 BOOK INDEX
Apologists. We didn't often get discussion on the Volt blog about Volt. That feel apart years ago. The final Friday last October was different though. A discussion thread was started about GM taking a stand related to upcoming loss of tax-credits. It was what many of us had been waiting for. This was the beginning of the inevitable fallout. There was indeed a lot of apology posts as a result, enthusiasts making excuses to justify the fate of Volt. It's another way of stating they were in full "damage control" mode. Belief was that it would become a battle, building up as year-end approached. Refusal to accept the reality that GM hadn't diversified, that they had rested on their laurels, was too difficult to accept. Hypocritical callouts was something they wanted to avoid at all costs. So, the battle fizzled. Posts ended a few days later from all but one apologist working hard to preserve some pride. That continued for another 2 weeks without any progress. I let him exhaust himself trying to find ways to excuse GM's lack of progress. His own "laggard" insults applied more and more to his own position. It was quite intriguing to witness. We all knew it was over. To our surprise though, it wasn't a soft fade into history. A week after he finally gave up and all posts on that blog ended, there came the announcement of closures & layoffs. Suddenly, there was a declaration of defeat. Exactly 1 month after the big apology thread, a true end had come. It was over. Commitment they had all long hoped for never happened. I called them out on their short-sightedness summarizing with: "MSRP of $36,620 for a compact wagon selling at a rate of 1400 per month, despite a $7,500 tax-credit, is not high-volume product for sustained profitable sales." It was followed by a long series of attacks denying I had ever called out anything constructive. This is why I documented that history as it was unfolding. I knew a day of reckoning would come and they feared it. Every post was quickly negative-voted to hide the contents. It was fascinating to watch. There was no more apologizing at that point. They were angry. I made sure they understand how their group-think allows the website to become a source of fake news. An attempt to misquote me by attaching someone else's words wasn't even too low for them to try. I saw it all and reminded them how their personal attacks failed miserably. Posts turned to a state of panic. That's when you know they have finally recognized the end had come. Phew! Rewriting history is what follows... the last resort for an apologist... admitting defeat but spinning it to be ok... like that was planned all along. Ugh. Rereading that long thread today certainly was interesting. It comes down to the reality that GM didn't target its own customers with Volt. There was never a sincere effort to change the status quo. Sales of SUVs and Pickups would continue as usual with Volt providing a "halo effect" for the automaker. It ended with the the needs of business far outweighing technical praise. As I said from the very beginning, great engineering is not enough.
Investing. The frequency of smug posting is on the rise: "The best? That's a laugh. They stopped innovating a long time ago, and it's catching up with them." We're getting attack after attack on Prius Prime. That's a very good sign. No attention means they don't feel there's any kind of competitive threat. Getting sense attitude on a regular basis is confirmation of worry. I watch for downplay. Comments starting with stuff like this are key: "No serious offering..." It's simple to understand why too. Simply look for substance. If there isn't any detail to actually back up the claim, it's just rhetoric being stirred to undermine progress. In this case, they see Toyota advancing forward. Most people don't recognize how though. That's the problem with most consumers. They simply purchase a mature product. How it got to that stage is something they'll never bother to find out. It's not a priority. That naive is what antagonists hope to exploit. I mess up those plans by provided information. This particular nugget of detail was quite pleasing to share: Toyota is investing 1.5 trillion yen ($13.9 billion) in its battery business. So what if the hare is ahead early in the race? We're still very much in the early-adopter stage.
Old Enemies. They have returned. Seeing Prime go from barely a mention most days to drawing attention routinely has stirred some emotion from long ago. They don't like Prius or Toyota. That sentiment is quite easy to see too. From pushing a narrative to outright lies, they are spreading the greenwash quite a bit now. The quote I chose to reply to, within the long string of obvious hate posts, was one comparing Tesla to Toyota. There's no way to constructively do that. They have completely different business models and time lines. It makes no sense putting them side-by-side for analysis. With so little in common, that should be obvious. But many of these names now stirring trouble were antagonists of the past. So, being constructive was not their goal. It was to undermine in any way they could. I kept my response to that brief: $44,000 for the base price of Model 3 overwhelmingly confirmed it appealed to early-adopters taking advantage of the remaining $7,500 tax-credit. Comparing that low-hanging-fruit to ordinary consumers is an apple/orange situation, telling us virtually nothing about the upcoming market when more choices are available and the subsidies are used up.
