Personal Log  #498

January 16, 2011  -  January 25, 2011

Last Updated: Weds. 1/26/2011

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Reality.  The downplay of Volt is well underway now.  This was a great example: "Before something becomes mainstream, it will be a niche."  Remember how it was supposed to take the industry by storm?  It's really unfortunate events of the past weren't taken seriously.  Some of the fallout could possibly have been prevented.  I replied with this:  Assuming all low-volume products will appeal to the mainstream over time is quite a leap.  Typically what happens is the product is optimized before going high-volume, dialing back features the business learned weren't appealing to middle-market... and dealing with shortcomings.  Volt-2 is going to disenchant many enthusiasts.  Dropping the price by $10,000 while also improving both engine efficiency & emissions is going to change characteristics quite a bit.  The angry responses to asking about goals is a clear indication of that.  The resistance to sharing detail about real-world data is too.  There's a painful transition coming.  Look at the level of emotion this topic stirred.  It would be naive to believe difficult choices aren't on the way.


Whatever.  Today's intense fallout allowed for an opportunity to sum up the situation.  Enthusiasts place blame on anyone looking forward, rather than just celebrating the moment.  I preferred the big picture:  Ironically, the problem is from within.  Each of the outspoken supporters for Volt have a different set of goals, but are too preoccupied with the outsiders to notice.  The same type of conflict happened with Two-Mode.  Awareness occurred during rollout.  It wasn't pretty.  The variety of responses to recent topics confirm it.  There is no concise purpose being conveyed.  Those varying priorities send mixed messages to consumers.  The who & what becomes a confusing mess.  Measuring success, or even progress, isn't possible.  Looks like there is no interest in dealing with this either.  Whatever.  It's not like the outsiders didn't attempt to point out the upcoming struggle.


Data Sharing.  Rather than the simple spreadsheet as before for Volt, we got summary provided by the subscription service.  Naturally, it made no mention of engine efficiency.  An overall MPG value was the featured statistic.  To complete the greenwashing, actual gallons consumed wasn't included.  There was an estimated "saved" value though.  That immediately stirred emotion.  It said 103 gallons had been saved from 3,443 miles of driving.  Huh?  That didn't make any sense.  Using my average MPG of 46.1 from last month, it would have only taken 75 gallons to travel that distance with a 2010 Prius.  Where the heck did that other 28 gallons come from?  And what about the distance traveled using electricity?  Needless to say, that service was providing very misleading information.  Even using the upcoming new fleet standard of 35.5 MPG wouldn't use that much gas, even without plugging in.  What the heck kind of data sharing is that?


Over Promise.  True to form, GM's mention of significantly increasing production volume for Volt without any realistic way of doing it to that scale resulted in a celebration of accomplishment.  My favorite from that was this superiority declaration: "GM built a car that can out-Prius any Prius."  So, even knowing that the vehicle itself has a number of shortcomings which may or may not be overcome with the next generation, victory was the message to convey already.  I couldn't believe it.  That particular group of enthusiasts (the daily blog) simply doesn't care about being constructive anymore.  Good thing other venues have a very different attitude toward Volt.  Perhaps they are cognizant to the repeated problem of over promising.  Anywho, here's what I posted:  Whoa!  Talking about hanging the "Mission Accomplished" banner prematurely!!!  Prius earned its reputation from selling at mainstream volume (5,000 per month) in a time when gas was cheap, guzzling was encouraged, and there wasn't a tax credit.  Things quite different now.  There is already a well-established market for high-efficiency vehicles and sales of Volt only just began.  Demand cannot be determined by the surge of initial purchases. It takes at least 6 months to get a feel for what on-going sales will be like.


Lowering Price.  To get price down, reducing production cost is the most obvious approach.  Increased volume helps, but you have to very careful that it doesn't result in increased advertising expenses.  Squeezing $10,000 out of a $41,000 vehicle isn't realistic from production alone, not even close.  For Volt, many wants were fulfilled... things well in excess of need.  Acceleration speed is the most blatant.  The consequence was efficiency sacrifices and a higher price.   How do you think the enthusiasts will react to a slower, less powerful Volt?  What about the elimination of that second display-screen and the On-Star interface?  How about a smaller battery-pack capacity?  There's also the possibility of relying more on direct-drive from the engine.  Delivering a cleaner emission-rating is a problem too.  Requiring premium-grade gas (91 octane) isn't a price-conscious design aspect either.  What the next few years bring with respect to lowering price will most definitely be interesting.


