Markethaus Musings

I have to say, I was pleased to see so many passionate responses to my last post. Reading them brought back the fervor with which most of us on the EV team tried to solve the "problem."

My thoughts on some of the comments...

If you "worked on EVs" for 5 years, you sure must be oblivious. The EV1 had a range of 110 miles for the lead-acid car that gm crushed, and 160 miles for the 1999 EV1 that gm crushed. Today, I drive a Toyota 2003 RAV4-EV with 68,000 miles on it and a range of 120 miles.

The only reason auto makers were forced to put out EVs was California's ZEV mandate, and they sabotaged EVs and lied, cheated and stole by raising gas prices.

We did all of the range studies. Our Sodium sulphur vehicle had a range of over 100 miles per charge if conditions were ideal. The EV1, with lead acid...was more in the 60-80 miles range...again, depending on conditions. In perfect conditions, you could approach 100, no doubt. 160 was definitely possible with the nickel metal hydride battery pack.

The gas price comment...I don't know what to do with that. GM lost close to $10 billion last quarter. Ford is doing poorly as well. High gas prices are killing the domestic car industry, threatening hundreds of thousands of US jobs.

- Consumer ignorance causes us to buy more from lust than from love. I really don't think there is much focus beyond the glorious sheet metal, the smell of the leather and the monthly payments. The entire concept of long term thinking is under educated and under evaluated when making purchases.

I agree...but that's what drives a capitalist society. Supply and demand. It takes a while for Americans to begin associating excessive gasoline use with marines dying in the Middle East. And it requires courage and political will by Americans and its elected politicians to change policy. The entire U.S. Energy policy needs a radical re-thinking. The U.S. economy is 100% reliant on access to oil half a world away; sitting in the ground of nations who are not entirely friendly towards American society. Can you imagine writing that plan? We will build an economy that relies on the free flow of energy from countries that hate America?

G'day, Dave!

Like the rest of America, you, too,knew not of the 1991-1996 battery electric technology development at Toyota that was secretly trying to meet the California mandate, and found the going quite easy.
Can't make money on them? Rather, an ev showroom and small service bay is the inverse of ICE economy/Detroit model. Our NiMH batteries run great, at 5 years like others'.

I heard a good one. Next time you see someone in a ev golf cart, odds are they'll be having a good time; our EVs provide our EV grin.

Actually, we were very aware of both Honda and Toyota's EV programs. I personally drove their cars and our engineers looked them over carefully (as they did ours). We were impressed with their efforts. During that time frame we were arguably ahead of Toyota and Honda (we certainly weren't behind). Our vehicles were on the road with advanced batteries years ahead of Toyota and Honda. We gave up the lead when the ZEV mandate was scrapped.

You're right...NiMH batteries can be very reliable...back in the mid 90's costs were still exorbitant though. And even to this day, a Hybrid is no cheaper to own/maintain than an ICE (internal combustion engine) powered car -- if it is a high mileage car, the ICE is probably cheaper, even at current gas prices.

The only problem was that Honda only built 300 of these EVs for California. When others asked where they could get one, all of the limited production were already leased. And Honda had no intensions for selling them.

And they required almost no maintenance. After 90,000 miles it was still a zero-emissions vehicle, with no smog check, no oil changes, etc. The problem is, the auto repart market couldn't do anything to improve this vehicle, even with 10-year old technology.

Everyone who rode in the EVplus loved it. And every morning it had a full-tank, costing only $0.02/mile in electricity to fill up. Typically we could drive up to 600 miles per week without having to fill up anywhere else except at home in the evening. No smelly expensive gas stations nor waiting in line. What a concept.

The lower service costs (aside from battery replacement) were/are a major attractor to EVs, along with avoiding the carcinogens at gas re-fill. All of our research showed women especially loved the EV's simplicity. Make no mistake, however, the price on the car you drove was in the extreme luxury territory...that's why the were leased. Too expensive to sell and the car companies needed to get those cars back for exactly the reason you mentioned. Too expensive to support long term because of parts, training, etc.

I find it hard to believe that you have worked in this field and hold the opinions you do, but like I said, having yours is the best part of our Democratic Republic.
I KNOW if we had known about the EV1 we, as a family, would have purchased more than two-and remember you weren't ALLOWED to own them; very un-American. My parents own a hybrid as do we, and so do my borthers and sister. We are neither tree huggers nor greenpeace wild environmentalists; I simply DO care about leaving my children a future and don't like seeing HUMMERS idiling next to me-it is a selfish waste and always seems to be a single guy too. While I cannot contradict myslef and say that too is not the American way-choice, I know better. Do your homework. There was MAJOR deception in (lack of) advertising.
Last point on the UN-availability of these cars by the Majors, and the market; As a technician (ASE certified and all) I have worked for Toyota, Chrysler, and private shops over the last 20 years. I never ever even ONCE heard the name EV1 or RAV4-EV while standing in a Toyota shop and reading the monthly newsletters of my industry. Uninformed? Me? NO!
Lack of advertising and effort on the part of GM and others? YES.
Don't blame ME if you bring something to market and keep it hush hush. If American Idol was on a community access channel, I doubt you or I would know who Ryan Seacrest is, much less any others on the show.
Good day to you sir.
-EVRIDER

As I mentioned before, leasing was necessary because none of the companies had the infrastructure ready to support EVs when the EV1 was available. We had many meetings on that subject.