Demise. What more can be added to this: "The demise of the Volt shows the lack of leadership at GM." Turns out, there's quite a bit: Who knew the "over promise, under deliver" would become even worse. GM has turned into an "all bark, no bite" automaker. They just sat on the Volt-1 approach, delivering a Volt-2 which appealed even more to enthusiasts. GM leadership simply wasn't interested in leading mainstream change. Enjoying praise from conquest sales become the downfall, a dangerous trap to fall into when profitability is at stake. As we can now plainly see, Toyota was well aware of this problem... and even nailed the timing. Producing just 60,000 Prius PHV/Prime to prepare for higher volume rollout later while refining hybrid design in the meantime (most notably, the next-gen RAV4 hybrid) is looking to be a well played business move. MSRP of their plug-in hybrid system is low enough to compete directly with traditional vehicles. Ironically, the 2-year anniversary of Prime ownership for me will be on the very day GM's tax-credit phaseout becomes a cold-hard reality... April 1. The heavy dependence on that $7,500 subsidy will be halved, making those challenging sales so difficult Volt won't come up as a recommendation anymore. Toyota delivered a well-balance offering, one that seems to have too short of a range until you actually drive it for awhile. You can enjoy commutes & errands in EV and get remarkable MPG following depletion. It has been quite interesting to hear comments from early-adopters who really didn't understand the larger market or what it really takes to change the status quo. 2019 is definitely going to be a year to remember.
2019 Perspective. Asking this question came about
from an article titled that: "Does Toyota See the Future?"
It was published as a 2018 summary. Knowing most people don't have
much foresight, I wanted to make sure to
capitalize on the opportunity.
What could I convey that would break them of their hold of last year's
perspective. This year will be very, very different. Seeing that
right away may be a challenge though. We'll find out, hopefully with
some feedback from this:
This biggest problem with that question is most people see it from the perspective of 2018. Recognition of how different the market will be in 2019 is key.
Tesla scrambled to get ahead of tax-credit phaseout, building production capacity to dramatically reduce impact. With investor capital and an unusually large early-adopter audience, their effort seems to have established opportunity for sustainability. That's great, but doesn't really apply to anything the legacy automakers must do.
GM is finding out the hard way what that actually means. Even though it should have been obvious that dealers were GM's true customer (know your audience), that fact was clearly not understood. GM's message of conquest conveyed a feeling of disinterest to change the status quo. Dealers could continue to focus on the push of high-profit guzzlers.
What did that mean for Toyota? It meant a mess to deal with. Legacy automaker push to abandon cars in favor of SUVs and Trucks meant an especially hard push from Toyota to get their dealers to embrace change... which sent a message of "no interest" toward plugging in. Toyota's push to deliver an extremely efficient Camry hybrid and RAV4 hybrid meant delay for Prius Prime promotion.
That left Prius hybrid in a very awkward position. The decision to give it a standout look didn't help in a market with rapidly declining gas prices. Fortunately, timing of mid-cycle updates provided an opportunity to change that look and introduce AWD. Transforming Prius to deal with market change is confirmation of Toyota seeing and responding. Holding off on full rollout of Prime further confirms recognition of the need to adapt.
Long story short, the answer is "yes".
December Sales. The year-end rush to take advantage of tax-credits in the current filing-year was favorable to Honda. Clarity took the top spot for December, though only by 11 more sales than Prime. That provided discussion opportunity online. I asked: What is the availability of Clarity? Supply of Prime is at just 800 models for the entire country and limited to specific markets. Toyota has been burning down inventory and holding out rollout to many of the central states. Waiting for the inevitable Volt fallout GM had to deal with and the unique Tesla situation (loss of tax-credits combined with virtually no competition) was good reason to lay low in the meantime. It also raises speculation of possible mid-cycle updates to increase appeal of the current approach. That could be recognition of Honda's market potential. Clarity is a compelling balance of what the market may embrace... which is good news for Toyota. Seeing a RAV4 plug-in hybrid would help endorse large scale abandonment of traditional vehicles. We only need to prove a few very recognizable choices sell well without tax-credits... which means there's still a few years wait. Honda's current success is very encouraging for the entire market. There is strong potential to build upon.
Global Distribution. The smug coming from certain EV owners feeling "vastly superior" is annoying to have to deal with. They mock plug-in hybrids and have no interest in seeing the big picture. Their focus on the EV market is detrimental. Whether they recognize that or simply don't care remains a mystery. I just keep providing information regardless: Toyota focused on their global distribution, sending a small number of supply to each of their markets. The first year there were 51,000 available in total. That's quite good for a production including new tech, specifically the carbon-fiber hatch and the aero-glass rear. Last year was likely around 60,000 available. This is how you establish a foothold, working out details of how to approach mass distribution by testing out each of the customer bases ahead of time. Again, it made no sense whatsoever rushing to our particular market knowing the GM fallout could be rather intense. We all saw how GM wasted tax-credits on Volt for conquest sales. They should have been focused on changing their own status quo instead, so they would be able have momentum built to take advantage of the phaseout period, much like Tesla did. Toyota is clearly using their tax-credit allocation carefully, with the hope of doing the same thing. This is why Prime inventory was low in many places and non-existent in others. Being able to grow sales to a sustainable & profitable level takes careful planning. Toyota now has a market to tap that won't constantly face competition with Volt. In fact, the wait with Prime has provided a wide-open field to play in.
