Tag Archives: Innovator’s Dilemma

The 1-2-3’s of EV market share in the US

My article on the 1-2-3’s of electric vehicle adoption in the U.S. went up on GreenCarReports on the weekend. The commentary went through a title change – a procedure familiar to many famous writers, and many more of us unknown mediocrities. :)

About fifteen years after a publisher’s first impression of Jane Austen’s First Impressions was as negative as its heroine Elizabeth Bennet’s first impression of Mr. Darcy, she rewrote the title (and, oh yeah, parts of the book) in the trochaic verse style, giving us Pride and Prejudice. Which is not to be confused with the similarly-titled literary masterpiece, Pride and Prejudice and Zombies.  :)

The article involved breaking U.S. vehicle sales in 2013 by make and model, done by Tim Cain at GoodCarBadCar.net, then looking up manufacturer’s suggested retail price for each and every one – done by me. After that, it was a straight-forward (albeit time-consuming) matter of making macros to do my bidding – in this case, slicing up the sales statistics by price point and vehicle type.

The 1-2-3 in my original title referred to the fact that, if one excluded trucks and crossovers/SUV’s (since the Toyota RAV4 EV is the only electric vehicle offered in those categories, and then only in California) then electric vehicle market share turned out to be:

– about 1% of passenger cars (again, excluding trucks and x-overs/SUV’s)

– about 2% of passenger cars with a base MSRP of $20,000 or more

– about 3% of passenger cars with a base MSRP of $25,000 or more

And way up in the nosebleed section of the luxury car market – where “high” might not just refer to the prices* – Tesla got about 17% of the passenger car market among vehicles costing $62,400 and up. (Tesla’s Model S costs $62,400 after U.S. federal incentives.)

Name-dropping Edwards Deming

One fun aspect of the article was that I was able to weave in references to W. Edwards Deming, the Godfather of statistical quality control. It’s the latest addition to my list of occasionally-Canadian cross-references, including:

– the Innovator’s Dilemma and Kleiber’s Law (both from this article)

– GM’s old philosophy of “a car for every purse and purpose” (here)

– Canada’s on-again/off-again aspirations to annex Turks and Caicos (here)

– and Wayne Gretzky getting traded to the Los Angeles Kings (here)

And the writer’s cut

Verbose babbler that I am – Scrabble players and spelling bee champions alike might say I verge on “logorrhea” — I came in a couple hundred words over target. Or, as I like to think of it, “overachieved”. :)

As a result, the following was originally present just before the Slimming Down U.S. Sales heading.

– – – – – –

As is so often the case for plug-ins, hybrid vehicles offer an apt comparison. In 2012, hybrids claimed about 3.1 percent of the U.S. auto market, and 1.5 percent of the worldwide auto market. (1.2 million of 81.8 million vehicles.)

On the surface, this looks grim – fifteen years after the Prius premiered, hybrids remain in the low single-digit percentages. But better context comes when we focus on Toyota: in 2012, their third-generation hybrid technology was in a full 16 percent of their sales – almost one in every six cars they sold!

This added context helps us understand that bureaucracy, not technology, kept hybrid vehicles marginal: if corporate priorities had been different, there’d be far more hybrids on the roads today.

– – – – –

Fortunately, content is highly recyclable (as many a plagiarist and plagiarism victim is aware) so hopefully I’ll have a chance to deploy the above when I wind up 122 or so words short on an article. :)

– – – – – –

* being a lefty, I’m predictably happy about the fact that the U.S. seems to be easing up on its War on Drugs, which as Matt Taibbi recently noted, is a war waged mainly against the non-wealthy and the non-white.

But it was probably predictable that this would happen, because the winners of the past four Presidential elections were the candidates who’d done cocaine in their youth. (Obama wrote about it in his autobiography, and GWB has avoided making outright denials and was allegedly arrested for possession in 1972.)

The last time someone who’d never used the drug was elected President, Microsoft was king of the world, and Apple was almost bankrupt. Oh, how things change…

If Republicans and Democrats alike have been willing to fund-raise, campaign and vote for candidates who’d done hard drugs, it’s hard to imagine their attitudes towards drugs and drug users wouldn’t soften. And maybe, just maybe, that can lead to legal priorities more focused on prevention/rehabilitation, than on punishment.

