Personal Log  #453

March 15, 2010  -  March 26, 2010

Last Updated: Sun. 10/24/2010

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Fascinating.  As an outspoken Prius owner, the outspoken Volt enthusiasts truly believe you only have interest in Prius.  No matter how much you point out the repeat of decisions match to Two-Mode, they just don't hear.  Ironically, that's exactly the same way Two-Mode enthusiasts responded back when those decisions were made the first time.  They simply dismiss what you say.  It boils down to basic economics.  You won't be able to sell high volume of a new product if it is priced significantly above the current offerings.  We've seen that in many markets, especially automotive.  No matter how great the technology is, the mainstream simply cannot afford it.  And with so much financial risk having proven to be tragic lately, why would anyone want to risk falling into a trap like that again?  As outspoken enthusiasts, they have an opportunity to influence change... rather than just accept choices that don't actually fit consumer priorities.  Sound familiar?  When that line between need verses want becomes blurred, it's a sign that objectives won't actually be met.


Lowering Expectations.  What if they change the plan prior to rollout?  Does lowering expectations before that point count as over promising?  For years, GM has been saying the second year production capacity of Volt would be "up to 60,000".  Now in an article today, the volume potential has changed to 50,000.  Why?  What happened?  We already know that first year production plans have been changed from the 10,000 they've been saying all along to "8,000 to 10,000".  Are they later going to spin this as a 625 percent increase by saying demand grew from 8,000 to 50,000?  Remember the disconnect between production & profit and how statistics can easily be misinterpreted when not associated with actual quantity.  Needless to say, this Volt saga is very much an ever-changing story just like it was for Two-Mode.  You never know what they'll say next.


Sales Rise.  There's a variety of reasons for GM recovery.  As supporters begin to celebrate, I inject a dose of reality.  Short-Term thinking is what got them into trouble in the first place.  Falling into that trap again is way too easy.  Of course, rather than being called a devil's advocate for attempting to keep focus on the true goal of financial stability, they'll likely label me as a troll for not letting them live in the moment.  Whatever.  Late last Summer, their reception was hostile.  Improving upon that should be easy.  After all, comments about Two-Mode sales aren't challenged anymore.  Anywho, here's what I posted:  Ready to discuss the future?  It's great that traditional offerings are now providing a solid financial basis to build upon.  Next is how to deal with the replacement competition.  Priority is clearly shifting over toward clean & efficient technologies, away from size & power.  What should the planned sales/profit be for that?


Getting The Story Wrong.  That's an interesting twist on the usual spin.  Someone got rather angry about the way Two-Mode was being portrayed.  But the numbers speak for themselves.  16,579 sold between Jan 2008 and Feb 2010.  It's not profitable to have sales that low for that long, especially when each included a $2,200 tax credit.  That's not good business no matter what you call it.  Two-Mode saga is an ever-changing story.  It was meant to be the single-mode (two-speed) hybrid efficiency killer offering rapid integration and wide scalability at a competitive price.  All of that feel short; meanwhile, the competition is expanding the market.  GM will have nothing to compete with.  Supporters pretend there's lots of time available still and a major drop in battery cost is coming very soon.  Wasn't it that type of approach that contributed heavily to the bankruptcy.  Remember... too little, too slowly.


Journalist Research.  Reading about this sure did feel good, it was quite an extreme from the usual hype we get from reporters... who sadly, quickly write articles with little to no research... they just report whatever draws interest.  With a true journalist, they do their homework.  In this case, resources were plentiful too.  25 staffers were assigned to review the NHTSA database for 2006 to 2010 models through September of last year (over 52,000 records).  Turns out that of those, 30 percent of the original complaints were miscategorized and 26 percent were duplicates.  There were also hundreds that weren't complaints at all, just suggestions & comments.  None of the hysteria articles ever mentioned any of that.  It was just an exploited opportunity for reporters... and sadly, lawyers too.  Imagine all the legal expenses which would reveal what, a manufacturing defect?  How perfect (current rate is 500 per million here and 15 per million in Japan) should a component yield be?  What should be done when one is found?  Does raising attention to the level of panic actually accomplish anything?


