The Homa Files

Ken’s Take: It will be interesting to see how the Detroiters position hybrids when they grovel back to Washington in a week or so with their economic viability plans.  Zero chance that they make any money from hybrids in the next couple of decades (if ever).  But, they’ll have to play “emporer’s new clothes” to get their government money

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Excerpted from Fortune, “Chevy Volt: Marketing meets technology” By Alex Taylor III, Jan 13, 2009

Whenever you ask General Motors CEO Rick Wagoner what he needs to do to revive the troubled automaker, he invariably replies, “Make great cars and trucks and achieve technology leadership.”

Despite GM’s financial troubles, he is arguably making progress … But one piece of a GM revival has consistently eluded Wagoner and frustrated its executives: restoring the tattered company’s good name. Until GM improves its reputation with potential customers, all the improvements it makes in its product line go for naught …

Indeed, GM’s determination to improve its standing with the public dictated the creation of the Chevy Volt as the company’s technology flagship. The Volt was chosen to be a leading-edge image booster rather than an immediate moneymaker for the cash-strapped automaker … And its capabilities were designed at least as much to grab attention as to make a big impact in the marketplace.

Due to reach the market in late 2010, the Volt is a vehicle unlike any other in the world. It consists of an elaborate battery pack and a small gasoline engine … GM calls it a “range-extended electric vehicle” and it may price around $40,000.

According to GM executives, the Volt was conceived in the spring of 2006 as a way for the automaker to leapfrog the technology edge that Toyota gained when it made a success of the hybrid gas-electric Prius …

GM decided it needed an electric car. But it faced another decision when it tried to figure out how capable it should be. The range and cost of an electric car are directly related to the size of the battery pack. Use a few batteries and you limit the electric diving to a few miles, but you also hold down the cost.

GM figured that it needed a lot of batteries – and hence a higher sticker price – to give its image the needed lift. “It was an engineering solution to a marketing problem,” says Burns. It settled on a 40-mile all-electric range because it would satisfy the commuting needs of a majority of the population. The Volt’s $40,000 price tag, which will sharply limit its sales volume, was given less weight, as was the fact that GM would lose money on the car. Pizzazz outranked practicality …

By comparison, Toyota is pursuing a sharply different strategy. It plans to introduce a plug-in version of the Prius that will only go 12 miles on a charge of electricity … As a result, the Prius will be significantly less expensive than the Volt, perhaps $10,000 or less, and it could be expected to sell in much larger numbers.

GM executives say that so far the Volt has been successful at raising the automaker’s profile and helping to refurbish its image. Whether it continues to do so once it arrives on the market with its high price tag and limited number of potential customers will be another question.

Edit by SAC

Full Article:
http://money.cnn.com/2009/01/13/autos/motor_world.fortune/index.htm

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This entry was posted on February 9, 2009 at 7:00 am and is filed under Autos - Travel, Environment - Green. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.