Implications
General Motors, Ford, and Chrysler all made the same mistake in 1997: They failed to see any consequences for themselves from a Japanese carmaker's introduction of a new power train technology especially since it was based entirely on American technology. The then Big Three decided that Toyota was barking up the wrong tree and wasting time, money, and resources on a dead end. After all, they reasoned, GM had proved that even if the Detroit-area-invented nickel metal hydride battery could improve the performance of their all electric GM EV1 beyond the performance it was getting from lead-acid storage cells the EV1's performance would never match the speed, range, acceleration, and cargo carrying capacity of petroleum hydrocarbon fueled cars, and Americans, their focus groups assured them, would never be satisfied with less. GM then and therefore led the rest of the US OEM automotive industry down the garden path of 'cost cutting" as the only way to stave off the Japanese invasion.
Analysis
The Toyota Prius was, and still is, the leading mass produced hybrid car that depends on nickel metal hydride batteries, a completely American innovative discovery. In high tech, however, following someone else's lead usually means playing catch up.
When Toyota was engineering the Prius GM was simultaneously working on the EV1, an electric car powered by rechargeable lead acid batteries. Toyota had discovered the nickel metal hydride rechargeable battery invented and developed by Energy Conversion Devices, Inc. of troy, Michigan, a suburb of Detroit next to Warren, Michigan, the Detroit suburb in which is located The General Motors Technical Center.
In the mid-1990s GM felt that the NiMH battery was too new and untested for long term reliability and performance to be used even in a limited production car, so the EV1 was field tested originally with 500 units powered by safe, reliable, performance stable lead acid cells then as now the basic starter ignition battery used by the global OEM automotive industry.
The field test of the EV1 was well under way when Toyota introduced the Prius. The Prius was well received but GM had already decided that the range limitations of the lead acid powered EV1 could not be overcome with enough improvement by the then available NiMH batteries to make the continuation of the test, much less the progression of the vehicle to mass production, practical or desirable. The EV1 field test was terminated and the cars repossessed by GM for scrapping. GM was watching the Prius carefully, and it looked to them like a loss-leader designed by Toyota just to give the Japanese company green credentials.
At the sale time that the EV1 was canceled Chrysler was fighting for its existence for the second time in a decade, and it certainly had no engineering assets either of personnel or money to develop hybrid, battery powered, or fuel cell powered cars. Ford was also uninterested in green cars. Jac Nasser had just begun pouring money into his his ill-conceived agenda to make Ford a home for global brands and to look for downstream profits from repair and even recycling operations. Sheer ignorance of the business models used by the repair and recycling industry caused Nasser to waste billions of dollars getting property, plant, and equipment but not the people who knew how to use them and run the businesses at a profit.
Now, a decade after the introduction of the Prius its sales have reached a total of one million units. Had the prius been a gasoline or diesel powered car it would have been canceled long ago with such dismal sales against what must be such enormous engineering and service costs and such completely unknown costs of future problems such as replacing batteries and recycling their components.
Toyota kept announcing that a second generation Prius with performance enhanced by lithium technology batteries would be for sale in 2009 even though such an announcement should have caused sales to slow while buyers waited for the better model. In order o avoid this outcome Toyota finally admitted in April of this year that it had concerns with the safety of lithium batteries, and so, in the interests, it said, of its customers' health and safety it would not be replacing the NiMH batteries it currently uses when it does introduce the second generation Prius in 2009. The next generation prius will have something called an advanced NiMH battery although it is not at all clear what, if anything, that means.
Chrysler and Ford with essentially no in-house development of hybrids or electric vehicles just blow in the exhaust wind from Toyota. Ford in particular has been licensing Toyota's hybrid power train and purchasing the components from Toyota's suppliers under license, so that Ford has nothing of its own. Chrysler, on the other hand, has been cooperating with GM on two green power train projects: 1) The development of a family of new diesel and new gasoline/diesel-like engines with high gas mileage and 2) The development of a hybrid power train using a the new engines and either NiMH or lithium technology batteries.
GM and Chrysler will now begin to introduce in the 2008 model year families of diesel and gasoline/diesel like engined cars with much improved gas mileage. Chrysler will first concentrate on smaller cars and GM on larger cars, SUVs, and some light trucks. GM already has quietly introduced a Saturn Aura hybrid with what it calls an advanced NiMH battery system. This car was designed to directly compete with the Prius, but the Aura is a luxury car, so when GM completes its first group of hybrids the Aura will be the entry level vehicle, but it will be a small luxury model selling for the same price as the Prius 'economy' car.
GM has not withdrawn its announcements that it will have hybrids powered by lithium battery technology either in 2010 or before. It is also touting a fuel cell powered all electric car, the Chevrolet Volt, for the 2012 model year.
GM probably will have hybrids, plug-in hybrids, and fuel cell powered cars in its lineup within 5 years. It will also by then have a full line of diesel engines and diesel-hybrids available.
By the 2012 model year GM will be far and away the world's leader in alternative power train vehicles.
I thin that by 2012 The Ford Motor Company will be gone from the scene and that Toyota will still be playing innovation catch up with GM but that it will be GM, which is ahead.
I think that in 2012 you will be able to get most GM cars and trucks with diesel engines, or in hybrid versions with either NiMH batteries or lithium batteries, and you will also be able to get a fuel cell powered vehicle, which runs on hydrogen from GM. I suspect that gasoline powered heavy trucks will still also be available.
I also think that Nissan-Renault and Honda will both be breathing down the neck of Toyota with offerings demonstrating innovative technology and that Chinese cars, both diesel and hybrid, will be looking by that time to put Hyundai out of business.
Finally I predict that GM will completely restructure its purchasing business model before 2010 and will be moving the sourcing of high tech components back to the USA along with making long term plans to manage the risk of raw material supplies. I predict that the name Lopez will be revered at GM only as that of a comedian by 2010.
Relentless cost cutting as a GM business model has resulted in GM's exposure to Chinese currency appreciation, Chinese resource nationalism, Chinese quality "fade" issues, and the rape of technology and design. If this doesn't stop then all bets are off.
