I was watching the "Today" show yesterday and they had a segment on electric cars. The first car up was the Chevy Volt. It will be available in 2010. From the website:
Chevy Volt is designed to move more than 75 percent of America's daily commuters without a single drop of gas. That means for someone who drives less than 40 miles a day, Chevy Volt will use zero gasoline and produce zero emissions.
And they claim it will cost 2 cents a day to charge. Plus, it has a gasoline / ethanol engine that can extend the range beyond 40 miles. Hey, sounds great. Sign me up. Can we get these in the stores for Christmas?
Then they hit us with the price tag. $40,000 according to the "Today" show segment.
What?
The whole point of hybrids and electric cars is that they be available to the masses because they are the ones that are driving the old cars that pollute the most on the road. How is pricing the car at $40,000 going to accomplish that? Oh sure, it might get some jackhole actor to drive it so they can feel good about themselves, but how does that help the planet?
These kinds of cars should be sold like cell phones. Remember when cell phones first came out? I sort of do and they were expensive. It was the kind of toy that only the rich had. Now and days, if you don't have a cell phone, you're the exception rather than the rule.
These hybrid and electric cars need to be sold like cellphones. Whichever car manufacturer figures that out first will clean out the competition.
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6 comments:
That's why the Michigan based car companies deserve to fail. When Toyota couldn't keep the Prius in stock in California, The Big 3 were still pumping capital into their SUV divisions.
To big to fail? I say too stupid not to fail.
It'll be be 40K at the outset, but it looks like that will be accompanied by a $7500 tax credit. That should put it in line with the Prius when it first came out, except the cost of operation for the Volt is much, much lower.
While 'Feel Good Yuppies' in LA were paying a premium for Toyotas that wouldn't save them a dime on the cost of ownership, Hybrids were rotting on the lots in the midwest because nobody wanted to pay a $10,000 premium to buy a car that would only save them a few dollars a tankful.
Computers were also significantly more expensive when they were released but you didn't see anyone looking for IBM to fail because they couldn't lower the cost of the product.
Being first to market with a high-tech product comes with significant costs. It's only when the product is embraced by the masses do more suppliers enter the mix which lowers the cost to produce the product. Somebody has to pay for the development costs that go into the product, GM isn't in the philanthropy business. They need to recoup their development costs somehow... giving Volts away isn't going to help the shareholders if GM goes out of business.
Yeah, that's the other thing. The upfront r&d costs are tremendous. Someone has to help pay for it, and that's the early adopters willing to buy the cars as a moral choice rather than a financial one. Yes, people ultimately respond to price signals, and the car will only be widely accepted if it comes down in price. Where that tipping point is, no one knows.
But in the meantime, the proposed price isn't out of this world, and is probably necessary. This pricing pattern is observable in pretty much every successful new technology.
If the price was lower, I believe they would sell more cars. I think you would recoup your R&D costs sooner if you lowered the price and sold more cars. Also, you'd get more cars on the road, which is free advertising, and more cars sold mean a bigger market share and those are numbers you can trumpet to Wall Street. When the VW bug was introduced, it was priced way under the competition and it sold like hot cakes. I'm all for making a profit but I just think that the Big 3 are missing a golden opportunity to recapture lost market share and lead the way into a new car revolution.
Yeah their inability to quickly shift resources to the new green markets is a function of how broken they are as companies. I don't know who is to blame but they're getting outmaneuvered by companies that can move more quickly. They are aircraft carriers amonst fighter jets.
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