Last week, after announcing massive losses from continuing operations,both GM and Ford laid out their plans for survival in an age of ever diminishing prospects.
GM first.A company that has symblized the ascendancy of the finance and accounting men over engineers and quality men,finally went for broke and now has staked its survival on an electric car called the Volt.The car is really a hybrid that can travel about 40 miles on an initial charge without any gasoline.After that a gasoline engine is used to recharge the battery which powers electric motors driving the wheels.
The GM version of the hybrid differs from Toyota’s more famous Hybrid Synergy Drive which uses two drive trains in parallel.A conventional gasoline engine mated to a transmission is used alongside a battery driven electric motor.This parallel hybrid system has been tested in over a million Prius autos in the past ten odd years and has been a resounding success.It delivers excellent fuel economy, over 50 miles per gallon,is reliable and has had very few reported problems.
If GM wants to make a break from this Toyota version, it will have to convince the public that its system is reliable over the long term,it delivers the fuel economies promised and that its price is within reason.The crucial missing link in GM’s strategy is the Lithium-Ion Battery which needs to be developed to provide the power to the motors.The infrastructure to charge the batteries also needs to be available.
Given GM’s track record in bringing new products to the market,the burden of proof is now on GM.If this hailmary pass fails, GM is toast.
Ford, lacking GM or Toyota’s resources, has wisely opted to license Toyota’s Hybrid Synergy Drive.But Ford’s problem like GM’s is that over the past four decades they have steadily lost ground in the perception game against the Japanese and the Germans, and increasingly against the Koreans.Their product line is seen by many as inferior,lacking in technical sophistication and simply tiresome.What is worse is that they have lost the younger generation completely.My son who is a car nut says that he does not know any one in his class that purposely goes out and buys a Ford or a GM,old or new.
I do not blame the engineers or the technicians who are very dedicated to their companies.They have been let down by the managements at GM and Ford which are infested by the Harvard Business School types to whom understanding the technical intricacies of a car is the equivalent of getting a root canal job.They are at home in the world of financial statements,balance sheets and income statements.They have not realized that those financial results come AFTER a product is designed, marketed and sold.
I just hope that GM and Ford have fortune smiling at them soon.Unfortunately, their rivals don’t seem to be standing still.The plug-in version of the Prius followed by a Lithium-Ion powered version is expected in 2010.