Heck, if the U.S. can close enough jails currently crowded with non-violent drug offenders, that might give them a good excuse for that perennially popular bipartisan American activity, lowering taxes! :)

The quest for the golden meme

https://i0.wp.com/photoinf.com/Golden_Mean/Stuart_Low/The_Golden_Mean/goldenmean.gif

Golden mean image sourced here.

It’s been a pretty good month, in terms of writing. Over at GreenCarReports, I had my piece on September EV sales in Canada, a Canadian Thanksgiving-centric story riffing on the country’s nationwide EV charging network, and discussed what our EV drivers do, to get through Canadian winters.

Topping that off, Corporate Knights will be running a piece of mine, in an upcoming issue!

Innovator’s Dilemma, Toyota edition

Coolest of all, though, was a Jeff Cobb story in HybridCars.com, which referenced my article on Toyota’s Innovator’s Dilemma with Electric Cars (GCR version here, bonus blog notes here).

HybridCars

It’s nice to think you’ve contributed to the public discourse, or helped “frame” the conversation around a topic one cares about. Even though you may well be one of several like-minded people who came up with the idea independently. :)

The surveillance state as an auto-immune disorder

Another example of converging memes — or maybe, just maybe, someone else reading me and liking my talking points — comes from The Guardian, which ran a comment-is-free column which included the line:

“The American body politic is suffering a severe case of auto-immune disease: our defense system is attacking other critical systems of our body.”

One of my mid-summer blog entries — The surveillance state is an autoimmune disorder — used imagery to that effect. To my elation, that piece actually got picked up by a few financial blogs, whose curators thought the metaphor apt.

“In this sense, [the surveillance state’s] behaviour maps to that of an immune system that has been hijacked by an autoimmune disorder, and is treating the body’s own cells as invaders. The main difference is that the surveillance state exists at the societal level, while autoimmune disorders exist at the individual level.”

…and we wrap up in “Bloom” County…

My biggest contribution thus far — the closest I’ve come to a “golden meme” — has been a line from the McKinsey piece I coauthored, which read:

“…an expansive transmission grid dominated by a few central power plants is vulnerable to disruption from both natural phenomena and human malevolence.”

Basically, if you have a few centralized power plants, earthquakes, hurricanes, and other natural disasters can have catastrophic consequences if they strike at the wrong place(s). Ditto if saboteurs were to strike target those key bottlenecks. But if your grid is fed by thousands of locations spread across a wide geography, it’ll be harder to knock it offline, because no single bottleneck or node will be as crucially important as in a centralized system.

Bloom Energy adopted it as one of their key talking points, as evidenced on their website and elsewhere. Which I found annoying as a fuel cell engineer at one of their competitors… but which I found delightful, as a writer! :)

Their business resiliency page mentions natural disasters once, and disruption twice:

Bloom 1

A few select press releases (e.g. March 2012) also leveraged my work. Eagle-eyed readers will note the use of vulnerable … disruptions … human [intervention] … natural [disaster]. The talking point was repeated in numerous media outlets, as a quick Google search revealed.

Bloom 2

The earliest Bloom Energy story I could find which references the “distributed grid is less vulnerable to terrorist attack / natural disaster” factor is this Dec 2009 story from The Atlantic, titled Who Needs The Grid?

Bloom 3

Since electron-democracy was published in March 2009 — nine months before the article in The Atlantic — and, carrying the McKinsey imprimatur, would likely have been passed along to Bloom, I’m pretty confident that I know where that talking point came from.  :)

It’s possible that Bloom could have simultaneously come up with this phrasing and framing on their own (the meme equivalent of convergent evolution) and I’m okay with the uncertainty. In the end, it allows me to blithely assume that my creation has enjoyed its biggest success, in others’ hands. Kind of like how so many Canadian artists and athletes eventually move to the United States, I suppose. :)

The Innovator’s Dilemma, Toyota edition

280px-1st_Toyota_Prius_--_07-28-2011

This car — yes, this car — has impeded Toyota’s electric efforts

My post on how The Innovator’s Dilemma explains why Toyota lags in electric vehicles — and how Kleiber’s Law explains there’s nothing for them to worry about (yet), is now up on GreenCarReports.