Double Sightings.  It must sound like I'm being incredibly harsh on the efforts of Volt.  But after 10 years of hybrid market awareness, it's hard not to be concerned.  Running weekend errands today, I saw not 1 but 2 Prius at just about every stoplight I got stuck at.  I spotted quite a few while driving too.  The thought of Toyota & Ford being positioned well to deliver large volumes of both high-efficiency hybrids and plug-in hybrids while GM struggles with their one-size-fits-all approach isn't comforting.  Our economy is tied to them being successful too.  Our dependency on oil and the environment is as well.  Failing to be competitive hurts everyone.  The consumers Volt targets are a niche, not middle-market or apartment dwellers.  Diversifying to offer a choice would help reduce risk.  Unfortunately, all those who could make that happen have resigned.  Why?  Meanwhile, the number of Prius we all see will continue to grow.  How long will it be before I can report triple sightings?  Of course, being in a Prius myself, the other 2 at the same intersection brings the count to 3 already.  So, I guess it depends on your perspective!


Credit Dependency.  Oil may be getting lots of attention, but the other dependency isn't... the tax credit.  Gambling that the cost of Li-Ion batteries will drop 75 percent between introduction and the time credit expires isn't wise.  The "if we build it" scenario hasn't been successful enough in the past to justify the risk being taken.  Yet, that's exactly what we are seeing with Volt.  Remember how the cost gamble didn't pay off for Two-Mode?  Volume is the key.  But even if that miracle cost drop actually occur that fast, all it would do is compensate for the loss of the $7,500 credit.  The price of a base model at around $32,500 will still make it a heck of a challenge to sell in high-volume.  No matter how great the technology is, consumers only have so much available to spend on a vehicle.  Imagine if the price of gas skyrockets.  That would make justification of the purchase easier... until you realize how much that would drive up the cost of living.  Remember what happened when gas shot up to $4 per gallon?  Lack of diversification has been and continues to be the concern.  Requiring a plug and only offering a single capacity is quite a risk, especially in a market struggling to redefine production & profit.  What happens if cost doesn't drop fast enough?


Runaway Prius Claims.  Over this past week, we've heard from Toyota and NHTSA about their findings.  Nothing surfaced from the first claim to support something in the vehicle actually failed.  There's simply no evidence.  Not finding anything certainly makes the suspicion of it being a hoax much more likely, especially considering the background of the driver.  With the second claim, it was a very different situation... but it also raised doubt.  A worker driving her employer's Prius on a private road down a hill onto a country road stirs questions.  How often, if ever, had see driven that Prius?  How busy was traffic?  Did the lack of street lights have any influence?  Was see distracted by reason she had been sent out to run an errand?  What would be the consequences of having destroyed her employer's vehicle?  Well, it turns out the investigation shows that the driver never braked at all, proving her claim was false.  It was either driver error or she lied.  Of course, with these claims having come out of no where and none the previous 9.5 years Prius has been on the road here in itself causes suspicion.  Blaming the vehicle or just wanting attention is far too easy when an automaker is being dealing with recalls exploited to the point of hysteria.


Power Mode.  Speaking of modes, new information came out yesterday to disappoint the Volt purists even more.  Their "gas free" claim was never realistic, knowing that gas would be consumed from time to time for the sake of preventing it from getting too old and for engine up keep.  A brief mention last year on a video got them concerned.  They heard a comment about the engine being used as an electric power assist during hill climbing.  That would be an unacceptable use of gas, as far as they're concerned.  So, they simply dismissed it.  Unfortunately for them, the recent test-drive opportunities revealed a little insight about the "sport" button.  Pressing it requests more power.  Having a mode that causes the engine to contribute power prior to battery-pack depletion raises questions from people like me and concern for those who want the engine to only be thought of as an emergency backup.  Why would you want this ability from a vehicle marketed as an electric?  Those purists absolutely insist Volt is not a hybrid.


Driving Modes.  It's nice getting back to those basic questions again.  This morning started out with an interesting one: "Which mode is most similar to a Prius II which has no selection of modes?"  NORMAL is pretty much what resembles the Iconic model.  ECO is very much like the Classic model was all the time.  Dropping the pedal to the floor and letting the computer decide the best way to achieve maximum acceleration became standard practice as a result.  I find myself doing that quite often when needed to accelerate quickly while already in motion.  POWER is what I take advantage of when pulling out into busy traffic from a dead stop.  It's nice having that extra punch from by informing the system you'd like to consume electricity at a greater rate than usual.  Of course, let's not forget that the Classic model only offered a 33 kW electric motor and the Iconic a 50 kW.  The 60 kW in the 2010 combined with the highest voltage provides greater efficiency opportunity regardless of mode.


