Meeting 95% of 95% of buyers needs doesn’t cut it.

Last night I watched the “documentary” Who Killed the Electric Car with by brother and mom.  I put documentary in quotes because it is your standard highly biased account which invalidates it as a true documentary in my opinion.  But that’s neither here nor there.

The point of this post is to point out some of the most overlooked reasons why alternative vehicles have failed in the last 20 years.

  1. 95% of consumers buy their vehicles not based on what they need the vehicle on a day-to-day basis, or said another way what they use it for 95% of the time, but based on all of the capabilities they would like.  The most obvious example of this is 4-wheel drive on SUVs in California.  Most Californians see conditions where 4-wheel drive is valuable about 3-4 times a year.  But those same consumers when they are buying the vehicle say to themselves, “I want 4-wheel drive because I like to go skiing”.  The same principle applies to towing, people capacity, storage capacity and most importantly for electric vehicles, range.  Even though on 350 days a year most consumers don’t drive more than 150 miles a day, it is very important to most consumers that on the remaining 15 days a year they can drive 600 miles if they want.
  2. The low gas prices of the last 20 years.  Everyone forgets that in the mid-eightes gas prices dropped dramatically.  While there was a full head of steam on alternative vehicles but it faultered when gas prices dropped.  Now that gas prices are back up, there is a new sense of urgency and it will last as long as gas prices are high.  However, many people overlook this factor.
  3. Safety regulations.  The car market has a “high barrier to entry”.  In other words, the amount of investment required to become a new car maker is so high that very few companies are even capable of considering it, much less being interested in doing it.  There are numerous reasons for the investment being so high but a big part of it is all of the regulations required to be met including the destruction of a large number of cars for safety tests.  What this means is that Detroit can safely make the same thing year after year because no new car makers are going to be able to come in and steal market share.  As the hybrids have shown, one Detroit is pressured, they will quickly respond.  Figuring out how to allow new car makers into the market would increase the options available to the consumer and force Detriot to be more innovative.
  4. Technology based regulatory requirements.  California and and a few other governments had passed laws requiring electric vehicles be made and sold at certain rates.  That’s the wrong way to regulate because it actually restricts innovation.  The reason is two-fold: one, it gives automakers an excuse for failing.  “You said we had to go all-electric and the technology isn’t available.”  If you instead say “the average emissions of all your car must be less than X” where X is a number that traditional internal combustion engines can’t meet but only slightly so, the car makers are forced to look at other technologies yet bear the burden of justifying their technology decisions.  Which leads to reason number two: By allowing experiementation, excellent solutions that aren’t being considered are given a chance to be vetted out.

There are of course other reasons, but in my opinion, these are the most important yet overlooked ones.

2 Responses to “Meeting 95% of 95% of buyers needs doesn’t cut it.”

  1. Brian Conaghan Says:

    We had a couple folks over for a viewing a week ago, and I must admit, I was left with some of the same thoughts you have had, especially around the percentages they were quoting.

    The thing that jumped out at me was that we drive on average 30 miles a day … well if you target in that range then half of the time you are going to run out of energy. Need to look at the 99.9% point of the distribution.

    The simple one for me was imagining having to drive one of these across the country for a move, something I have done 5 times now. Even if you had a recharge station whenever you needed and could get to 500 miles per charge that would still have you stopping for 5 hours 6 times. Essentially, you now have a car that if you want to move far you have to ship, which would not fit in my ideal world.

    The obvious target audience here is as a second car which is only used for commuting assuming you know exactly where you are going. If in the middle of the work day you figure out you need to travel to your kid’s sporting event an hour away you can forget about it. For good or bad, what the gas engine has done is allowed us to not have to plan at all, which is a hard habit to break.

    And then there was the end, with the “guilty”‘s and “not guilty” came off very unprofessional (ok, so that was a fair criticism of the whole film) … but to me to pretend that battery techonology and cost does not play a role is naive. Today we have the perfect test bed – everybody loves a Prius which can be retrofitted to a plug-in hybrid, but the range is very low. If it was a really viable option we would see a huge push on that front in my opinion.

    I should say that in general I am for better fuel economy and probably even more government oversight of this … and that I drive a Civic hybrid myself.

    I enjoyed the movie as entertainment, but as information I found it too biased to really trust what they are saying to any large degree.


  2. Ken Crawford Says:

    Sorry for the slow moderation Brian. You’re comment nearly got lost in a sea of comment spam.

    A note about the “plug-in hybrid”. Although it’s technically very feasible, it is in many ways the worst of both worlds instead of the best of both worlds because of the weight. There are four components in a car that weigh a lot:

    1. Internal combustion engine
    2. Electric engine
    3. Batteries.
    4. Gas

    -A traditional car only has #1 and #4 but both have to be big.
    -A electric car only as #2 and #3 but they both have to be big.
    -A hybrid has all 4 but each one can be made smaller than the dedicated solution because they all share in the load.
    -A plug in hybrid has a medium #4, a big #1 and #3 and a super sized #2.

    One would think that the plug in hybrid would be just like a regular one but just with a big #3. However, that extra weight requires a big #2 to compensate, one that is even bigger than the pure electric since we’re lugging around a small #1. To add insult to injury, in hybrid mode, because of the reduced efficiency of the electric portion #1 and #4 need to be bigger as well.

    The place consumers would most visibly see the effect of this would be the fuel economy and electric range. The fuel economy would be worse that the pure hybrids (albeit better than traditional cars) and the electric range would be pretty small.

    While there is still hope for the plug-in hybrid, the technical challenges to get it to where the efficiency numbers aren’t depressing (and seeing how the point of all of this is efficiency that’s pretty important) is more difficult than people think.