2. Overview
Discussion of emerging technology and
disruptive technology.
Applying topic to a case study: the Chevy Volt.
Discussion of US legislation and economic
events impact on the Volt.
Exploring the disruptiveness of the Volt in
hybrid automotive technology.
Analyzing General Motors’ management
strategy and its impact on the Volt.
Summary– will the Volt succeed or fail based
on the above discussions?
Photo Curtsy of IFCAR. 2010.
3. Emerging and Disruptive
Technology
Technological change is inevitable.
Technological change is usually a
refinement of existing technology–
sustaining technologies.
Technological change is occasionally
revolutionary or “disruptive” in nature–
disruptive technology.
Wilson, David. OMT 598 Forecasting and Evolution of Technology. Arizona State University. 2010.
4. Emerging and Disruptive
Technology Continued
An emerging technology that displaces an
established technology and becomes the
new standard is a disruptive technology.
An established technology is one that has been
on the market long enough to become
recognized as a standard.
Examples
○ Vacuum tubes were the established technology of
all electronic devices for years before being
displaced by transistors.
○ Internet Shopping disruptive to In-Store Shopping.
Wilson, David. OMT 598 Forecasting and Evolution of Technology. Arizona State University. 2010.
5. Emerging and Disruptive
Technology Continued
Forecasting Methods: Subjective and Objective
Subjective Forecasting Methods
These methods rely upon logic, insight, vision, and
educated opinion for predicting the future of technology.
Subjective methods are aimed at consensus generation
include brain storming, focus groups, the Delphi Method
and expert systems.
Objective Forecasting Methods
Objective method rely on mathematics.
Such methods include: statistical methods (time series
analysis, growth curves, regression analysis, and
econometric modeling), computer simulation (discrete
even methods and continuous event methods, like
systems dynamics), and probability theory.
Wilson, David. OMT 598 Forecasting and Evolution of Technology. Arizona State University. 2010.
6. Emerging Technology Case
Study: The Chevy Volt
Asked to apply what was learned in class
by picking an emerging technology and
predicting whether it will succeed or fail.
Chose the Chevy Volt.
Paper written in March 2010.
Chevy Volt’s limited release date in the United
States was December 2010.
Method for analysis in paper was a subjective
analysis, using Delphi Method/literature review
(consensus of experts) and examining the
external forces, like government regulations and
management practices, that could either hinder
or help in the success of the Volt.
7. US Legislation and Economic
Events
In 1990, California enacted the CARB Low-Emission
Vehicle (LEV-1) program, which required all vehicles
sold beyond 2004 emit zero tail pipe
emissions, forcing companies to explore alternative
fuels and electric cars.
Although the original law has been modified, allowing
hybrid to fill the quota, the environmental restrictions, will
help increase consumer demand for the Volt in California.1
Environmental air quality laws have been changing
in other states and countries, and couple that with
public opinion in favor of hybrid and electrical
vehicles, the Volt could be successful.
1. Taylor, M. (2005, April 24). Owners charged up over electric cars, but manufacturers have pulled the plug. San Francisco Chronicle Online .
8. US Legislation and Economic
Events Continued
However, GM’s bankruptcy may hinder the
success of the Volt.
Production costs of the Volt are significantly
higher than other products GM currently offers,
and this higher cost is likely to limit production
capacity. 2
The US government’s bailout of GM may
cause GM to focus on more profitable
products in order to repay its debt, further
limiting GM’s ability to invest capital in the
Volt.
2. Ross, P. E. (January 2010). Discharged. IEEE Spectrum , 36-37.
9. The Technology Behind the Volt
The Volt is disruptive to current hybrid
technology.
The current hybrid technology in the
industry is a “power-split,” using a
battery to store 1 to 2 kilowatt hours of
energy to help assist a gasoline
engineer and store energy generated
while braking. Current hybrid cars can
only travel at most a couple of miles on
pure electric energy. 3
3. Voelcker, J. (August 2008). Battery Czar. IEEE Spectrum , 32-37.
10. Technology Behind the Volt
Continued
By contrast, the Volt is an “extended range
electric” car, using a lithium-ion batter pack
that stores 16 kilowatt hours, giving the car a
range of 40 miles on pure electric energy. 3
In most scenarios, the Volt’s gasoline engine does
not drive the wheels directly. The gas engine serves
as an electric generator that recharges the
batteries, which drive the electric motor that spins
the wheels.
The Volt also has a plug that will let the batteries be
charged from any outlet which is not standard on the
current hybrids (although after market plug-in
conversion kits are available for current hybrids).
3. Voelcker, J. (August 2008). Battery Czar. IEEE Spectrum , 32-37.
11. The Technology Behind the Volt
Continued
One hurdle for the Volt is the need to overhaul the
standard auto manufacturing process, requiring not
just new body panels, but also new powertrains.
The company will need to retool an existing manufacturing
plant in order to build the car, increasing capital cost.4
Another challenge is the battery itself.
