July 2008 Archives

The Volt

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Russ Roberts got me thinking about the Volt; here are some random thoughts:

1) I think we need to see this as one of the results of the increasing competition and opportunities brought about by globalization.

2) GM is taking an absolutely breathtaking risk -- the sort of risk I once believed only governments are willing and able to bear.

3) Massive private R&D projects do exist -- think Boeing 787 and Airbus A380. While they routinely fail to meet cost and schedule and performance, the private companies themselves must pay the penalty for failure.

4) But GM's situation is very much unlike a prime contractor in a military R&D project, in which a sensible profit rate is guaranteed, schedules routinely slip by years, costs can double or triple, and desired performance characteristics are flexible. If GM fails in any of these areas by wide margins, the brand will be badly, perhaps irreparably, damaged.

5) Both legacy and new media have greatly confused the COST of research, development, prototyping, testing, and initial lots of production of the Volt with the PRICE the market will bear. And GM managers -- even Bob Lutz -- are keeping their mouths shut about expected sale PRICE.

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