GM risks it all in a Chevy Volt jig meant to woo "rational" consumers
By Matt Jansen
In light of its declining market position and damaged reputation, GM has realized that it’s time to take some risks, and it’s gambling a lot by developing technology for more fuel efficient vehicles. The Chevy Volt is at the forefront of that initiative and GM is betting that consumers will continue to make rational decisions and that gas prices will stay high or rise even more.
The trend is especially relevant in California which now strongly favors imported brands like Toyota and Honda, according to Reuters. Expanding in markets like California “has been increasingly tough for GM in recent years and the company has also taken flak for killing an earlier experimental electric car program in the state.” GM is hoping the Chevy Volt will change that.
Environmental advocates, particularly in California, have urged automakers to develop plug-in vehicles like the Volt, which GM sees as part of a bid to win back consumers who have abandoned the Detroit-based automaker because of concern about fuel economy and the environment.
But GM is carrying a lot of risk by assuming that:
- Gas prices will stay high or continue to increase. That’s a fair possibility, but it’s difficult to predict how an oligopoly (oil companies) will react to encroaching technology that threatens the entire industry.
- Consumers will continue to make decisions based on economic scarcity, rather than preferences in style or performance.
- It’s technology, as seen on the Chevy Volt, will outperform cars from rivals like Toyota and Honda. That’s where timeline plays a critical role, because if GM pauses in its mad dash forward, competitors will catch up.
That in mind, it’s encouraging to hear that Chevy is on track for a 2010 release of the Chevy Volt. Chief Executive shared that “so far we’re on schedule. . . our optimism is building. Consumers are acting pretty rationally.”
. . . for now.
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Stumble It!
May 2nd, 2008
The drop in costs per barrel that derailed the last big push to diversify and develop alternatives from petroleum isn’t likely to be repeated. OPEC lowered the price because of concerns over lower demand for product, and moved the alternatives costs back into the financially stupid column.
China and India with other emerging markets make it unlikely a repeat will happen.
May 5th, 2008
….wait, how is GM carrying a lot of risk by assuming that gas prices will stay high and consumers will continue buying cars based on economic scarcity? It seems to me that they’d be carrying a lot of risk by NOT assuming that this is the case. Honda and Toyota did, and produced more economical conventional vehicles and hybrids. Maybe that’s why they’re more popular?
Technology is another matter, although Chevy seems to have a bit of a head start with this type of hybrid.