Proof of Concept

As the sales numbers for the Chevrolet Volt and Nissan Leaf roll-in pundits and talking heads, most vociferously on the right wing of the American political culture, are raining down damnation.  Their argument is that low sales figures prove that vehicles with alternative powertrains are not economically viable.  Well, as gas prices go above $4 a gallon in parts of the U.S. some of that argument may erode.

At the end of 2011 7,761 Volts had been sold and 9,674 Leafs had been sold.   The talking heads are besides themselves.  General Motors is idling the production facility where the Volt is manufactured with about a 6 month supply on dealer’s lots.  Nissan is much tighter lipped about the Leaf and production plans, but a facility in the U.S. is planned to go online to produce the Leaf sometime in the near future.

These vehicles, however, cannot be seen in the same light as a normal production car like the Ford Focus or Chevrolet Cruze.  Each is a proof of concept.  It is one thing to make a concept car and it is quite another to coach build a few examples without the intent to ever mass produce.  Look at Tesla.  Sure, the Roadster is a unique and amazing electric vehicle but is essentially a coach built luxury car for a very small slice of the car buying market.  The Volt and the Leaf, regardless of price, were always intended to prove the idea that one could design and build an alternate drivetrain vehicle in a quantity that would actually move the needle.

The true test is when these vehicles move from the first generation to the second generation where leaps in capability generally occur.  Think about Apple’s products.  What was the leap like between the first generation iPhone and the subsequent iPhone 3 or 4?

As battery technology evolves or is pushed forward by some revolutionary technology what will the Volt 2.0 or Leaf 2.0 look like?  I tend to think the answer will be further range, better mileage or mileage equivalent, increasingly fewer compromises and a cost that is equivalent or less than today’s purchase price.

Furthermore, each of these vehicles needs to be seen as a test case in the underlying technologies that can be leveraged across a vehicle lineup.  The Volt and Leaf are both compact cars in size, but with an evolution the technologies can easily be scaled for CUV or midsize car.

What about the Toyota Prius?  At this point in that particular vehicles history no one can argue that it has not been a success.  It was the platform on which Toyota evolved its gasoline-electric hybrid powertrain and proved that an alternative powertrain vehicle could be sold in large numbers.  The vehicle has gone through three generations since 2000.  It has even spawned two new models carrying the Prius name—the V and the C.  In the U.S. sales have averaged about 140,000 per year in 2010-11.  But what about its first year in the U.S.?  In 2000 Toyota sold ~6,000 and ~16,000 in 2000 and 2001 respectively.

In the first year of each vehicle’s sales history, the Volt and Leaf outsold the first year of the Prius.  Why are we not comparing apples to apples when we talk about the relative success of these vehicles’ introductions to the market.

A bigger threat to the Volt, Leaf, and any other alternative drivetrain automobile is the continued evolution of the traditional internal combustion drivetrain.  The latest crop of compact cars are achieving 40 miles per gallon on the highway in the EPA test cycle, which is excellent.  Heck, Subaru is able to produce an Impreza with supposedly fuel sucking full-time all-wheel-drive that is rated at 36 miles per gallon.

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