Featured Unlike Toyota, GM to build a US Battery Factory

Toyota vs. electric cars: Smart strategy, or Innovator’s Dilemma?

 

Perhaps somewhat over-hyping a medium-sized, but welcome, step in the right direction.

 

That's smart strategy.

It's easy to recognize the difference. Just look at tax-credit dependency and the diversity of product. GM exploited conquest sales, wasting the subsidy opportunity for that rather than establishing a profitable & sustainable base. In other words, they innovated for enthusiasts instead of focusing on their own base. That is exactly what Innovator's Dilemma refers to. Toyota did the opposite, directly targeting showroom shoppers.

We see Corolla & RAV4 hybrids being sold so fast, keeping them in supply has become a challenge. This is why Toyota is switching over their Camry production in Kentucky to RAV4, which has capacity to deliver 500,000 annually. That will become a vital part of meeting RAV4 Prime demand. It will be high-volume sales Toyota's core buyers. No part of that is a trap of innovation. Notice how GM never spread their technology?

 

GM has fixed the issue based on their ever increasing pickup sizes.

the trouble is consumers buy what they can afford to own, not what they need



Ford and Dodge then follow suit

 

Conquest = targeted at outside customers

Vampire = loyal customers, shopping the showroom

KNOW YOUR AUDIENCE.

Those two are so fundamentally different, the enthusiasts not recognizing/acknowledging that were doomed... which is exactly what we saw play out and the resulting damage-control taking place now.

In other words, Innovator's Dilemma only impacts on the one.

 

GM didn't cancel the Volt, they closed a factory. If it was all about how poorly the Volt was doing, you could still buy a LaCrosse. CT6 production will end in January, and the Impala in Febuary.

GM should have spread Voltec to more vehicles. They might be wishing they followed up on that Volt crossover concept for NA, though it might have ended up Azteked. Or perhaps they had acknowledged the impact of low gas prices on fuel efficient cars like hybrids; the Malibu hybrid has been cancelled, as well as the diesel Equinox.

 

Detail has been posted countless times. Volt needed to achieve sustainable sales prior to tax-credit phaseout; otherwise, production would be cancelled. Since that's exactly what happened, any excuses now are damage control. Even worse is the technology itself became too much of a niche... hence Innovator's Dilemma.

That most definitely isn't the case for Toyota. We're seeing the Prime tech in Prius being deployed in both Corolla and RAV4.

 

The big take away from that chart is that the Tesla Model 3 is crushing everyone. AND sales are increasing even as incentives are decreasing. Talking about everything else is like discussing the deck chair positioning on the Titanic. No?

OK, discussing the Prime and Bolt sales might be like saying there is still one dry compartment somewhere, hopefully near an undiscovered lifeboat.

Mike

 

It'll come with an electric funicular minitruck that you drive from the curb up to the cab to get EPA & CARB credit for the whole thing.

 

Guess the LaCrosse, Impala, and CT6 are also no longer getting tax credits.

Voltec is very similar to HSD, and it is being used in a couple of Chinese models, but like HSD, it has a high cost. Which is one consumers can justify where fuel prices are high, but is one they will forgo in places with cheap gas, like the US.

The cost of HSD is around $3000. The ratio of Camry hybrid sales to the ICE model in the US hasn't changed much since its introduction.5% to 10% of the ICE model seems to be the norm for such hybrids, and I expect the same for the new Corolla. The Rav4 hybrid bucks the trend by Toyota only offering the AWD version, and forgoing the usual profits from the AWD upgrade.

The whole exempt from CAFE thing might disqualify it from any such credit.

 

I'm struck by how few of any of these cars are being sold.

How do you amortize the development costs over so few units? Who is making money by selling EVs besides Tesla and even then profit on investment so far is looking like our interest rates.

 

I would imagine GM is covering the development costs with their sales of vehicles the public wants to buy.

 

Ironically, using an analogy to Titanic is quite fitting, but not the message you were trying to convey. Tesla could be compared to Titanic surviving the iceberg hit, not sinking and actually making it to port. It's just a single ship arriving to the destination at great expense. That's why my push to get acknowledgement of the bigger picture continues to get the positioning of chairs response.

