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.
Every time I write about Tesla I have to make sure that everybody understands how much I love Tesla’s products and what they have been doing so far for electrifying the car industry. By pushing big manufacturers to finally start producing electric vehicles (EV) we will ultimately drive better and cleaner vehicles. As a marketer though, I often worry that Tesla’s policy of over-promising and under-delivering will ultimately have negative aspects on the electric car industry.
In this blog entry I want to talk about the most fascinating luxury (and electric) SUV on the market right now: the Tesla ModelX. With that example I want to show how using the term SUV in marketing messages can negatively influence customer satisfaction. So, lets start by defining the term SUV. How is a luxury SUV like the Model X defined?
Luxury SUV is principally a marketing term to sell fancier vehicles that may have higher performance, comfort, technology, or brand image. The term lacks both measurability and verifiability, and it is applied to a broad range of SUV sizes and types.
In real life, I am a passionate motorcyclists. In fact, I have just come back home from riding on the highway 1 from San Francisco to Half Moon Bay. I also commute 60 miles daily on my Aprilia Shiver. I love the freedom a bike provides me with, the sound, the speed, etc.
But, I have never done a lot of research on the motorcycle industry. In contrast to the driving experience the industry itself is rather boring and traditional. The exciting part is, there are many electric motorcycle firms trying to change that (there are actually more electric motorcycle startups than electric car startups). The sad part is that the chances of success are very slim for most electric motorcycle firms. Why? They haven't found their customer yet and it surely is not today’s rider, the traditionalists.
Recently, I read an article by Visordown explaining why electric motorcycle startups are destined to fail. While I like the article, I felt that the reasoning is incorrect and proofs that even motorcycle industry insighters do not analyze their potential customers enough. Two things stroke me specifically: First, why do the guys from Visordown publish an article on New Years Eve (joke aside) and this quote:
It's as if they don't realise they’re already taking on a massive task in persuading motorcyclists – who are largely traditionalists that shun change – to shift to electric power. It’s a big and bitter pill for many to swallow, so it needs to be sugar-coated, not rolled in wasabi.
Disrupting automotive through adaptation of technology business model - How to attract MILLENNIALS (2/2)
In the prior article I wrote about the 3 reasons why car ownership is dying. Car leases are already the most popular way of "purchasing" a luxury and electric vehicle (EV). First, I documented why millennials/younger customers are more likely to lease. Second, I described why technology changes can lead to reduced interest in buying. Finally, I tried to proof that smartphones have given users the ability to experience freedom without owning a car.
These 3 points lead to an assumption: GenY, as the second largest car buying generation, is leading the ownership disruption in the car segment. They buy fewer cars per 1000 citizens, have the highest % of leases and have different expectations for cars (in terms of technologies and features). How can car manufacturers attract GenY and bring driving back?
Lets take a look outside the car industry. How are technology firms attracting young customers? The smartphone market, like the car market, has taken a hit in the last few years. The handset replacement cycle has slowed down significantly. It is the slowest since the introduction of the iPhone in 2007. In 2014, 143 million mobile phones were sold in the United States (-15%). Of them ~90% were smartphones. 2007 users upgraded their phones every ~19 months; today they upgrade every 26+ months.
Sini Ninkovic analyzes the EV market and its customers since 2012. He helped bringing BMW's i3 and i8 to market and currently works as Product Planner for Lucid Motors.