I'm really starting to like these guys . I found the last paragraph to be particularly insightful.

http://www.businessweek.com/autos/co...ge_top+stories



GM's Plug-In Push

General Motors is developing a plug-in hybrid technology for its Chevy Volt that is miles ahead of Toyota and Honda



by David Kiley
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Don't tell General Motors (GM) Vice-President of Research and Development Larry Burns that the Chevy Volt plug-in gas electric hybrid vehicle it plans to launch is a marketing ploy to improve GM's brown image with consumers.

On the other hand, Burns admits that GM is spending SUV loads of money to make sure the Volt comes to market on time, and ahead of Toyota (TM), in 2010 in the hopes of changing the marketing nightmare the company faces. "No question, it is our intent to leapfrog Toyota in this technology," he says.
Coming from Behind

What marketing nightmare? GM has been unleashing the best vehicles it has ever produced. Quality is better than ever. Designs are being lauded. And critics are falling over themselves praising new versions of such previously dullard drives as the Chevy Malibu. Even a Buick, the Enclave SUV (BusinessWeek.com, 8/24/07), is drawing kudos, and GM can't make them fast enough to meet demand. But overall, GM sales are down almost 6% this year, compared with a drop of 2.5% for the industry through the first 10 months of the year.

Not only does GM's portfolio of brands have an awful time resonating on the East and West coasts, but research commissioned by the automaker spelled out in how little esteem cutting-edge customers hold GM. A survey cited by Burns showed that 70% of respondents think of GM as "part of the problem" when it comes to climate change and pollution, while 70% view Toyota as part of the solution. Moreover, consumers believe GM's brands have much lower quality scores than they really do, because of how poorly GM has marketed its brands over the years. "It's a huge hole to dig out of," says Burns.

But GM is showing signs of life in the arena of "green" image making that, if the company gets it right, could shed stardust on its whole brand portfolio. As GM and Toyota battle for superiority and market momentum with the next gas-saving technology—plug-in-hybrids—many analysts and engineers say GM may, for a change, have the advantage over Toyota. "GM has quietly closed the technology gap with Toyota and looks like it is pulling ahead in plug-ins," says Brett Smith, director of forecasting at the Center for Automotive Research (CAR) in Ann Arbor, Mich. (Read more about GM's successes in developing hybrid transmission technology.)
Changing Horses

Talk is cheap. But there is buzz in the industry's engineering and supplier community that GM's advantage is that it chose better battery technology than Toyota in the first place to develop its Chevy Volt plug-in car for sale by the end of 2010. Toyota has been focusing its battery development on cobalt oxide-based lithium-ion batteries, the same technology that's used in cell-phone and laptop batteries. But fires in laptop batteries earlier this year derailed optimism about their application in cars.

Meantime, GM has been pursuing a nano-phosphate-based battery with privately held battery technology company A123 Systems, in Watertown, Mass., whose technology is the kind used in lithium-ion batteries that drive cordless power tools. And it's this technology, which is not subject to fires and packs more power and battery life, that is emerging as the favored pathway for plug-ins. "There are a lot of problems with cobalt-oxide, including scaling it up for cars because of the cost and availability of cobalt," says Ann Marie Sastry, an engineering professor at the University of Michigan, Ann Arbor.

Toyota, too, has been working with nano-phosphate as a hedge, but on a slower track than its cobalt-oxide program, which was in a joint-development project with Panasonic (MC). And GM is working with cobalt-oxide on a slower track for the same reason. But GM's nano-phosphate development is, according to supplier company sources working with Toyota, at least a year ahead of Toyota's. "All hell has been breaking loose at Toyota on its plug-in program for the last three months as it changes horses," says one supplier company executive working with Toyota.
Consumer Readiness

Toyota and Honda (HMC) have been uncharacteristically open in their criticism of GM's plug-in push. At the Tokyo Motor Show, Honda CEO Takeo Fukui said his company won't pursue plug-ins at all, because he feels they don't deliver enough environmental benefits. Toyota's project general manager in its hybrid vehicle system-engineering division, Yoshitaka Asakura, said he isn't even sure consumers want a plug-in, and that while Toyota is developing a plug-in Prius as a trial balloon, it is looking more for ways to expand its existing hybrid systems.

Honda's bearishness on plug-ins doesn't cloud the potential of the technology. Honda, while leading all auto companies operating in the U.S. in fuel economy, has proved to be especially tone-deaf in understanding the U.S. market for its vehicles. It launched the Insight hybrid around the same time as Toyota's Prius, but its size and unappealing styling made it a dud. The Civic hybrid has been a steady seller, but it is dropping its Accord hybrid (BusinessWeek.com, 11/19/07), which didn't sell at all and offered little fuel economy benefit over the nonhybrid Accord. Toyota, whose executives say they don't believe GM can get a battery small enough to fit in a car and have a 40-mile range, meanwhile, is heavily invested in its hybrid system and has the advantage over its rivals in passenger car hybrids.

