Today, I want to respond to one of Davey Alba's articles on Wired. He recently published a post with the title “Calling an Uber Is Cooler Than Owning a Car—And Automakers Want In”, which I enjoyed reading. However, the title was confusing and disconnected from the rest of the article. Today, after shortly analyzing what upset me about his use of words, I want to take a deeper look into perceptions of being driven vs. driving and of course the coolness factor.
Davey uses the word cool in his title, which has a huge array of meanings. According to urbandictionary.com it could be used as “the best way to say something is neat, awesome, or swell”. Calling an Uber is done by pressing a single button. It is unclear to me is how pressing a button on a screen is more awesome than owning a powerful, moving object? The word cool does not fit here. Maybe it is cheaper or more comfortable but how is it cooler? No customer research was provided to prove that claim.
Second, an action (of calling an Uber) was compared to the ownership of an object. It was not the experience of being driven vs driving nor was it the ownership status that was compared. It was the act of calling an Uber that was quoted to be cooler than the ownership of a vehicle. How is that even comparable? Sure, one could say that opening up a banana is cooler than having an apple, but how does that make any sense?
It is not easy being an automotive executive today… from government pressure to produce safer and more efficient cars to customers needs to increase connectivity levels and reduce prices at the same time. Let’s not forget about competitive pressure either: startups are entering the space fueled by technology changes such as the electric powertrain. How does an automotive executive go about keeping at least constant profit margins to satisfy investors while investing in R&D to satisfy customer desire through innovation?
To keep up with today's fast paced automotive environment, the ability to innovate quickly is critical. OEM executives rank each other’s innovation ability on different metrics. KPMG, a global consulting firm, surveys automotive execs once a year for its annual automotive report. Last year, they asked automakers to rank leaders in the field of connectivity and autonomous driving to capture that innovative capital. Connectivity and autonomous driving are among the five most important enablers for future success as identified by Mckinsey 2014. Last year, 24.5% of automotive execs believed that BMW was leading the field, followed by Daimler and GM. Tesla was 6th in the list, getting 6% of the votes and Google was last with 0.5% of the votes. Oh and by the way, 0.5% means they received a single vote from one brave car executive… a single vote from the leaders in the car industry... Chery has received two...
This week may have been the most exciting week in the short electric vehicle (EV) history. The Tesla Model 3 was finally announced... and much more was shown than I would have expected from the first of three Model 3 launch events. The promises that were made are exciting: Autopilot standard, 215+ miles range and <6sec acceleration to 60mph... for $35,000. When taking Tesla's quality and brand perception into account, the Model 3 has the potential to become the best car you can buy for $35,000. Well, taking into account that you have already reserved one. With >200,000 orders lined up, you would be waiting over a year after start of production for your Model 3 to arrive if ordered now.
The are three points I want to make today, to prove that other car manufacturers need to start producing competitive vehicles now (maybe with a newly positioned brand). First, current product supply in the full electric car market is so poor that it leaves customers basically with a single option to buy. Second, demand for full electric vehicles is high and will only increase in future. And finally, the decision tree for car manufacturers has changed with the Model 3 introduction.
Electric cars are regularly perceived as being slow and heavy. Recently, an Uber driver told me that he would consider buying an electric car only if the electric motor had better torque. He was confident that an internal combustion engine (ICE) has a better torque profile than an electric motor. I tried to explain that it is the combustion engine that is stopping today’s hybrids from performing better… but I failed miserably. I hope I do a better job now explaining why that is the case and why hybrids might be improving the perception of all electric vehicles (EVs) in future. There is some hope for EV perception outside battery electric vehicles (BEVs) like Tesla. It lies in a category called EREV (extended-range electric vehicle).
GM is trying to establish a differentiation between PHEVs (plug-in hybrid electric vehicles) and EREVs (like the new Chevy Volt). At first sight they might seem to be the same; both have an electric motor and a combustion engine; both have a battery pack with between 5 and 20kWh. The big difference, in simple terms, is that EREVs only use the internal combustion engine as backup when batteries are empty. The engine only starts when the battery is empty. Now, that might sound like a disadvantage (why would I only engage one motor instead of two?) but lets look at the data.
Since electric vehicles (EVs) have become one of the hottest topics in the automotive industry a shadow has always followed the discussion. Range anxiety, as many call it, has together with price been named the 2 biggest preventors of large scale EV adaption. However, range anxiety is more a psychological problem than it is a real usage issue. In a prior article, I already described that 200 miles of range would be more than just sufficient for most US drivers after an analysis of the 2009 NHTS database on US driving behavior. But what if customers have started to realize that their driving needs are less than anticipated?
In 2011 Deloitte and Accenture analyzed the behavior of potential EV buyers in different countries. Accenture has come to the conclusion that 50% of consumers expect at least 270 miles of range, while Deloitte has found that 56% of American consumers would expect an EV to drive for at least 300 miles on one charge. These results are 5 years old, but confirm the general publics believe that a car needs to have a range of 300 miles.
At the 2016 CES in Las Vegas Chevrolet showed its 2017 Bolt to the public. GM claims the new Bolt will be able to go over 200 miles on a charge, “…well beyond the driving range of most drivers,” GM’s chairman and CEO Mary Barra said. In a prior article, I already described that 200 miles of range would be more than just sufficient for most US drivers after an analysis of the largest scale NHTS database of US driving behavior. But more than just having sufficient range, costs of the 2017 Bolt will also be reasonable and affordable at around $30,000 - after collecting the $7,500 government rebate.
This might very well be the first mass market ready electric vehicle (EV) ever produced. But why does Michigan analyst Alan Baum then only project 20,200 Bolt EV sales for year one when GM claims a production capacity of 50,000 units per year? What could hold customers back from buying the most useful mass market EV out there?
Michigan analyst Alan Baum is projecting only 20,200 Bolt EV sales in 2017. He states factors like limited demand in a country of cheap gas and GM’s track record of marketing electrified vehicles. In this article I will talk about both points and thus will start by analyzing potential demand for the 2017 Bolt before trying to understand why that car might not become the game changer it could be.
Every Christmas I get reminded how irrational human behavior sometimes is. Every year, just to make friends and family happy, we go through the holiday shopping madness; just to buy presents we don’t even know if they will want/need. I am sure most of you did it this year too. But irrational behavior influences consumers even outside the holiday season; even when buying electric vehicles (EVs).
But before we talk about customer needs in disruptive markets, lets start by congratulating Atieva and Faraday for bringing out their first brand videos this week. Both videos offer a glimpse into what they are working towards – the automotive future. While the videos follow different colors schemes and story line, the main message stays pretty consistent. Customers want a different car buying, car owning and car using experience in future. Both firms are trying to satisfy the user of modern mobility solutions.