Editorial board
Kristen M. Daum
Marilyn King
Zack Colman
Liz Kersjes
Nick Ayala
Meredith Skrzypczak
Electric car may not be enough to save Big Three
Start your engines, Detroit, but don’t forget to plug in your car overnight.
The Big Three auto companies unveiled several electric concept cars at the 2009 North American International Auto Show as the car manufacturers attempt to keep their collective heads above water.
But there is one thing these companies are forgetting — electricity and water don’t mix.
While it’s admirable to see the Big Three finally doing something to address energy concerns and consumer dissatisfaction, it may be too late and too soon for such a measure.
Indeed, the Big Three lack the innovation and, in some cases, quality of their foreign competitors, so this fresh emphasis on electric cars is necessary.
However, whether such a venture can be made profitable is unclear, and mass-producing small amounts of these cars is more symbolic than anything.
The reason for small production numbers for these new cars is simple — there isn’t a market for electric cars.
That is not only because consumers haven’t been introduced to such cars, but also because they will undoubtedly be more expensive than their petroleum-powered predecessors.
In these economic times, it’s hard to imagine people shelling out money for a brand-new electric car if they can get a used sedan or new minivan to save a few thousand dollars.
Consumers will not be entirely sold on the Big Three until they can prove they’re financially solvent.
Issues such as warranties and customer service should concern future buyers, because it’s not a guarantee that such things will remain intact.
Additionally, these concept cars are scheduled to hit the roads in 2010. If the Big Three fail to bolster their current car lineup, their management officials will participate in a Chapter 11 lineup.
Electric concept cars — the key word being “concept” — are hardly a solution to the Big Three’s gigantic problems.
They will be produced too few in quantity to make an impact, and any car company that relies on its truck sales to achieve any semblance of profitability is in trouble.
Even the Toyota Prius, the car that is virtually synonymous with “hybrid vehicle,” had sales of 8,660 cars in the United States in November 2008, the lowest total since January 2007.
The Big Three must instead focus on improving its current products to remain afloat. The Big Three cannot expect to corner the electric car market, and even if they do, foreign competitors will find a way to do it cheaper.
This electric car push will certainly increase consumer confidence in the companies, but that doesn’t mean people will be ready to open their checkbooks for such cars.
The Big Three must realize that little bells and whistles such as a built-in iPod charger, which will surely bedazzle future owners of the 2011 Chevrolet Orlando, cannot be significant selling points.
These companies are past the point of luxury — it’s time to admit they’re scrounging for pennies.
Published on Sunday, January 11, 2009
Comments
Steve S.
01/12/09 @ 9:02am
It’s not the Big 3 that believe electric cars are their salvation. It’s their new masters in Washington DC who head the National Bank of Taxpayers that demand GM and Chrysler bow at the Green Altar. This bailout is not about making the Big 3 profitable. It’s about keeping union (i.e. campaign contributors) jobs and appeasing the environmentalists. GM and Chrysler know their only hope for survival is to keep the politicians (who control the purse strings) happy.
Joe
01/12/09 @ 9:09am
Steve, who do you think contributes more to political campaigns? The UAW or Exxon Mobile?
Steve S.
01/12/09 @ 10:23am
In the 2008 presidential campaign…
Oil and gas industry donated $5 million. 25% to Dems / 75% to GOP
Labor donated $1 million. 96% to Dems / 4% to GOP
What’s your point?
O.K.
01/12/09 @ 11:24am
So the oil and gas industry donated 5x the amount of money than that of the labor unions, Steve S.
What’s YOUR point?
Steve S.
01/12/09 @ 11:45am
Joe believes Exxon’s contributions are an issue. Not sure why he (or you) believes that’s an issue. The market doesn’t believe electric cars are the answer – at least not in a time frame that will matter for the short term viability of GM and Chrysler. If either company was responding to market conditions, they wouldn’t be promoting these concept vehicles. They are catering to politicians, not the market. And the politicians have an agenda that has nothing to do with profitability.
where to begin?
