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If electric car had succeeded, GM might not be fighting to stay afloat
Business Browser
Date published: 8/3/2008
THE BEST-RUN com- panies well under- stand the concept of creative destruction.
This essential but cruel part of capitalism ensures that new technologies will constantly come along and replace old ones. In this way, today's monopolies become tomorrow's has-beens.
This concept is hammered home in the excellent 2006 documentary "Who Killed the Electric Car?" It is about the creation and demise of General Motors' electric car in the 1990s.
The documentary, like many, is rather one-sided, painting GM as a company unwilling to mass-market the EV1 electric model because of its possible negative effect on the future of the established product. It claims that there was a wide audience for the electric car.
The film points fingers at a number of people responsible for the death of this early line of electric cars--the oil companies, car makers, federal government and more. The documentary pins part of the blame on the California Air Resources Board, which eliminated stricter fuel-efficiency measures.
It's unclear who is responsible, but one thing is not in question--GM, Ford and other American car makers were hurt by their unwillingness to develop newer, more fuel-efficient products a decade ago. Government standards may not have mandated this, but the consumer ultimately did.
One has to look only at their stock prices to know this is true. General Motors' stock price hit a 50-year low last month, and Ford's is still stuck about where it was a quarter-century ago.
Meanwhile, Toyota and Honda had the foresight to see the era of $4 a gallon (or more) gasoline, and prepare with smaller cars and fuel-efficient hybrid engines. Toyota is now closing in on GM as the No. 1 car company in the world, and Honda is nipping at Ford's heels for the No. 3 spot.
The stock prices have responded--both Honda and Toyota shareholders have about doubled their money over the past five years.
Of course Honda and Toyota aren't the only car companies that have grasped the current reality and begun focusing on more fuel-efficient cars. Ford and GM are doing the same, and this strategy may lead to a turnaround for the two giants down the road.
Date published: 8/3/2008
Most recent reader comments:
EV1 that killed GM
(posted by
Robert76
, Aug. 12, 2008 4:14 pm)
After the LIEs from GM that the EV1 would never be destroyed, but given to musiums, schools, or recycled...Then shreaded the eco-friendly cars so no one will be reminded they worked...I think it's carma the electric car will kill GM...I personally will never buy a GM product again! (even if it is electric)
Facts Outdated
(posted by
RandyC
, Aug. 4, 2008 12:40 pm)
Last quarter Toyota sold 300,000 more cars than GM did making it the number 1 car maker. I hate to see a once great American company in such dire straights. But the way GM treated the EV1 customers makes me not so sorry about it.
Nonsense - nobody wanted EVs
(posted by
theBike45
, Aug. 3, 2008 1:01 pm)
GM shut down production of the EV-1 YEARS before the program was canceled, for sheer lack of interest (never more than 800 cars were on lease at the same time). It made ZERO difference whether the program was canceled or not. Next year Mitsubishi is going to sell an EV that is light years better than the EV-1, costs $40,000 and goes 100 miles with a $20,000 battery that will last a mere 5 years. Let's see those who claim the 1990's EVs from Toyota,Honda and GM were worth anything buy one. Ha,ha,ha
Millions for what?
(posted by
RonWelch
, Aug. 3, 2008 11:35 am)
The CEO's of the American car manufactures should be ashamed of themselves. They took the money and did nothing. Stockholders should demand they return all their compensation.
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