Scenarios for Consumer Rejection of LEVs

Whenever a new technology or product innovation enters the market the level of consumer acceptability will be a crucial factor in determining how successful it will be. It is quiet common to hear stories of success by budding entrepreneurs who entered the market with nothing but a good idea and a lot of determination and ended up making it big. Stories on product and technology failure are much less common with people and firms less keen to comment on their inability to succeed in making their new product or technology triumphant. This part of the product lifecycle is often overlooked and companies and individuals do not investigating these aspects to a high degree. Indeed it can be this lack of assessment that leads to a new product or technology not being widely accepted by consumers.

In relation to the introduction of LEVs into the automotive market it is important for manufacturers to investigate what are the likely hindrances to consumer acceptance. These rejection scenarios happen when consumers appraise a new vehicle for its suitability according to a set performance criteria and deem the product unsatisfactory. These scenarios will happen throughout the purchasing process and will entail both absolute appraisals where vehicles are required to pass specific levels of acceptability and also relative appraisals where multiple vehicles are compared simultaneously against a set criterion.

What Tricks do we have up our Sleeves?

It has been reported earlier on this blog that the UK government is considering cutting to proposed £5000 incentive grant for BEV/PHEVs in its budget austerity measures. Direct financial incentives can be exceptionally effective at influencing consumer behaviour towards a product but they are not the only option that is available. Indeed, it is often a combination of different incentives that proves to be the most effective. Below we will look into other common forms of consumer incentive that can be considered both by the UK government and car manufacturers to help boost demand for LEVs.

What Does Deepwater Horizon Mean for Low Emission Vehicles?

It is coming up to the two month mark since a huge explosion occurred on the Deepwater Horizon drilling rig that has ended in 11 lives lost and one of the biggest ecological disasters ever seen. The oil has been flowing almost unchecked straight into the Gulf of Mexico with multiple attempts to plug the hole having failed. It seems ever more likely that we will have to wait for relief wells to be completed sometime in mid August before the oil flow can be stopped. Another month of huge quantities of oil (estimates range from 1000 to 25, 000 barrels per day) spilling uncontrolled into a fragile ecosystem is almost unthinkable and not many commentators have dared to mention the possibility of the relief wells not working. Oil has begun to reach the shoreline of the United States with coastal Wildlife Reserves among the casualties.

The public outcry against this situation has been substantial and with the watchful eyes of the world’s Press recording and analysing every individual element nothing has gone unreported. BP’s (who were operating the rig at the time) Chief Executive Tony Hayward has been vilified by the US public and the US President Barack Obama has come under heavy criticism for how he has handled the crisis. The fallout of this tragedy promises to be protracted, you only have to look at how long the Exxon Valdez claims took to clear up (20 years in the courts) with the financial claims taking much longer than the ecosystem recovery to sort out. Some commentators have predicted this could be the downfall of BP and potentially Barack Obama if he doesn’t play his cards very carefully from now on.

Where are EV Trials best Located?

Late last year the Technology Strategy Board announced the 8 winners of its Electric and Ultra Low Emission Vehicle Demonstrator Competition. The lucky winners will receive government funding to trial ULEVs over the next year in locations throughout the UK. The schemes will operate in areas such as London, Birmingham, Glasgow and Newcastle and a quick browse of the list shows that the winners are all located in urban settings.

A question that has been slightly glossed over is whether or not urban locations are the best venues for EV/ULEV trials and eventual roll out. Certainly these areas hold many advantages. Urban dwellers predominately do not have extensive daily range requirements so individuals operating a limited range vehicle (such as an EV) would not have to worry about running out of power. Urban areas have much greater access to the infrastructure necessary to operate these vehicles such as charging points. Collecting the data for the trail will be easier as the users will be situated in a more concentrated area. The early adopters of EV/ULEVs are likely to be urban dwellers themselves who are perceived as being environmentally conscious, socially aspiring and affluent individuals.

Electric Vehicle Incentive Grant to be Scrapped

Some commentators have dubbed the incoming Government coalition between the Conservatives and the Liberal Democrats as heralding the Age of Austerity for the UK. Spending cuts totalling £6bn have already been announced and it is without doubt that much more will be on the cards if the public deficit and debt burdens are to be reduced. This action is without doubt required, southern Europe has already experienced a sovereign debt crisis last month and financial markets are looking very unnerved. If the UK Government does not take action to curb the deficit (which stands at £156bn this tax year) then Government debt repayments could amount to more than £70bn per year.

People are obviously very keen to find out exactly where the axe will fall. Education and the NHS appear to have their funding ring-fenced with David Cameron’s commitment not to cut essential services. We may have to wait until the emergency budget is announced by George Osborne on June the 22nd before we know exactly the scope of the reductions but speculation is rampant. The £5000 incentive grant earmarked to come online in January next year to assist consumers in purchasing a Electric or Plug-In Hybrid Electric Vehicle has been muted as a likely victim of the new regime.

Dialogues: A New Interface with Corporations

Last week I had the pleasure of attending a Dialogue hosted by Shell concerning Sustainable Transport. This is the first time I have participated in one of these web chats where the audience is given the opportunity to propose questions to a panel of senior Shell representatives covering a range of different sectors in the corporation. The website hosting these Dialogues can be found here and the transcript for the discussion should be available shortly.

I initially had reservations about the usefulness of this form of corporation-public interface. I feared that questions would be either asked in advance so that polished responses could be prepared or that only a handful of selected questions will be responded to. This fear was quickly dispelled when it became apparent that the panel were answering all varieties of questions posed to them. Some of the answers were short and lacking the detail I would have liked to see, but for a question and answer session it certainly exceeded my expectations.

Tesla, An Electric Success?

Automotive manufacturing is huge business producing around 80 million vehicles in 2007. This market has been dominated for the past 20 years by a number of firms that you can count on a single hand. Between them, the top 5 manufactures produce over 33 million vehicles accounting for over 40% of the total market. These companies are backed up by extensive investment and branding divisions that ensure the vehicles they produce are innovative and of high quality whilst consumers are saturated with the brand identity. This leads to a hostile environment for any wouldbe market entrant. Not only must they face a huge level of startup capital required to get an even modest vehicle manufacturing operation online but also the history, prestige and financial capability of the established firms.

With governments around the world deciding to take action on carbon emissions from personal vehicles by introducing strict emissions targets, a gap has been created in the market. Entrepreneurs have been continually commended for their ability to spot market openings and be quick out of the blocks to get their new products to market. It appears that this trend will be continued in the automotive industry as new firms lineup to get their piece of the electric vehicle pie. A window of opportunity exists for start-ups to establish themselves in the new technological market for electric vehicles which is predicted to grow rapidly in sales volume over the next 20 years. However, this window is quickly closing as the big manufacturers start to flex their muscles and turn their attention to the emerging market.