While the Tesla stats were cooler to have dug up, and will probably enjoy a broader readership, this particular piece was more gratifying to write; the Innovator’s Dilemma is a fairly well-known concept in business circles, but there’s a tendency to incorrectly think that all industries get changed and disrupted quickly. To adapt from yesterday’s screed, the world of software changes a lot more quickly than the world of stuff.

And Kleiber’s Law probably (partially) explains why.

The GCR article had to be edited down, and some of the rejected detritus included this little comparison of hybrid and EV adoption rates below. Think of it as rounding out the “complete and unabridged” version of the article.

Note: I thought electric vehicles would have roughly the same adoption rate as early hybrids, figuring that greater sales due to a broader product selection from various manufacturers, would be offset by lower sales due to the higher sticker price. Boy, was I wrong. :)

Though I might claim that gov’t rebates “distorted the market” (in a very positive way, mind you) I’m not so egotistical as to be unable to admit to mistakes, so I’ll file that for future learnings… after taking this quick religious diversion. :)

A quick religious diversion

On the topic of “complete and unabridged” versions, people who peruse the Christian scriptures (the “New Testament”) will notice that the Gospel of Mark is a lot shorter than the Gospels of Matthew and of Luke. This is most likely due to the fact that back in the day, there were two standard scroll lengths: a short one, and a long one. Kind of like how we have letter paper (8.5″ x 11″) and legal paper (8.5″ x 14″) today.

Mark, chronologically the first of the three to be written, was written on a short scroll, and Matthew and Luke wrote on the longer ones.

A more interesting case is that of the book, Acts of the Apostles, commonly credited to Luke — whose name almost certainly wasn’t Luke, because people tended to assign famous works, to more famous people. The same tends to happen in our modern era — for instance, this British revocation of the American Declaration of Independence  is commonly attributed to John Cleese, though he didn’t write it.

Acts exists in two commonly-circulated versions, one about 10% longer than the other. While this is less impressive “genetic variation” than one finds in other texts — the Buddhist Dhammapada has more variants, possibly because it was translated into multiple languages early on, before anyone with overarching authority tried to establish a “canonical” version, as happened in Christianity. There, someone identified by scholars as “The Ecclesiastical Redactor” (possibly Polycarp of Smyrna) created a standard edition fairly early on. There are many reasons for hypothesizing this, not the least of which is that essentially all manuscripts available to us share the same abbreviations of key terms (from memory, Theos is abbreviated Ts and Iesous is abbreviated Is).

All of which is a phenomenally long-winded, trivia-filled way of saying that the text appended below would form the “10% longer” version of my GreenCarReports article.  It originally was included before the paragraph “The Innovator’s Dilemma – why Toyota’s tepid on electrics”.

Hybrid history and the plug-in path

Plug-in electric vehicle enthusiasts have exchanged many a high-five over the fact that in the United States and probably elsewhere, plug-in adoption rates have thus far surpassed hybrid adoption rates. Here again, context is valuable.

In the first four years of hybrid availability in the United States (2000-2003) oil was cheap, and consumers could choose between three hybrid vehicles — two small (the Prius and the Civic Hybrid) and one even smaller (the Insight). These were sold by Toyota and Honda, who shared about 17 percent of the automotive market between them.

In retrospect, it’s unsurprising that electric vehicles are being adopted faster, given the greater awareness of our environmental challenges, higher oil prices improving the cost/benefit equation, government incentives, and — perhaps most crucially of all — widespread automaker participation.  

By the four-year anniversary of the Nissan Leaf and Chevy Volt’s December 2010 retail debut, ten carmakers will offering production plug-in electrics stateside: BMW, Daimler (Smart), Ford, GM, Honda, Mitsubishi, Nissan, Tesla, Toyota and VW.  (Fiat is excluded from the preceding list, as the 500e is a compliance car available only in California.)

These automakers control about 75 percent of the US auto market, and by December 2014 their product offerings will range all the way from subcompact commuter cars to SUV‘s. To adapt Alfred Sloan’s old phrase, there’s now a plug-in “for every purse and purpose”. Fierce competition has already resulted in lower prices, which will only accelerate sales volume, which will itself improve economies of scale.