Realities of Business.  They will come crashing down.  It's just a matter of time.  The pointlessness of posting anything other than cheerleading content on the daily blogging website for Volt has become painfully obvious.  But with all that hype now taking place, why not still attempt to insert a dose of reality?  I tried...  The need for profitable & competitive sales will require tough decisions.  Even with the tax-credit, some have admitted the price is still too high.  And once that's gone, then what?  Heck, we've already witnessed the abandonment of the "no plug, no sale" motto after 2 years of devoted use.  How will Volt break out beyond niche volume?  How will the technology be expanded?  Whenever tough questions get asked, rather than a constructive debate, the post simply gets a negative vote.  How will high-volume sales be achieved?


Driver Error.  Tired of the onslaught of runaway Prius stories yet?  The media thrives on stuff like this, especially if it becomes an on-going controversy.  Fortunately, it isn't.  The easy excuse a hardware failure provides to conceal human error is just too tempting to resist.  Nothing is surfacing as reason to be concerned though.  Hype is fading now that a model-wide design flaw isn't turning up.  At the very best (for the media), a failure in an individual vehicle is the only remaining hope.  And since that has happened for decades, though rare, it isn't anything to stir much consumer attention with.  They've lost their exciting new topic to fill webpages & printpages with.  Driver error is common.  That's why they call them "accidents".  We make mistakes.  We panic.  We attempt to conceal & mislead.  There is no quality-control cover up.  People aren't driving death traps.  It's just an industry dealing with extreme change in an extreme way.


Grille Unblocked.  For a brief moment, I saw 61 F degrees appear on the outside temperature gauge.  Spring arrived early!  Most of the commute home was 59.  The coolant reading on the ScanGauge climbed above the usual 191.  It stayed flat at 195.  That's still within the normal operating range, but enough to get me to experiment.  Every other exit, I got off the highway and removed a length of foam blocking a slot in the grille.  Each time, the temperature remained at 195.  That was impressive.  My Prius was happy with the warmth.  Even with the entire Winter covering removed, I continued to see the 195 while cruising on the highway at 65 MPH.  When I slowed down to 55 MPH, it dropped only a little.  I had to remind myself that this generation was designed to retain & maintain heat.  Witnessing the behavior firsthand under a wide range of conditions is quite impressive.  The 2010 design is proving to be extremely well thought out.


No ER, No Sale.  Remember how the staunch Volt enthusiasts would sign each of their posts with the "No Plug, No Sale" motto?  It got to the point where they ended up just using the NPNS abbreviation.  That was so common, everyone readily understood what it meant.  For 2 years, they held firm.  They weren't too concerned about Prius either.  That's because Prius was so well branded as a hybrid already, even later when it offers a plug, calling Volt an electric instead was easy.  Then came Leaf.  That's becoming a big threat.  Nissan intends to provide more and at a lower price.  Focusing on the plug alone no longer makes sense.  They are now back to it being a hybrid, but rather than using the proper SERIES term, they are using "ER".  Extended Range is a term created by Volt marketing.  Some see it as a compromise.  This switch motto adds to that.  What else do you think will change as sales of vehicles offering a plug progress.


Tax Deduction.  Remember how the previous administration announced hybrid tax incentives just prior to their re-election but withheld detail until afterward?  We saw right through that greenwashing.  Sure enough, it was indeed a let down... but too late, they got votes from the vague.  Those details we got afterward showed it was just a token effort only providing a small number of tax credits.  Actions like that irritated for the next 4 years.  They'd talk big but actually did very little.  Sadly, another aspect of that deception was to end the deduction after the credit expired rather than just reverting back to it.  So when I was doing my taxes this year, I wasn't eligible for anything from a hybrid purchase.  That deduction was long gone, vanished years earlier.  However, as a temporary economic stimulus from the current administration, new purchases between February 17 and December 31 of last year for any type of vehicle (including non-hybrids) qualify for a deduction.  That means I get some money back from my 2010 Prius purchase anyway.  Of course, now that the automotive market is beginning to recover, that deduction will vanish too.  Fortunately, there is still some incentive money available... 4 times as many people will have the opportunity to get it too.  It's the credit for plug-in vehicles.  But when that's gone, then what?  I prefer deductions since it offers a modest incentive, a small fraction of what credits provide.  It other words, there's a huge difference between roughly $500 and $7,500.


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