Price Panic.  A directive recently given by the CEO of GM was to reduce the cost of Volt by $10,000.  Consequences of missing the original goal of "nicely under $30,000" is obviously sinking in.  That statement made many years ago had been made for good reason.  This confirms abandoning it wasn't a good idea.  In the not too distant future, the niche will become saturated and the tax credit will expire.  There's only so much demand for a plug-in car with a base price of $41,000.  The competition has adhered to that original goal, never wavering from a price unrealistic for middle-market... in other words, something they'll be able to sell year after year in high-volume with government subsidies.  Panic comes from the enthusiasts, fearing too many compromises will be made to achieve the much lower price.  They never wanted a balance like that.  Heavy emphasis on speed & power with no regard for price makes that rather blatant.  They simply argue "the price is worth it".  Isn't that the same reasoning for luxury vehicles?


Expectations.  As the announcements from other automakers continue, attention is getting drawn away from Volt.  It's too bad they didn't want to be a game player.  The consequences of declaring to be "vastly superior" are already starting to show signs of trouble.  The most obvious is the complete absence of driving data.  Nothing.  And when you ask why, the responses have been hostile.  Shouldn't we expect to hear about owner experiences?  The unexpected move by GM to deliver double the original second-year planned volume may be adding stress to the situation.  It's like placing a big bet on a single play.  Of course, that could have something to do with the 2010 sales of Prius.  We now have the final count for Japan.  It was indeed an all-time record: 315,669.  Add to that the 140,928 sales in the United States along with the 50,000 or so from all the other markets and you've got a number very close to the half-million mark.  No wonder those cheering for Volt are feeling pressure now.  Knowing all which has unfolded so far, what are the expectations?  What should happen next?  What is the best way to achieve that ultimate goal of replacing traditional vehicles with something much cleaner and more efficient?  How much are consumers willing to pay for that?


Trophy Mentality.  Getting over that is really proving to be a challenge.  It's becoming increasingly more difficult to find any real-world data for Volt.  The recent reports of the effects of Winter (specifically heater use impact) seem to be silencing owners.  We get lots of spin from the enthusiasts though, attempting to downplay this situation.  It's too bad.  This all could have easily been avoided had they just acknowledged what we already knew over a year ago.  Remember those initial test drives?  Oddly, the response from GM is to increase production plans.  The very latest is that they are working with suppliers to be able to raise 2012 capacity to 120,000.  That's an interesting turn of events.  Of course, with a base price of $41,000, even with a tax-credit the demand for that many is quite uncertain.  Is this the best way to finally address the "too little, too slowly" concern?  Taking advantage of the current trophy mentality could prove a worthwhile risk if gas prices end up skyrocketing in the near-term.  After all, the next generation model is likely to be very different to achieve the many goals this one missed, the effort with Two-Mode is faltering, and the competition is preparing an onslaught.


Displacement.  This was the question posed this morning: "Will the Chevrolet Volt be a failure or a success?"  Having dealt with the displacement issue countless times already, I chimed in right away with:  Volt enthusiasts addressed this topic a few months back.  They absolutely refused to define what success actually meant.  Responses were just a vague "yes" without any quantitative goal stated to measure merit.  Needless to say, that will allow them to spin the outcome as a result.  The most common evasion technique is to direct attention to 1-for-1 comparison, rather than stepping back to consider an automakers overall sales to see how much gas was actually displaced.  Only selling 25,000 Volt hardly competes with 500,000 Prius when you realize there were also 475,000 purchases of much less efficient vehicles.  The extremely high price for Volt and the requirement of a plug is quite a challenge to deal with.  Not offering an affordable choice and something for those who don't have an outlet available is clearly an impairment to success. In other words, lack of diversity is business risk the automaker really shouldn't be taking.


