Saving Detroit

In a distressing article, entitled “Detroit Flails in Latest Effort to Reinvent Itself,” in today’s New York Times, Ford Motor Company announced that it would cut tens of thousand of jobs and would still not post a North American profit until 2009.

Despite insisting all this year that they had solutions to their financial struggles well in hand, both the Ford Motor Company and the Chrysler Group conceded Friday that the steps they had taken were not working and that more bad news was coming in one of the deepest auto industry crises in Detroit’s history.

Ford, which has held second place behind G.M. for 70 years, admitted for the first time that it would inevitably be ceding that spot to Toyota because of slumping sales and its decision Friday to close more factories and cut thousands of additional jobs. It also said it did not expect to make a profit in North America until 2009.

At the same time, the Chrysler Group, also pummeled by the decline in sales of big sport utility vehicles and pickup trucks, said it would report a loss for this summer of $1.5 billion, more than double what it had originally anticipated.”

I bought my last American-made in the 1970s. The car, a Ford Granada, was so poorly designed and so shabbily made that I swore never to buy another American car. The next car I bought was a vehicle manufactured by a small, almost unknown company, Toyota. It provided reliable transportation for almost 10 years. I kept my promise and I'm sure I'm not alone.

I laugh every time a Detroit senior exec pontificates on the changes that will be necessary to regain market share. Their strategy always boils down to massive job cuts, attempts to achieve other manufacturing efficiencies, and mergers and acquisitions. Textbook Detroit thinking.

Maybe it’s time for one of these automotive geniuses to recognize that cost cutting and linear innovation won’t save their companies. Maybe it’s time to try something new, something out-of-the-box.

Here’s an idea – build and aggressively market an electric vehicle (EV). The idea, anathema in Detroit for two decades, is one whose time has come. The objections to EVs are based on a number of myths: (1) that Americans won’t buy them because they don’t want them; (2) that their range precludes their use for most people and families; (3) that the technology simply isn’t there yet, and (4) we tried it in California in the 1980s and it failed.

All four myths are just that -- untruths and misinformation that have been fostered by the auto and oil industries.

Let’s take them one at a time:

Americans won’t buy EVs because they don’t want them. Economic realities and environmental concerns will drive interest and create a major market, one that could easily surpass the market for conventional SUVs. Gas prices are falling at the moment, but they will not fall forever. Every day, an article or TV expose’ on global warming appears. Marketing a vehicle that is 'green,' cost effective, and “cool” is a slam dunk. Americans can be convinced to buy virtually anything, if the marketing and sales strategy is right.

The mileage range for EVs precludes their use for most people and families. The vast majority of American drivers travel less that 60 miles each day. The range of modern EVs can extend to well over 100 miles. Are EVs right for everyone? No, but neither are 2-seat sports cars, pick-ups, or SUVs, yet Detroit has no trouble focusing on those market segments.

The technology simply isn’t there yet. Untrue! In the 1980s, GM built an EV that was truly remarkable in terms of technology and capability. It never adequately marketing the vehicle and then pulled all of them off the market and destroyed them. I wonder why? The technology has improved even more since then, and more importantly, as a market grows, technology improvement accelerates (think PCs).

We tried it in California in the 1980s and it failed. See the movie Who Killed the Electric Car? and you’ll learn why this is untrue.

So, think EVs Detroit, and maybe you’ll can regain your lost greatness. You got very little left to lose.