Monday, November 05, 2007

Opinion Piece VI

Who Killed Tom Hanks, Mel Gibson, Ted Danson and Alexandra Paul?
(a review of “Who Killed the Electric Car?” by Scott Lessard)

Occam’s Razor states that all things being equal, the simplest solution to a problem is typically the correct one. In my experience, this idea tends to be correct more often than not. This explains why I am not a huge fan of conspiracy theories. To me, most “conspiritists” are paranoid, misguided, or just plain insane. That is not to say that there isn’t something going on behind the scenes every now and again, but I don’t believe the Federal government was behind 9/11, that NASA staged the moon missions, or that the Holy Grail is the surviving bloodline of Jesus Christ and Mary Magdelene. The complexity of these events being conspiracies are just so incredible, the easiest and more logical answer is that these conspiracy theories are all false. The same is with the supposition placed by the makers of “Who Killed the Electric Car?” that the automakers, the oil companies, and government conspired to kill an incredible technological advancement and kept us dependent on foreign oil far beyond what that dependency should be.

In fact, I am more inclined to believe Dan Neil when he states in the movie that, “GM would sell you a car that ran on pig shit if it would sell.” Why? Because GM is a large corporation out to sell cars and make money. That’s the simple fact of our market society – the market has a demand for a product. If there is demand, but not enough product, the price goes up. Producers, seeing the price rise, realize they could make money if they had more product, step up production. This increased supply lowers the price so more people want to buy the product. The cycle repeats until people no longer want the product. This didn’t happen in the case of the electronic car (named the EV1). We have to ask ourselves why…The movie clearly states that this was because GM wouldn’t create enough of them and that they did this because they were in collusion with the oil makers, who are the ones that really had a great deal to lose. To distill it down, it was a conspiracy – that big corporations pressured the government to eliminate stringent requirements that the auto industry sell more alternative vehicles, thus removing the requirement for them to make more vehicles.

My question – and one that the movie does not address – is why would the auto industry do that? Why would they care if they are selling electronic cars or gasoline-powered cars, or both? I can’t imagine any reason for this. They want to make profit and can do so by meeting the needs of the consumer. If the consumer really wanted a car that went only 60 miles between charges they would have bought it. If the consumer really wanted a car with questionable battery technology, they would have bought it. If the customer really wanted to pay more for these problems, they would have bought it. The problem is that GM wants to sell hundreds of thousands of automobiles, not tens of thousands – the consumer demand just wasn’t there. If it had been, at the scope at which the marginal benefit of selling this car was greater than the marginal cost of building it, GM would have built them. This HAS to be the case. General Motors is a public company with many thousands of owners in the form of shareholders. To not take advantage of a new and profitable product would have been career suicide for the board and for its management. However, this never occurred, even with all of the publicity and the celebrity hype surrounding the car. This isn’t to say that GM couldn’t have marketed the car better, or provided better technology into the vehicle – they probably could have. What is evident, however, is that they had one real reason not to put the car into mass production – it wouldn’t have been profitable to a company whose number one responsibility is to grow value for the owners.

I find it interesting that demand wasn’t created by the fact that Ed Begley Jr. had one or that Tom Hanks said he was “saving America” by driving one. Further proof that the EV1 was either not ready for sale or that the American consumer was not ready to purchase.

No comments: