Interesting news from Ford regarding their roll out strategy for the new Focus EV.
Articles published by Bloomberg and Energy Digital recently revealed their strategy to be a cautious one. Looking to ‘de-risk’ in the face of uncertain demand, the first prong is a build-to-order production set up where customers will have to wait 4-6 weeks for their car to be delivered. Ford says they are taking a different approach to other EV manufacturers by building the Focus EV on the production line along side its ICE and Hybrid siblings. Mike Tinskey told BusinessGreen that, “there are simply too many variables impacting the market that we have no control over, so this gives us real flexibility. If the price of crude rises and demand for EVs climbs we can produce more EVs and fewer gas vehicles”. Prudent stuff, but don’t expect prices to come down through this kind of strategy.
Interestingly Ford are also working on improving other areas of EV purchasing by working with partners SunPower to offer a solar array system with car that apparently could provide enough electricity to drive 15,000 miles annually for the price of less than $10,000 with a 25-year warranty. A similar tactic to Tesla however who do it better, offering energy storage too. On top of this and par the course these days, Ford has developed a mobile app. to relay battery and charging infrastructure information to the driver.
Now it is Ford’s marketing strategy that cause my eyebrow to raise. Apparently they are going to do most of it through Yahoo!. According to John Felice, General Manager of Ford-Lincon sales, they stand to save around $90 million, as digital media campaigns are typically 1/10th the cost of a traditional one. The center piece of the plan is a reality television show on Yahoo! Screen called “Plugged In”, in which people will compete to win the car. Of course there will be a standard healthy smattering of celebrities required to draw the traffic these days.
Felice says this strategy was chosen “because of the lack of awareness out there, people aren’t sure what kind of car they want. Electric is going to grow, but we’re not sure what the consumer is going to want, so we have to be flexible”.
Well I am not entirely convinced a web only ad campaign is going solve this awareness problem.
Ford actually plans to triple their out put of EVs and Hybrids to 100,000 units by 2013. Unfortunately, I couldn’t find what % of this will be purely EV, a bit criticial to this piece I know.
Certainly Fords approach will be an interesting experiment of the power of digital media to promote niche products. The marketing of EVs is largely untested water so a variety of different approaches should help to ensure that EVs get the exposure they need. Its clear what Ford are doing here though, letting more dedicated companies like Nissan Renault bare the cost of breaking the ice ahead whilst positioning themselves to sail behind picking up the profits.
Ford says the Focus EV returns 100 miles on a single charge. Whilst it is currently only available in the U.S. at $39,200 before the $7,500 federal tax credit, Ford plans to introduce it to Europe in 2013. Time will tell if that actually happens or not.
Bob Lutz’s prediction that March would be a record month for the Volt indeed came true. Chevrolet delivered 2,289 Volts last month in the U.S, the most it’s sold in a month since the vehicle became available a little over a year ago.
Also Carlos Ghosn came out swinging at the NY auto show saying that he remains bullish on EVs and that the 27,000 Leafs sold world wide are just the very beginning. He’s standing behind his ambitious predictions that EVs will make up 10% of the market by 2020. Way to stick to your guns Ghosn! (in fact he has practically glued those guns to his hands).
Here is a handy table from the guys over at AutoBlogGreen for Hybrid and Electric sales in the U.S. (I am also interested in the European data, if I find it i’ll post it up). Over all sales of EVs and Hybrids are up 40% on the previous month. The data also throws up other interesting suprises such as the fact that GM actually sold more Hybrids than Ford if you could the mild hybrid eAssist cars.
That is the conclusion of a recent article in MIT published Technology Review. Fisker just revealed their new smaller $50,000 saloon, the Atlantic (previously code named the Nina) and I think we all can agree it looks great. Unfortunately the company has hit some major speed bumps and has been grasping for private investment to replace a lost $300 million DoE loan.
I disagree with Tech Review that if Fisker collapsed it will not be a loss to the industry. It is true that despite Fisker creating a lot of noise and attracting attention, their foot print on the EV industry is a relatively small one but any loss to a fledging industry such as this is bound to hurt.
I bet the 21 people who bought an electric in February are feeling pretty smug right now. I can report that in my area of N. London, there are substantial queues in every single filling station. Click the pic for more info.
Despite increased activity and interest in electric cars by activists, politicians, scientists and finally manufacturers, sales of electric cars remain slow. An article in today’s Sunday Times by Dominic Tobin and John Arlidge states that just 21 new electric cars were sold in Britain last month! Now that is a low amount of cars no matter how you frame it (even if it is one more than Feb 2011).
This is obviously a concern given the large amounts of R&D some automakers have dedicated to these projects. One solution according the authors is to make loss making electric vehicles available through car sharing clubs. This they say will mean “manufacturers can reduce the overall carbon dioxide emissions from the cars they make, and thus keep the EU regulators at bay”.
Below:Mercedes Car2go has been rolled out in France, Germany and the USA
The two big manufacturers that already have car sharing schemes of the kind discussed in the article are Daimler (Car2go) and BMW (DriveNow). Daimler is currently the only one using electric vehicles. The schemes basically allow people to hire cars for short periods of time, pay-by-the-minute and and drop off in any municipal bay. This is all facilitated by a smart phone and a chip installed in a members driving licence. Simple.