Did Wrong. An article drawing attention to the
situation GM put itself in stirred this: "No one in this thread stated
that." It came from a frequent poster on the big Prius forum who
refuses to look at the bigger picture, a problem common with discussions
online. I was annoyed, but it did provide a nice chance to provide
Don't turn a blind-eye to the hundreds of times someone else has said that somewhere else. You know all too well the "Tesla lowered the prices of their cars to ease the pain of the phaseout, so who says GM won't do the same thing." was an expectation scores of die-hard enthusiasts claimed on a regular basis.
We had to deal with never-ending attacks on Prius PHV & Prime from allegations that Volt was already making a large enough profit to absorb the loss of the tax-credit without interruption. Those "in this thread" knew it was a red herring, since the goal was to grow sales significantly, not just to maintain the niche level. So, even with the discount, it wouldn't be enough. Regardless, that was stated.
Now that we are in a hindsight situation, it is clear the GM disaster called Volt wasted opportunity... a point I made hundreds of times as a counter-measure. Conquest sales did nothing to achieve change within GM's own customer base. As a result, there is no successor establish... or even announced... for their dealers to embrace. Showroom shoppers are flocking to the Trax, Blazer, and Equinox offerings instead... all without a plug or even a hybrid option.
As for GM's choice to squander what they learned from Volt-1 to make an even less appealing-to-mainstream Volt-2, it explains the abrupt shift to Bolt instead. Competing with Toyota was a big mistake. Profit was totally unrealistic. Seeing initial sales disappointment of Bolt should have made the need to promote their solution change for "range anxiety" by a plug-in hybrid to now instead an electric-only obvious. They didn't bother competing with either Nissan or Tesla though. That opportunity was wasted too.
This is why the "Who is the market for Volt?" question got asked so often. GM started with a frustration to beat Toyota, but could not deliver something affordable. Switching targets didn't make any difference. Affordability would be key regardless of who. A compelling reason to draw interest from guzzlers to plugs must be an appealing stick-price... as the tax-credit loss clearly confirmed.
Whether or not you want to accept that big-picture analysis doesn't change the outcome. Exactly as this thread topic states, GM "did wrong" with their approach. The question now is how Toyota will handle the spotlight. They carefully preserved tax-credits, a move often criticized prior to Volt's demise. It already sheds new light on the market opportunity Toyota patiently waited for.
Patience. Not having any is what most problems emerge from. Wanting quick gratification and only simple steps to achieve goals is what we have grown to expect... here, anyway. Our mindset in the United States is quite different from that in Japan, where they have a culture promoting patience. That translates to resting on laurels here and gets you the "laggard" label. There's little merit to support the claim, but the online community of early-adopters don't care. They don't see the "EV market" as a first step, one that is mostly low-hanging-fruit. The whole idea that $7,500 of tax-credit money having a major influence in demand would get shunned. For years, I had to endure the claim that GM would lower MSRP in sync with subsidy phaseout. Somehow, GM was already making so much profit, it wouldn't matter. Really? Even with the $7,500 discount in the tax-filing return format, sales were still well below what is necessary for a vehicle intended for the masses to be sustainable. These blog entries document their terrible expectations based on greed & pride. It's really sad. But at least not all the legacy automakers share that need for a quick & easy return, as I stated: No sense of patience, eh? Toyota has been focusing on global distribution, refining production along the way. Rushing to sell more in the United States would have been pointless. It's very difficult to argue that it wasn't sensible waiting until dust had settled from the inevitable GM fallout. In the meantime, real-world data from owners is being shared. In my case, I’m averaging 125 MPG despite several 80 mph trips from Minnesota through South Dakota to Wyoming and back. My entire commute is EV, so the spin about range being bad is a load of greenwash.
Balance. A few old foes are still posting, but the nature of what gets put in their message is changing: "If sales was the criterion for pulling the plug on the Volt as the author asserts, then the Corvette would have to go before the Volt. For all of 2018 GM sold 9680 Corvettes, but 18,306 Volts..." That is obviously a damage control effort, but at least it is somewhat constructive. In the past, I couldn't even get those enthusiasts to discuss GM's own fleet. They always made it into a pissing match about Toyota. That childish rhetoric turn greenwash became a very big problem. They put up such a massive offense, there wasn't any defense to speak of. That puts Toyota in a position to score a lot of points when they aren't paying close enough attention. We're seen that play out now too. For now though, I'm happy to actually get a little somewhat constructive discussion about our biggest legacy automaker here continuing to make mistake after mistake about serving the future. It's really hard to tell if the executives don't understand or just don't care. My reply was: Sales are a criterion. Balance is the overall measure. Corvette has a carefully planned supply/demand balance and is priced accordingly. Just the right amount of people are willing to pay a high-premium for a low-volume vehicle. Dealers are willing to stock as inventory accordingly. That's what specialty offerings are all about. Volt was promoted from reveal back in 2007 as a mainstream vehicle. That meant a much lower price with a much lower profit. But since it would be sold in high-volume (60,000 minimum annual), that would be acceptable for dealers. Volt failed to meet its supply/demand balance.