CAFE Requirements.  They are the reason so much emphasis is being put on next year, rather than 2011.  That's when automakers must meet new higher MPG standards.  Raising overall efficiency is a challenge... once the easy trick of reducing vehicle weight and engine size is used.  Both Toyota & Hyundai have reached their goals already.  So, their upcoming new rollouts are actually opportunities to which advantage of growing consumer interest, well preparing them for the next CAFE increase.  The rise in priority toward efficiency should be a good thing for everyone.  Acceleration needs had been met longer ago, so pushing vehicles even faster was pointless.  The same was true for seating & cargo room, the largest vehicles were already exceeding need.  And towing capacity got absurd: gross overkill.  Finally focusing on what had been neglected in the past is most definitely a step in the right direction... just in the nick of time too.  Climbing gas prices make high efficiency quite appealing.


Everything Freezing.  Today looked & felt like it colder is on the way.  We are in the dead of Winter now, where temperatures in the single digits are the high.  The forecast for the end of the week is -20°F for my morning commute!  To make matters worse, the $3.09 we had been paying for a gallon of gas finally changed.  I wondered when it would.  Here in the Midwest, our fuel is amongst the cheapest in the country.  Out on the West Coast, they pay $3.89 already.  So, seeing $3.19 on the drive home from work wasn't a surprise.  Needless to say, the outlook is a cold one for those still resisting change.  By the time the weather turns favorable enough to melt the snow, discussions of plug-in differences would have become common.  Any remaining apprehension for hybrids will evaporate.  We're approaching that point where abandoning beliefs of the past will be very easy.  It's about dang time!


Vapor Trail.  It was night, but the city lights illuminated the street well.  The temperature was in the low teens.  We waited for the light to turn green.  It did.  We both launched.  The scene was quite amusing.  I wonder if anyone noticed... or for that matter, do they ever?  The majority of people simply don't pay close enough attention to characterize a detail like the steam coming from the tailpipe.  But in this case, conditions were right for unusually large vapor trails from the bitter Winter air... and I just happened to be looking in the right direction.  Upon completing a brisk acceleration, I knew the engine would shut off.  It did.  But what I hadn't really given any thought was the visual effect that created.  Suddenly, there was nothing behind the Prius.  It abruptly stopped.  The traditional vehicle next to me still had a big plume following behind.  I would have loved capturing that on video.


What If, backlash.  When seems to be more of the issue than if.  That comes from being in the middle.  Promotion of Volt mocks both hybrids and pure electrics.  It's presented as "vastly superior", so naturally the enthusiasts have been echoing that sentiment.  I summed up the situation this way:  It's becoming an interesting wake-up call.  Lessons were not learned from previous major efforts falling short, like Two-Mode.  Specifics from Volt include the both electric-range & engine-efficiency being less than expected, along with the emission-rating disqualifying it from privileges which were assumed to be easily achieved... not to mention a price much higher than hoped.  How much of a difference between hype & reality are consumers willing to accept?  Some type of backlash could be on the way.


What If, emotion.  All that hype over the years about Volt promises stirred emotion, creating passionate enthusiasts.  As a consequence, many became blinded by hope and simply brushed off each expectation that wasn't met.  Now we are at the point where purpose has been obscured and the competition a challenge.  Sadly, some have even turned to greenwashing... with same old techniques we've seen before from antagonists of the past, like using outdated facts.  And of course, there's an intense effort now to focus entirely on the driving experience.  The resistance to any type of calculation is truly amazing.  Purchase criteria, like being affordable, aren't taken seriously... because those are just excuses.  Clouding of logic is the intent.  They play with your emotion.  But what if it's not too late and that can still be changed?


What If, competition.  With the announcements from both Toyota & Ford about their upcoming plug-in hybrids as well as others like Hyundai & Honda considering them, it makes you wonder what consumer expectations will be for battery-capacity.  Gut responses are that EV range should be large; however, that line of reasoning quickly falls apart upon seeing +100 MPG operation firsthand.  Knowing there will be a much heavier dependence on the engine during Winter gives pause for thought too.  Then you have to ask about A/C use.  Do you know how often you'll deplete the pack entirely?  In other words, there will be many questions about energy consumption.  The competition will almost certainly take different approaches to answer those questions, to get consumers to purchase their particular technology.  But what if they don't?  Imagine a cooperative effort to dramatically reduce the production of traditional vehicles.


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