I'm actually a marketing/advertising guy and I totally disagree on the lack of advertising/promotion. Remember, gasoline was just over a dollar a gallon. Very few were interested - even now some hybrids have incentives. You can't crank up assembly plants when gas prices suddenly go through the roof. Doesn't work that way. Planning and producing a car from scratch requires 36-48 months, you should know that. I always believed EVs were a good short range solution for commuters. Even faster is ride share. Cuts gas use in half, same with smog. There are many solutions; incl. EVs, bicycles and sensible commuting.

Keep the comments coming...really enjoying the exchange. I'm not that enthused about Hybrids...I am very interested in the potential of Hydrogen and, in the meantime, conservation/improved health via bicycles...

The Consumer killed it. Not George. Not Big Oil. Not Greed. No one cared except CARB and a few hundred consumers that bought the GM EV-1 and Ford Ecostar and Ford Ranger EV (the latter two purchased by fleets).

Saw the preview...I will admit I haven't seen the movie. If the movie follows along the lines of the video, as an acquaintance used to say, "if it's not Scottish, it's crap!" Frankly, for those of us who worked on the EVs, and saw consumer reaction, this crap enrages me.

As some know, I worked on Electric Cars. For 5 years. 1991-1996. Hopeless. Problems:

Where do I start?

1. Not enough range (50-60 miles/day)...worse in cold weather states and with AC running
   
2. Not enough charging stations for slow charging (120 v/40 amp plugs) at work places to charge in 12-24 hours
   
3. Not enough charging stations for fast charge (240 V or higher) to charge in 1-4 hours
4. Batteries were expensive (Thousands of dollars requiring replacement every 2-3 years)
5. Vehicles were very expensive. If sold based on true cost, $30,000 or more each. And that didn't include the battery replacements every 3 years (Minimum $3,000-$7,000). In 1996 dollars, not 2006 dollars.
   
6. Not enough energy/power in most applications and duty cycles. EVs are great 1 or 2 person haulers/commuters in traffic going 50 mph. Or short haul light delivery. Terrible if you're moving lots of people (families) or going distances in stop/go with drains on load (AC, heat, etc.)
7. Consumers hate changing behavior...we don't buy cars based on need...we buy them based on want. We loaned EVs to consumers and found that it freaked people out to know that they could get stranded if they didn't charge regularly. I did several trips this Sunday...total of 40 miles in 2 hours with AC running. Various errands. Not in an EV if at 40 miles you realize, damn, I might not make it home. Take a look at the best selling Accord and Camry. 200 hp with lots of electronic gadgetry and convenience that suck power.
   
8. Very, very limited market - movie stars and people with an axe to grind (Nader and various other people who don't mind living an impractical lifestyle). Limited market means low volume which means high cost. You can't build safe cars inexpensively at low volume. Ever notice how low volume cars typically cost $50k and up? Cost of tooling and assembly can't be spread over large production.
   
9. Can't make money selling EVs. In a capitalist market, companies have to make a profit or "GM" happens to them. Massive layoffs and shrinking market share. Out of 17 million new cars and trucks to be sold this year...how many hybrids? Quick, quick!! Less than 1% The only one selling well is the Prius. The rest have incentives.
   
10. The EV1 is/was a 2 seater. Anyone know how many 2 seaters are sold in America in high volume? That's right...zero. The Corvette is the best seller. Why? Two seaters ARE NOT PRACTICAL for ANYBODY. It's a toy/fun car.
    

Better solutions?

Many...yes, many. Conservation is about changing lifestyle and/or making other alternatives more appealing emotionally and financially. We could cut our energy consumption in half if people commuted on bikes. Said this a long time ago in this blog. Lots of people laugh. We solve several problems

1. Obesity...Americans are gargantuan beasts.
   
2. Energy reduction...short trips pollute the most and use the most gas
3. Potential for reduction in traffic deaths. Bike on bike accidents rarely result in airbag deployment and twisted wreckage. I'll admit...Car on bike is a different story.
   

So, Dubya, get moving. Let's get some bike lanes approved and tax credits for riding a bike to work. Let's get tax credits for showers installed at work. Even better, all of us idiots paying for health club memberships? Buy a bike and invest in a shower at work. Leave the car at the office for "important" business meetings. And a change of clothes.

And puuuuhhhhhllleeeeaze. Enough with the idiotic electric car initiatives. A 30 Kw battery, that gets 70 miles range and weighs about 800 lbs has about as much energy as a gallon or two of gasoline that weighs 7-15 lbs. Our Ford Ecostar had a 75 horsepower motor. There are no cars sold in the US with less than 150 hp these days. Do you understand the problem now?