So could these schemes be the key to the future of urban mobility? According to the Sunday Times, Mercedes claims 70,000 members and BMW 16,000, whilst world wide membership of urban car clubs tripled between 2006 - 2010 to reach 1.2 million members. Also consider the fact that 80% of under 25’s in Tokyo, one of the worlds biggest consumer markets, don’t own a car (and I am sure you would find similar patterns in other major cities) and you can begin to see the structural issues. These days having a car in a city can be a massive hassle and looking after a tonne of metal in a crowded environment with limited space is stressful.
So perhaps the reason for slow electric car sales does not only come from their lack of range (largely perceived and not relevant in a city) and high price point. It could be the way in which we perceive car ownership that no longer fits with many people’s actual lifestyles.
Car sharing does of course come with its own problems for OEMs, who I’m sure would rather sell a car to 10 individuals rather than 1 car for 10 to share. But looking at it from the other direction, this could just be a great way to access a lot of people who would otherwise not have bought a car at all.
It is in a sense shame that regulation seems to be running ahead of demand for clean vehicles (although this matches historical precedent many aspects of the automotive sector). However, these kinds of solutions could be vital to providing sustainability in the EV market, both to take up demand side slack in the interim and structurally over the longer term. Changing business models as well as perceptions is the next step.
Some interesting related articles
As we saw at Geneva and CES this year OEMs are coming up with ever more ingenious ways to link you to your car. Slick in-dash touch screens, voice and even gesture controlled systems that can connect with your smart phone, link you with Facebook and download new apps are all part of the exciting new wave of in-car infotainment. They represent the new generation of in-car information systems and a leap forwards from the JVC unit I had in my first first car that could only receive 3 radio stations and play 1 jammed CD.
Now some have questioned the safety of all this techology. This Wired article cites a study carried out by MIT that looks into how a driver’s concentration is affected when forced to multitask. Their findings suggest that human concentration is not binary, but much better characterised as shades of grey. So this opens up the discussion, how much is too much?
Above:Probably too much
The study claims that hands free technologies might not be the silver bullet that automakers and policy makers had hoped for. According to study author Bryan Reimer, “hands-free technology does not make driving and technology safe. It can make it even more problematic when people perceive they’re doing something that’s safer” and that the real issue is how much ‘cognitive demand’ should be placed on the driver.
OK so before you shoot the horses, this study is intended as an aid to help create safer in-car systems and does not recommend an out right ban on them. Reimer warns that “drivers don’t know their own limits” and suggests one possible solution could be “technology that would alert the operator they’re functioning in an area where they’re really not capable” (others have suggested removing all but the simplest functions all together).
An interesting thought though, especially as a 2009 study by the Virginia Transportation Institute found dialing a phone made the likelihood of a crash almost three times higher if you’re driving a car and almost six times higher in a truck. Texting in a truck makes you almost 24 times more likely to have an accident. Yeesh.
On top of this analysts at ABI research have found that profits in the infotainment sector are actually set to decline. According to ABI’s 2010 research report profits in the sector are set to fall to $24.8 Billion by 2015 from a high of $29.5 Billion in 2010. Research director Larry Fisher attributes this to “pressure from the aftermarket, and from free or low-cost applications available via smartphone handsets, which will drive down ASPs for GPS/navigation systems so severely that, while the number of vehicles equipped with such systems will double worldwide over the forecast period, revenues for those systems will decline by two-thirds”.
The good news from this is that loss in revenue will largely be confined to in-vehicle navigation and that some of these loses will be offset by growth in the rest of the infotainment sector. In fact Mr. Fisher reports that excluding GPS/NAV services the sector will actually experience a healthy 20% growth over their forecast period.
Above: GM Gogo navigation app streams from drivers iPhone or Android device.
With people choosing cheaper after market navigations (such as Tom Tom and Garmin) or using their smart phones (as this commentator does) one OEM choosing to make the most out of this shift in navigation use is GM. They are exploiting their customers’ penchant for smart phones to increase their sales of not only infotainment systems but navigation software too. Their solution revolves around their latest MyLink unit which allows drivers to connect their smart devices and control them through a 7” touch screen with voice command. Users simply need to download the $50 Gogo Navigation App for their phone and they will be able to stream the navigation through the MyLink system. Not only are their obvious safety benefits from using a 7” centrally mounted screen compared to a small after market device but the low cost and integrated nature of the package should entice new buyers into the market.
Indeed automotive infotainment is now flourishing thanks to standards that prolong obsolescence, which in turn is drawing in third party developers eager to write software with a potential sales base of millions of drivers. This holds the promise of licensing revenue and on-going service revenue from these innovations.
Serendipitously the report ends somewhere near where we started, warning that sustaining revenue might be a bit like trying to nail jelly to the wall. This is because consumers are often reluctant to pay for something they might easily be able to get for free. Meanwhile the looming threat of safety legislation hovers over the industry amid concerns of driver distraction. For example this study by the The National Highway Traffic Safety Administration (USA) proposes that traditional real time navigation should be done away with and replaced by systems that update every 4 seconds.
Despite these concerns I can say with certainty that all of these new ergonomic and streamlined systems are safer and much less infuriating to use than my old JVC. However, like never before manufacturers have more to worry about in this field. The potential for these technologies to enhance the driving experience is large as long as safety is ensured and revenue can be harnessed. A change is upon us and coping with it will certainly require a little lateral thinking.
For some interesting comment and extra information on this topic;