Indeed, some believe the "wow" factor of getting more than 100 mpg could help plug-ins eclipse the popularity of hybrids. GM says the Volt technology will allow consumers to go up to 40 miles on battery power, after which the gas engine kicks on to recharge the battery while the driver continues. If a driver makes several short trips on battery power, the battery can simply be plugged in overnight to recharge. Many drivers could go weeks without gassing up. And electricity at night is cheaper than daytime recharging. Dr. Gary Vas, director of the University of Michigan Memorial Phoenix Energy Institute and a nuclear energy professor who is leading a study of plug-in vehicles, says the early indication on a study he is leading on the marketability of plug-ins "shows that consumers are more than ready to embrace it."

Toyota executives have said they believe the right model for plug-ins will enable drivers to go perhaps as much as eight miles on a charge before the gasoline power kicks on. University of Michigan's Sastry says such a conclusion may be dictated by the technology they have chosen, rather than consumer research. "I don't have any doubts that consumers will react very strongly to a 40-mile gas-free range," says Sastry.
Marketing Benefit

Consumer acceptance of the technology will depend a great deal on the price of the car, which GM insiders say will likely be between $25,000 and $30,000, and the final design. GM says it will build the Volt on the same engineering platform as the new Malibu. But it is a system GM can expand to other vehicles just as Toyota rolled out its hybrid system to five other Toyota and Lexus models.

GM engineers say the Volt and electric car program have "an open purse," meaning that when they need more money, they get it. A123 Systems Chief Executive David Vieau says GM's schedule for 2010 is "a risk" as far as using the nano-phosphate battery, but he believes they'll make it. In any case, GM is working with multiple supplier companies to give it the best chance. "But it's pretty clear GM will have an early advantage" when they start delivering cars. Robert Lutz, GM's chief product executive, says GM testers will be driving a prototype by this April.

When Toyota launched its first hybrids, it lost money for a few years on each one until the cost of the technology came down as sales volume went up. But the halo effect of the hybrid more than made up for it. The same internal study at GM that indicates consumers see the automaker as "part of the problem" also showed that the image of the Prius led car buyers to believe that Toyota's trucks and SUVs were about 25% more fuel efficient than they really are. Says GM's Burns: "We didn't understand the marketing benefit to the whole company that a hybrid would have, but Toyota schooled us on that."

The question is, does the student have what it takes to outsmart the teacher?

David Kiley is a senior correspondent in BusinessWeek's Detroit bureau .

Peace,

Martin

 

Although there were many good points in the article, I'm concerned that thinking it is just 'image' may lead to poor product decisions. For example, having too low of a ratio of hybrid power to engine power or treating the first generation as perfect rather than a necessary learning experience.

A radical thought but I think GM could shorten their learning curve by involving sets of users in hybrid control law experiments. In collaboration with early adopters, a small, data storage unit in the vehicles could collect 'real world' data and under non-disclosure agreements, be used to tweak and tune the control laws. Many of us have learned, years later, how to optimize the performance of our vehicles. GM could do themselves a lot of good by expanding the envelope of control law development. In fact, GM could do this for very little cost.

If GM were to publish an open set of specifications for reading the vehicle parameters from the OBD, the early adopters would quickly develop their own 'mini scanners' and begin collecting and analyzing the data. If GM were to offer the reward of recognition, say a web site to collect these user papers, it would be a rich source of "what could be done better" and GM wouldn't have to add another engineer.

Look at the lengths the early adopters have gone to in our community to understand how our vehicles work and maximize performance. This is the type of energy GM could tap and considerably shorten the 'learning curve.' A partnership with their customers to improve their products. [I will now get down off of my soapbox.]

Bob Wilson

 

I would say that we were guilty of the opposite error. There's no doubt that many in GM considered the Prius more of an image play than a clear product strategy. I think the mistake that cost GM the most time is NOT considering the impact Prius had on consumer view of Toyota goodwill, and even worse, not considering the potential for improved consumer perception and goodwill from having our own capable hybrid product. We're starting to see this at the core of the organization as the 2-Mode launches. It is very tough to factor this soft side issue into a numbers and dollars business case and even harder for some to evaluate the business case with those considerations.

Not so radical, really. Two examples.....

1. Equinox Fuel Cell fleets in DC, NYC, and SoCal are doing precisely what you describe above.
2. All new GM vehicle launch programs take advantage of early probe fleets. Early production vehicles are put in the hands of key drivers throughout the company (we tend to be customers, too). If you lived in the Detroit area you would ocassionally see vehicles on the road months before they are available at the dealership. Frequent check-ins are mandated to evaluate the ownership experience. In some cases, vehicles are instrumented to look for specific conditions or tendencies. Experts are on call to deal with any trends or unexpected occurrences. These experts will often pose questions to or request drivers to perform specific functions in order to gather more information.

Or we could use OnStar to gather data on the vehicles in example 2 above. When the vehicles are owned and operated by GM, there is some additional OnStar functionality that can be used to actively mine data on the vehicle driving experience. When the vehicle's OnStar box is tied directly to engineering development computer systems, the car becomes the mini-scanner.

Agreed. That is the essence of the Equinox Fuel Cell fleet.

Peace,

Martin

 

Hi,

I found some supporting data:
http://www.just-auto.com/article.aspx?id=93209
The quote, ". . .wanting an environmentally friendly vehicle is one of the least-cited reasons for purchasing," pretty well nails down the 'image' CNW Marketing kept trying to claim.

Bob Wilson