A quick note from the electric vehicle show in Los Angeles this week:
It’s true that most of the credible car-makers have EV products scheduled for delivery in the not-too-distant future. But they’re obviously hedging their bets, delaying their market entrance as long as possible, so as to maximize the penetration of their pipeline of gasoline powered vehicles.
It’s pretty clear that their hearts are not in this. And why should this be otherwise? If you’re an auto OEM, you see nothing but an ocean of downside: billions of dollars of R&D, a dozen different kinds of risk including exposure to tort attorneys from hell, diminution of sales revenues, cannibalization of your customer base, huge costs of customer support and education (that will still wind them up with upset customers), the expense of supporting multiple platforms, shotgun weddings with charger suppliers and standards, etc. No profitable industry really embraces change, regardless of its rhetoric — and that’s true in spades here.
At conferences like these, I’m always amused by the hoopla that surrounds what is actually the routine, the clearest possible cases of business-as-usual. The car companies tout their new new vehicles as game-changers, yet anyone can see that they’re anything but. Yesterday’s antics happened to feature the unveiling of the Toyota RAV-4 Electric SUV, with all the loud music, pretty girls, and bright flashing lights with which every new car or truck announced at an auto show has been introduced over the past half century.
But its MSRP is just hair under $50K, almost exactly twice the sticker price of the gasoline version of the same vehicle. How exciting is this, really? The customer gets to pay twice the price for an inconvenient car? Take a step back and ask yourself: Who really wants it at that rate? A few wealthy environmentalists?
So will this pre-ordained market failure bring disappointment or some sort of shock to Toyota? Not in the least. They win regardless of the success of the RAV-4 Electric. With this product launch, Toyota’s did what it was finally forced to do, and not a damned thing more.
After their unimaginable success in positioning themselves as the first eco-friendly auto company 12 years ago with the Prius, and having milked that cow far longer than anyone could have possibly expected, they’re finally back with a product in this space that they can promote. Regardless of how dismal the sales figures, they’ll be making a few of these pure battery EVs — while beating the living hell out of the public relations angle to ensure they regain their former stature as an environmentally conscious company.
Which they’re clearly not. With one of the biggest and best staffs of automotive engineers, if they had chosen, they could have led the world to green transportation. Instead, they took more than a decade introduce a $50,000 car that only a few people will buy. Their sales revenues in this space will represent a minute fraction of 1% of the gas powered vehicles they’ll be selling around the world for at least a generation to come — at a handsome profit.
The bigger picture: Big Oil and Big Auto will remain blood brothers for a long time to come.
God’s in his heaven/All’s right with the world.
– Robert Browning