KNOW YOUR AUDIENCE requires looking at the entire fleet and all of the use that will actually occur, not just a single trip. In this case, that's what GM failure with Volt was all about. They gambled everything on a single vehicle. It was pretty obvious how desperate enthusiasts were to force narratives to the contrary too. When the potential for Camry hybrid with a plug was brought up, they'd attack the messenger. Then when RAV4 hybrid came along and the second generation of Volt fail to grow sales, the hostility was raised more distractions raised.

Tesla was the easiest distraction to focus on. It relied upon lots of venture capital, money from green credits, and heavy utilization of subsidies... none of which could be sustainable. Fortunately, excitement about the potential remained strong. But now with less than 4 week left of federal monetary encouragement (the sales boom resulting from the "unlimited" phaseout stage), the question of sustainability becomes all too real. Innovator's Dilemma already played out with dire consequences for GM. The outlook for Tesla depends upon breaking out beyond the single-product reliance, especially since that AUDIENCE could just be low-hanging fruit... the EV market... not mainstream consumers.

That brings us to the main topic, addressing that bigger picture. How will GM building a battery factory change the situation with potential for market saturation? In other words, who is being targeted for selling those resulting battery-packs?

We keep hearing the narrative of Toyota focusing intensely on hybrids but ignoring the reality of dropping sales for Prius. That's a cherry-picked perspective. It hopes you won't notice both the regular Prius and the Prime model were undergoing mid-cycle updates, consequently there being little inventory made available. Waiting until 2020 for that new production to ramp-up, timing it to coincide with the availability of the introduction of Corolla hybrid, rollout of the next-gen RAV4 & Highlander hybrids, and the reveal of RAV4 Prime.

That is what's called a well thought out coordination of fleet change... because it so nicely matches up with both the ending of tax-credits for both Tesla & GM. Think about the position Toyota will be in for Earth Day 2020.

With all that change carefully orchestrated to directly target their own showroom shoppers, it sets the stage nicely for a turn to dedicated EV designs. The technology itself will already deployed in the 3 plug-in hybrid models (Prius, RAV4, Corolla) while the EV models of CH-R and UX300 make their debut. It represents a moving forward of a wide variety of choices. You won't be forced decide upon that single offering designed specifically to appeal to enthusiasts of the past.

Read through all that history of spin and now damage-control if you want good background. It isn't necessary to understand what this next stage involves though. All you have to do for a clear look forward is to consider what the sellers will actually sell.

 

GM build-quality has really declined over the years. I would rather buy a Dollar Tree battery than anything GM makes currently

 

China and Europe are bigger plug in markets than North America. Car manufacturers in Europe have to meet GHG limits, and sereval cities charge higher access fees for less efficiency cars. Some are talking about banning ICE cars from city centers. Of course, China has their EV policy, and if not now, they will soon be a bigger car market than the US.

Global Leaf sales is approaching 500k, and Nissan has a small commercial van that uses the same drive train. Their ePower serial hybrids do too, with a smaller battery and generator. Their FCEV test mule was just that van with a fuel cell installed. Nissan is spreading the cost around by using the same architecture for hybrids, plug ins, and FCEVs. Other companies are likely following similar plans, or have other ways of spreading the cost. Ford is going to license VW's BEV platform for some models in Europe.

The same was said when the credit was initially cut. Even with so-so sales like it had earlier in the year, the Model 3 should reach last years numbers, but the last quarter is usually their best. Even if it doesn't reach last years numbers, the Model 3 is outselling its ICE competition by 3 to 4 fold.

Sales of the Model S and X are down because of losses to the #, but also because they are still using Tesla's older technology. They should improve once updated.

The Model Y may arrive ahead of schedule. Tesla’s Model Y Could Hit the Road Much Earlier Than Expected | Digital Trends

It wasn't just Prii traded in for Teslas. Number two and three are the BMW 3 series and Accord. Four of the top ten trade ins would ones bought by mainstream consumers.
Tesla Model 3 Survey: Buyers Trade in BMWs and Toyotas For Musk’s Hit Car

John, Prius sales have been steadily dropping since the third generation. IIRC, the article gave 2012 as a date. Most of the regulars here know this. You know this.
Toyota Prius liftback US car sales figures

 

I don't know how well the Volt is made, but I know a couple who are wishing they had bought a Prius instead of a Volt: now that we have cold weather, their Volt (not sure what year) does only 28 miles without the ICE kicking in, and that demands premium gas. At least within walking distance of a place to which they travel once or twice a week there is a free charging point at a Chevy dealership.