The Chevy Volt Challenge

I am an engineer and business man with my 30 plus year career starting out in the automotive industry.  Due to the decline of the automotive industry I had to rebuild my personal skills, businesses and efforts to diversify and apply them to multiple industries to survive and thrive in the new normal.  I have been able to build a healthy mix of industries I serve including the automotive industry.

When I look at the Chevy Volt I see a great engineered vehicle, yes there were some problems, every new vehicle launched has problems and we engineer our way to a solution.  This negative noise on the technical aspects of the vehicle is meant to discredit it for political purposes.  I had a minor involvement in fixing the fire problem; the solution is sound and will not reoccur.  Other problems will arise, this is what engineers do, they solve problems.

In reviewing the Chevy Volt as a businessman I see major problems with the value proposition and the Return on Investment (ROI).  The price of the Chevy Volt is approaching twice that of the Chevy Cruise.  In the morning paper I see the pricing of these vehicles and it becomes an obvious choice for the consumer to choose the better valued vehicle.  I envision the customer coming into the dealership and seeing the Chevy Volt next to the Chevy Cruise and how difficult it is to justify the added cost of the Volt.  The technology is not cost effective even with the government subsidies.  There is a reason GM walked away from the EV 1 in California after a scaled effort to see if the concept would work.  They tested the market on a small scale and drew the conclusion that the customer is not ready to purchase these vehicles.

One of my current projects is to lead the design, develop, engineer, test and validation efforts on 4 separate US produced vehicles to operate on both Petro and Compressed Natural Gas (CNG).  In the world there are over 10 million vehicles operating on CNG with only 100,000 of them in the US, these US vehicles are not passenger vehicles.  CNG fueled vehicles emit 30 – 40% less emissions and the US has enough Natural Gas in the US to operate our vehicles for over 100 years.  One would think the problems we face as a nation we would embrace this approach as a “Bridge Vehicle.”

The Return on Investment (ROI) for these bi-fuel vehicles will be under 12 months.  There will be a cost penalty to have this bi-fuel system that will be offset with lower pricing of Natural Gas.  As the price of Natural Gas declines and price of Petrol raises this ROI continues to improve.

We are not developing a new Powertrain; we are using the existing Petro Powertrain with technical changes and picking up the economy of scale, unlike the Chevy Volt.  As the traditional Petro vehicles improve their Powertrain and Drivetrain systems we get a free ride on these efficiencies further improving our ROI with improved MPG and cost reductions.  This is an obvious “Bridge Vehicle” methodology we can use in the US until we can develop a cost effective alternative vehicle that creates true value.  The free market and consumers will dictate if a vehicle creates true value, not government regulations.

In the Chevy Volt scenario the customers are not buying them in quantities to pay back the huge investment to launch them into mass production.  The other electric vehicles have similar problems and we should have not gone on an “All Out” approach to the electric vehicle.  In business you take a small scaled approach to prove your point and then grow it if it can be done technically, in the US we decided to go all out and throw our tax dollars behind it and it is not generating a proper ROI that creates value for the consumer at this time.

In typical Patch fashion I expect to get plenty of comments about how fracking is destroying our environment.  Facts will get in the way of these distractions; with an engineering approach they have solved the problem of the fracking process poisoning the water system.  This has been proven beyond a shadow of doubt, but the noise will continue.  I do not understand why they want to stop an effective bridge fuel and vehicles to get us independent of foreign oil in the near future that is cost effective.

How about the environmentalist answering these questions about technology they are pushing:

• Florescent Bulbs – you need a hazmat team to dispose of them after breaking, is this safe?
• Solar Panels – toxic chemicals in product, short life, how do we dispose of them?
• Vehicle Batteries – toxic chemicals in product, short life, how do we dispose of them?
• Electricity – how do we create electricity without emitting toxins?

I could go on and on about the pros and cons to alternative energy approaches, with every technical and business challenge there is an engineering solution.  The real question is can we afford the engineering solution.  That is why I take the engineering and business approach, it needs to create value and have a reasonable ROI.  Without value and a reasonable ROI the customer will not purchase the product.

True value always comes down to a rigorous review and a math problem, not politics and opinions.