More later...when I calm myself.

Interesting article by Jean Halliday of Ad Age. Excerpts below

DETROIT (AdAge.com) -- Jan Thompson, VP-marketing of Nissan North America, today scolded the U.S. auto industry for resorting to "a less risky approach to marketing," leading to a big disparity in where automakers spend their ad dollars and consumers invest their time.

Auto advertising soared in the past 20 years by 1,378% while new-vehicle sales increased by only 17%, Ms. Thompson said. The industry-wide marketing cost per new vehicle sold increased from $50 to $1,000 in the past two decades. When incentives are added, which she said totaled roughly $51 billion last year, automakers are spending around $4,000 in marketing and incentive costs for each vehicle sold.

Nissan North America spent $1.02 billion in U.S. measured media last year, according to TNS Media Intelligence. The automaker spent $950 in measured media per new Nissan and Infiniti sold, based on the automaker's 1.07 million units it said it sold in 2005, an Advertising Age analysis reveals.

Jan was shocked at the $17 billion ad spending figure, most of which goes into traditional media.

Time for me to vent...

Forgive me for being annoyed, but Nissan was and is just as guilty of over-investing in "traditional" media. I see a lot of Nissan dealer association and national advertising on traditional media. I'm still glad Jan is pushing Nissan hard on interactive.

As far as the increase in $/sale goes...it's an arms race. Practiced by the ad agencies...to absolute perfection. The imports simply copied the traditional ad practices of Ford, GM and Chrysler. Agencies made a nice living telling clients that to launch a vehicle line properly required at least $50 million - $100 million to, "get above the noise level."

Automotive Interactive History

A short history lesson in automotive interactive from someone who has lived it for over 10 years. It wasn't Nissan who paved the road to interactive bliss. Actually, it was Ford and GM, who aggressively pursued online consumers and attempted to sponsor e-commerce companies as early as 1999-2000, while Nissan was in a deep, corporate slumber, ending with the hiring of Carlos Ghosn. It was Ford and GM who created, respectively, forddirect.com and the now dead GMBuypower.com to help consumers connect directly with its dealerbody. We can be critical of their executions if we like, but they did it. Further, both Ford and GM were aggressive in pursuing 3rd party car shopping sites to advertise, conquest import shoppers, gather data and leads.

I remember meeting with an august body of "import" marketing execs recently and getting quizzical looks when we discussed the subject of engaging with on-line consumers in real time. Gosh...why would we actually talk to consumers when we can...buy lots of banner ads on really risky sites like...Google...and Yahoo...and slyly run banner ads past consumer visages, softly illuminated by the warm glow of their flat panel displays. At only $1,000/sale? Who cares about cost/sale? What's the incrementality?

I'll never forget the meeting I had with yet another set of "import" agency folks who complained that it cost them $250/lead conversion when they bought banner advertising that drove people to their brand site. I replied, "how about you buy the leads directly from us for 1/10th the price. Because...we're really good at that." Didn't happen. Something about the need to, "brand" the experience.

Nothing Risky About New Media Brands

What's creative/risky about Google, Yahoo or AOL (ok, I'll throw in MSN too)? Google, Yahoo and AOL have 50 million unique visitors or more each day. How is that...risky? 70% of car buyers use the Internet to shop (By the way, 100% of car buyers also watch way too much TV and yack on their cell phones while driving). There's plenty of internet investment by car companies. The problem is that they aren't always creative about finding new avenues to use the internet...aside from Google, Yahoo and AOL. Spending money there is easy. Call local ad rep/SEM "expert" who arrives in shiny new company car. Demand a creative way to sponsor new vehicle launch. Ad rep takes order for banners, RSS and yada yada and creates insertion order. Just like buying TV ads. Media buyers/planners carefully watch click throughs to make sure they aren't spending more than $1,000/unit sold...which btw, is the single dumbest ad measurement in the history of ad measurements. Nissan, Ford or GM would sell 70% of its cars with zero advertising. 3rd party ad sites, bloggers and news outlets trumpet the arrival of new cars and trucks with amazing impact. Advertising influences, at best, 30% of sales.

The risk in advertising on Google evaporated when their IPO went through the roof and Bill Gates began fearing them. Further, how would you spend $17 billion on the Internet. Can't be done...there's not enough, "inventory." I've heard media planners complain, "all the good inventory is gone." Huh? I wish I had that problem. A lot of money...and nowwhere to spend it. Ahh...maybe I should go back into the agency biz...

The Truth (in best Jack Nicholson's voice)? The Truth? There's no risk in those online "brands." I'd say there's more risk in being on Television. We talk to thousands of consumers/day and it never ceases to amaze me how few of them recall even one ad for the car they are shopping.

For those who need ad "inventory"...let me make a suggestion. Here's my phone #: 248-232-7979.

Call me. I'll get you inventory.