01/12/09 @ 12:03pm
“there isn’t a market for electric cars”… Technically, I guess this is correct. Since electric cars are not yet available there cannot be a market for them (yet). Not at all the same thing as saying that there wouldn’t be one, is it?
They wouldn’t ‘undoubtedly’ be more expensive than internal-combustion cars. Although the initial price would certainly be higher, this could very well be offset by actual ownership costs (not paying for gas, but more importantly, not having mechanical parts to replace).
Finally “in these tough economic times” seems to refer to the here-and-now, but the article acknowledges that the cars won’t be available for several years. While it’s completely possible that the economy won’t recover by then, it just might.
All-in-all, this editorial pretty much lives up to State News expectations.
Ian
01/12/09 @ 1:01pm
For the Big Three it’s probably not going to be about the future, it is going to be about the past and missed opportunitities. As for the debate over big oil and the unions, you need to throw management into that mix as well. I think that CEO’s need to be fairly comensated, but I find it hard to believe that any CEO is worth compensation packages worth tens of millions a year (just as I think some union workers are over compensated for the work they perform).Greedy is good as long as the cash flow is there and there is little competition.
For decades the Big Three ruled – they had no foreign competition and a huge country addicted to their cars (there is a political reason for this car addiction, but I won’t bore you with that). The Big Three have had their chance to get it right – they lived through oil embargos, the introduction of foreign imports, recessions, etc. BUT what they did not learn was that their is a difference between merely surviving – and have a plan to prosper in a changing world market.
They chose to survive, but not plan. I find it hard to believe that not one single person in these organizations rose a red flag long ago.
Joe
01/12/09 @ 1:43pm
My point is that the oil companies have far more influence over either party than the UAW. The development of the Chevy Volt started years ago. This is not a way to get them to “bow at the green altar.” This is merely so GM can say, “See, we don’t just make giant SUVs that use lots of gas.” Kind of like Chevron and Exxon’s “we’re researching alternative energies” commercials.
And the electric car was already created and destroyed by GM, partly due to the influence of the oil companies. There were several other factors, but an absence of demand was not one of them. I recommend everyone on this thread watch the documentary “Who Killed the Electric Car?” You don’t even have to watch it, just Google it and read up.
Bob
01/12/09 @ 1:58pm
I whole-heartedly disagree with this editorial. They are way off-base. The American car companies have the same, if not better, quality as any foreign vehicle.
Who killed Joe's Brain
01/12/09 @ 2:57pm
Joe – if you believe “who killed the electric car” we all got more problems. Rememeber at the end when they are trying to lay blame (I still couldn’t figure out why they didn’t make a car instead of the movie). They talk about the consumer for 3 seconds. Where is Toyota’s electric car. Same time, same thing. I bet a bunch of bullies from GM went to Toyota to steal their only prototype and kill it too. GM WANTS TO MAKE MONEY. IF THEY COULD DO IT WITH AN ELECTRIC CAR THEY WOULD. Please learn all about our government and rules and regulations required by automakers if they are going to have serviceable vehicles on the road. It ain’t cheap.
Huh?
01/13/09 @ 9:37am
Who ever said that the Big 3 are relying on electric cars for a turnaround? This editorial equates to saying, “Grass is green”, but an editorial board published it and it spans several paragraphs.
The State News will be proven wrong on electric cars
01/13/09 @ 12:28pm
“There isn’t a market for electric cars”
—The State News, January 13, 2009
• “There is no reason anyone would want a computer in their home.” — Ken Olson, president, chairman and founder of Digital Equipment Corp., 1977.
• “This ‘telephone’ has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us.” — Western Union internal memo, 1876.
• “The Americans have need of the telephone, but we do not. We have plenty of messenger boys.” — Sir William Preece, chief engineer of the British Post Office, 1876.
• “The bomb will never go off. I speak as an expert in explosives.” — Admiral William Leahy, U.S. Atomic Bomb Project.
• “Airplanes are interesting toys but of no military value.” — Marechal Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre.
•“With over 50 foreign cars already on sale here, the Japanese auto industry isn’t likely to carve out a big slice of the U.S. market.” — Business Week, August 2, 1968.