Chrysler announced yesterday that they will be introducing electric vehicles beginning in 2010. We know GM is pinning high hopes on the Chevy Volt. And we know that the interest in hybrids and electric vehicles are a reaction to factors such as global warming, gas prices and dependence on foreign oil. So car manufactures are responding by developing new cars that use alternative fuels, multiple fuels, etc. Does anyone else see the problem here?
I think all of the auto makers are suffering from the Narrow Definition Trap. That is when a business defines itself by the markets it competes in directly and ignores the larger context. The old cliche is of the railroads thinking they are in the railroad business and not the transportation business. So, with the car manufacturers, they see themselves as being only in the new car business. They can only think to solve the fuel issue by offering brand new cars that run on alternative fuels. But what does that mean to the problem? There are over 250 million registered vehicles on the road, according to the Bureau of Transportation Statistics. In 2007, car manufacturers sold just over 14 million new cars and trucks in the U.S. We can assume that not all of those were replacement vehicles, many were added to the total number of cars on the road.
Do you see the opportunity that Detroit is missing? What if they could develop a technology and a process for making all of their cars made in the last five or ten years into hybrids? Or electric vehicles? Why does the solution have to be a new car? If my car is perfectly fine other than the fuel it runs on, why can’t I replace only the engine (and maybe the drivetrain)? I’m not saying it would be easy. But think of it this way, which business would you rather be in: the operating system business or the computer hardware business? Sales of new engines would be far, far greater than new car sales. Heck, the margins might even be better. The dealers would likely embrace it as well, as it would add significantly to their service business. There would be a little cannibalization of new car sales, but people who really want a new car are going to buy them anyway.
This type of thinking could also affect the development of new cars. What if you built a car that could take any one of two, three or even four different powerplant options? Say I wanted a Ford Explorer, but could not only choose what powerplant I wanted today, but knew that in the future I could swap it out for a different technology? Maybe a hybrid today, all electric in a couple years, and hydrogen in five years.
This is an example of what I call Ultimate Ideal thinking. It requires you to think beyond the product and the way you do things today. Unfortunately, Detroit tends to focus more on what is ideal for them instead of their customers and what is easy today, not ideal for tomorrow.
