EVcast #376: The Bo Show

Bo:

I was too hasty to post this comment a couple of days ago.  I came back to it just now to proofread-- I should have done so at the time-- and I realized just now how many typographical and other errors I made.  Better late than never.

I understand why GM may have elected to release the Volt in limited markets-- (California, Michigan, DC) for a few reasons.  GM may feel they only have one shot at a Volt roll-out that is free of humiliating defects: they may have been taking a page from Tesla's playbook, realizing that the Volt is significantly different than any vehicle they had ever released in their history, and to take caution in their first few weeks, just as Tesla had done.  For the first few vehicles off their assembly line, Tesla took extreme pains-- then, over the next few months, as they gained more confidence, they picked up momentum, eventually increasing their production pace significantly.

GM may be antsy at this point-- they may want to have the luxury of ramping up slowly, knowing that if, despite all their best preparations, they still found they had overlooked some issue, the embarrassment of being outshone by the much smaller Tesla might torpedo their recovery efforts.

 

Tesla's rollout could not have gone better-- GM can only hope to do as well.  They cannot afford to be careless: the stakes are too high.

One of GM's problems is that they are producing an electric vehicle that, in ways, is more complex and vulnerable to issues than the Tesla.  Yes, the Tesla is a light, powerful performance vehicle, and far more expensive, and such a vehicle must perform to a higher standard; but the Volt has an engine and generator that the Tesla does not, a system with hundreds of moving parts more than the Tesla, parts that might give ample room for failure.

To deal with this eventuality-- defective valves, or valve springs, or generator issues, etc.-- GM may have wisely decided that if a recall is needed, they don't want to have to deal with irate customers spread all over the country.  The time it takes them to deal with problems that do crop up can be critical to the preceived damage-- look at what has happened to BP in the Gulf.  If they had been able to cap their leak early on.  Tar balls and dead pelicans would all have been a fading memory by now; similar with GM.  If there are thousands of Volts suddenly stranded all over the country with identical problems, it will be much harder than if they are confined to the much smaller markets targeted presently.  GM needs to cover all its bases; they need contingency plans, like BP should have had.

There are more advantages to their planned small market rollout: GM does not have the resources it once had.  If they are to succeed gloriously, they need to saturate their first markets with advertisements and promotional events.  To try to do so countrywide would be difficult or impossible.  And, if their sales go well, satisfaction of their buyers will be infectious: neighbor tells neighbor, son tells father, pastor tells flock.  If their successes are less pronounced, such infectious enthusiasm is reduced.

And, should their efforts be as great as they hope, those parts of the country that do not have Volts will be clamoring to be included in an expanded rollout.

If there are problems with this new vehicle-- even minor ones-- it can scare off new buyers for years.  With plenty of parts and service departments located where the cars are located, something that could otherwise be seen as a mountain can be seem more as a molehill.  Expedient repairs can go a long way to alleviating anxiety of customers trying to decide whether to buy a Volt or a gasser.

If sales are more concentrated in an area that is more likely to buy them from the very beginning-- California and Michigan are more likely to buy them enthusiastically than, say, Virginia or Nebraska-- lots of good things happen, and quickly.   GM can suddenly say, "See! we pulled it off!  We are your EV car company!"  They can say this even though these sales are limited to select areas of the country.

If sales are spread thin over too large an area, it can be like having too few ad spots on TV-- you see it one time, and forget it too soon, and don't have much reason to put it on your to-do list.  But if you see Volts two, three, five times a day, it can seem like a deluge-- like iPhones, the Volt may hit a critical mass.  There are some people that behave like cattle, immersing themselves in every new fad-- Beanie Babies, Pet Rocks, Rubik Cubes, etc.; they are some of the very buyers GM may count on to be their early adopters.

As I was writing this comment a couple of nights ago, the local TV news showed hundreds of people that were lined up in Pasadena for nearly a day, just to get the latest iPhone.  You can bet some of those same people were in the early lines to see Avatar and Toy Story 3D, and will be some of the first to buy a Volt as well.

GM would be making a mistake to try to sell the Volt too broadly, too soon.