The new large format lithium-ion batteries (small lithium-
ion batteries already exist commercially in cell phones and
laptops) are just now entering the market and have not
been extensively tested, so there is doubt whether or not
these batteries can meet the expectations of range and
durability. The raw material needs and manufacturing of
the batteries are also a concern.5
4. GM to Open Retooled Flint Engine Plant by Late 2010. (2009, October 13). USA Today Online .
5. Sherman, D. (2008, September 11). Chevy at 100: Is it Future's Realistic? NY Times Online .
12. General Motors’ Management
Strategy
When it comes to the management and
marketing strategy of disruptive
technologies, GM has historically failed.
One example of GM’s failure to capitalize
on disruptive technologies is Saturn.
In the early 1980s, GM was having a hard time
competing with the disruptive, smaller cars that
the Japanese introduced to the auto market.
To respond, GM created the Saturn car line.
13. General Motor’s Management
Strategy Continued
GM went with a new business model for
Saturn, giving the development team
free reign and a huge budget of 5 billion
US dollars.6
The Saturn car was popular, the new
production system and dealer network
even more so: by 1992, there were
waiting lists for the Saturn cars. 6
6. Rauch, J. (2008, July/August). Electro-Shock Therapy. Atlantic Magazine.
14. General Motor’s Management
Strategy Continued
The car sold well, but struggled to break
even, and GM’s union and bureaucracy
pushed back against the division’s
(Saturn’s) organizational privileges. 6
Instead of nurturing and growing Saturn, GM
merged it into the larger organizational blob
and then neglected.
By reverting back to old management
practices, Saturn turned into a failure, and
by 2010, the Saturn brand had be shuttered
and eliminated.
6. Rauch, J. (2008, July/August). Electro-Shock Therapy. Atlantic Magazine.
15. General Motor’s Management
Strategy Continued
Saturn is not the only example of where corporate
policy at GM has limited the success of a product.
GM pulled the plug on the EV1 (its first foray in
electric vehicles) in 1999.
“After spending over 1 billion dollars over a four year time
frame, we were only able to lease 800 EV1s. That does
not a business make. As great as the vehicle is and as
much passion there is, there simply wasn’t enough at any
give time to make a viable long term business proposition
for General Motors,” Dave Barthmuss, spokesman for
General Motors. 1
It was GM’s decision to only lease a limited amount
of the EV1 in only two states, so it should be no
surprise that the profit potential was as limited as the
availability of the car. 1
1. Taylor, M. (2005, April 24). Owners charged up over electric cars, but manufacturers have pulled the plug. San Francisco Chronicle Online .
16. Prediction
If the history of GM is any indication, the
outlook for the Chevy Volt is not as rosy as
GM would lead the public to believe.
A $40,000 (US) price point for a vehicle
that will be compared to imported vehicles
at half the cost (i.e. Toyota Corolla at
$20,000 US) will be difficult for most
consumers to swallow.2
The estimated cost savings on fuel (fuel cost in
USA around early 2010) is just under $3,000
(US) over 5 yrs, making it even harder to justify
the $40,000 price tag.8
7. Chevy Volt: GM's 230 mpg Moon Shot. (2010). US News and World Reports: Rankings and Reviews .
2. Ross, P. E. (January 2010). Discharged. IEEE Spectrum , 36-37.
17. Prediction Continued
Also a limited production run of only
10,000 Volts during the first year will
severely limit the profitability of the
vehicle, as industry analysts have
projected that GM will need to
manufacture 100,000 units to make the
car a success.2
As with the EV1, limited production of
the Volt is the same old GM policy of
under producing to feel out the market.
2. Ross, P. E. (January 2010). Discharged. IEEE Spectrum , 36-37.
18. Prediction Continued
There are many signs pointing to the Volt
being a technological success, but limited
supply and a fickle consumer demand
could lead to market failure.
Like many innovative leaders before the
Chevrolet Volt may simply set the stage for
success to other vehicles, much in the
same way as the first generation Honda
Insight (the 2000 model) paved the path for
the very success Toyota Prius.
19. Summary
A year later, how did my prediction of the Volt do?
Prediction was great technology, but not great market success
General Motors has only sold 1,703 units of the Chevrolet
Volt through April (2011) but the automaker plans to crank
up the volume for the 2012 model year.
GM Spokesman Rob Peterson about why sales so far are
low:
"We have limited supply of Volts…supply is very thin (especially
when you consider we have nearly 600 dealers in launch
markets). Volt sales have leveled off in April, May and June. July
will be low as the plant is now shut down and the pipeline will dry
up. However, when production begins again in mid-July, the line
will be running nearly three-fold.”
http://green.autoblog.com/2011/06/03/chevy-volt-sales-whats-going-on/
20. Future of the Volt
GM is retooling Hammtrack Facility
4-wk process vs typical 2-wk
Increasing production from 16,000 units to
60,000 units
Expanding market to entire US for 2012
Expanding sales to Europe/Asia with
Ampera
Only 1,703 units sold from December 2010
to April 2011, the outlook is not that
promising
Will demand for 60,000 units be there?