Who Killed the Electric Car? Timid executives at General Motors

I recently watched Who Killed the Electric Car? and found it quite interesting from a business perspective. Narrated by Martin

GM’s main reasoning to kill the car was that there was insufficient demand for the automobile. Chelsea Sexton says this argument is unconvincing because she, as a lead marketing employee for GM during the time of the program, knew there was a waiting list upwards of a thousand people ready to purchase the vehicles if they were available. I cannot believe that a thousand people, or even five thousand people, is enough of a business case to put a vehicle into full scale production. GreenCarCongress.com says Toyota sold 9696 hybrid Priuses in June 2006 alone. A preliminary demand for a few thousand EV1s doesn’t seem like enough of a proven market to justify, on its own, taking the car to full scale production.

Wikipedia puts the retail cost of the EV1 at between $33,995 and $43,995. At that price point, the market for a two seater commuter car with a range of ~120 miles (or even a normal gas engine range of ~300 miles if you assume battery technology improvements) would be limited to those in the middle and upper class. It wouldn’t be cheap enough to allow widespread adoption by the average commuter. I suspect that if the EV1 went into full-scale production, the cost of the components probably would have dropped considerably, but even if you assume a retail price of around $30,000 for a fairly-equipped model, it would still be in the higher end of the two seater sports car market. From a financial perspective, I believe GM was being truthful when it said the vehicle simply didn’t make sense from a short-term financial perspective. My argument is that the EV1 was not a platform developed for short term financial profits. It isn’t as if they slightly tweaked a new model, rebadged it as something else, added a few bells and whistles, and pushed it out to market. The EV1 was a completely new idea, built around new technology that offered the possibility of revolutionizing the entire auto industry. It wasn’t going to make a killing overnight, and GM should have known that from the start.

From my perspective as a consumer, GM and most of the american auto industry looks timid and weak. Unwilling to take risks for fear it may jeopardize short-term profits, they are not able to lead technological innovations and are unable to remain competitive with their overseas counterparts. The story of the EV1 shows that, technologically, GM may have been in the #1 position to execute on the production of a mass-market electric vehicle, but they wouldn’t do it from a business perspective and that is shameful and scary for the future of the american auto industry. Regardless of pressures from outside factors such as the oil and auto-repair industries, GM needed to be strong from a business perspective and see the potential for long-term profits. They squandered their opportunity and now, 10 years later, are suffering for it. Being bed-fellows with the oil industry may feel comfortable for them, but looking out for their own long term interests is what will lead them to long term success. The death of the EV1 program at GM was surely fueled by outside forces such as CARB and the oil industry, but the ultimate responsibility for the death of the program should lie with GM and their incompetency at being a leader in the worldwide automotive industry. They were on the cusp of being a technological leader in the industry with the EV1, but they blew it with their timidity of taking a risk. They chose to focus on short term profits instead of focusing on the opportunity of explosive growth long term with an electric car platform that could lead the way in innovation.