Wednesday, August 4, 2010

“GM’s Electric Lemon”, The New York Times, “Mister Ed” Niedermeyer, The Lies About Cars, and Other Bankrupt Myths

David Carlisle

When my eldest daughter graduated from Union with a degree in literature my sister in-law, Sandy, helped get her some “informational” interviews. Sandy is amazing and can do anything. So, she set Rebecca up with an editor from a big New England newspaper. Rebecca came back convinced that newspaper publishing was a fatally sinking ship, Titanic-like, but with no band playing on the deck. Newspaper survivors were depressed zombies. She looked elsewhere.

That’s my image of the NY Times. Young people don’t buy newspapers, because they are smart. They get the news at no added cost from the Internet and cable TV. Everybody knows that old people are stupid, immortal (OK, some are immoral as well), and can’t use the Internet. So, newspaper organizations, like the NY Times, cling to this old codger’s strategy and continue to produce fewer papers that they sell to old folks and give away for free to young people. In fact, they give the news away for free even before it makes it to ink on the papers delivered to old folks’ mailboxes. They do this because they think this is smart and, paradoxically, the best hope for making themselves profitable.

I’m an old guy and I only read the Times on the internet. I’m not supposed to do that, because I’m old. Don’t tell the Times.

This is pretty much the essence of the economic theory espoused by Mister Ed Niedermeyer in last Thursday’s (July 29th) NY Times Op-Ed piece – “GM’s Electric Lemon.” He thinks that GM should sell the Volt at a loss, “which, paradoxically, might have been the best hope for making it profitable.” He said that Toyota did that in 1997 with the Prius and that’s why they are in such good shape now. Maybe the NY Times uses Mr. Ed for their own strategy? I’m sure he and Krugman give each other high-fives in the hallways.

By the way, other Op-Ed guest writers, call them “Captain Kangaroos,” would scream bloody murder if GM sold Volts at a loss. They would say that those GM guys were idiots for selling limited supply Volts at a loss into an enormous wave of demand … where dealers would place enormous ADMs (additional dealer mark-ups) on the stickers and really tick off those greenies clamoring for a cheap Volt. They’d hoot a lot about how GM is squandering all that government bailout money by giving stuff away to dealers who just mark ‘em up like any other scarce commodity.
Hey, now hold on there Dave. You are writing this blog on your iPad. Maybe Mr. Ed has a point. Steve Jobs should have sold all those millions of iPads at a loss! “Paradoxically”, that might have been the best hope for making all those iPads, and Apple, profitable. That Steve Jobs is one dumb son of a gun.
Mister Ed thinks that the affordable Volt lease of $350 a month is shameful. It only allows “12,000 miles a year, or about 33 miles a day.” The fact that 12,000 mile coverage is pretty much standard for the millions of cars and trucks leased each year is not important to note. It is not important because if you divide the 12,000 miles a year by 365 days in a year, you get 32.876712. Call it 33. The Volt can do 40 miles on its battery; so why do you need the $8,000 frigging high-test gas engine that Nissan’s Leaf doesn’t have if all you do is 33 miles a day!? This was my favorite thought of Mister Ed’s in the Op-Ed piece. People who lease cars drive 33 miles each day. They never drive 41 miles a day.
Time Out: I have to confess that one of my most private dreams has been to author a NY Times Op-Ed piece. I want everybody who reads that paper (OK, in Boston, Manhattan, and parts of Madison Wisconsin) to see my name and think I’m smart. I read David Brooks, Paul Krugman, Gail Collins … and think it is, well, just a dream. But, it’s folks like Mister Ed, Maureen Dowd, and Tom Friedman that continue to give me hope. Mister Ed isn’t very smart, nor is Tom Friedman. And that Maureen Dowd sure can write some really nasty stuff that nobody understands. I can too. I just hope I get an opportunity to live my dream before the Times goes bankrupt.
Mister Ed thinks that the Volt looks like a Prius. Hold that thought. He also thinks that the Cruze is more or less the non-electric version of the Volt. So, the Volt really looks like a Chevy Cruze. Hmmm. I don’t think Mister Ed is very good at anything visual. Hope he doesn’t drive much. I suspect that, in Mister Ed’s mind, the real truth about cars is that he just can’t find his own car in a crowded parking lot.

Mister Ed infers that he has a direct line into GM’s product planning. He talks about how the second generation Volt is aimed at eliminating the yet-to-be launched first generation’s “considerable shortcomings.” Shortcomings that, he thinks, will be apparent, once the first batches of Volts are manufactured and used by customers who have not bought them yet. This is an Ellsworth Toohey/Genzyme kind of thought process that Mister Ed has going here. It’s like doing an amniocentesis on the Virgin Mary prior to the birth of Jesus and saying that, hey, the next one will really be great. Believing that Mister Ed has credible access to GM’s product planning is like believing that Rush Limbaugh is a close confidant to Bill Clinton.

Mister Ed says that all the government bail-out money went into the Volt. Now, I think he even thinks that some of that AIG bailout money went to the Volt. He lists a lot of numbers. When you list a lot of numbers it looks good. He says to ”start with the $50 billion bailout.” The GAO can really use a guy like Mister Ed. I’d like to see what he can do with the truth about missile programs, or the truth about nuclear submarines, or the truth about those $300 government issued hammers.

What’s the truth about the Volt? GM is doing something that should be applauded. They are inventing a new segment and will be first in. The truth is that all-electric cars scare people who only want to own a single vehicle – they do not want their every-once-in-a while road trips to be constrained by the limits of a single battery charge. GM’s EV1 experience taught them t hat. The Volt solves this riddle. Hey, we are coming out of the worst recession in our lifetimes; I’d hate to define the electric car market as a second/3rd/4th/5th-car-only rich-guys market. Seems too old-school corpulent American. GM has figured out that demand for the Volt will far outstrip supply in the years to come. So, it makes no economic sense to lose money on every one sold if you can make money. Mr. Ed must have a Soviet sense of economic theory. Krugman would agree with me on this one. JD Power taught the automakers not to sell crap … or they’d pay for it. So, GM has a Volt production plan that fits modern-day customer QC expectations.

Speaking of QC and economic theory, now that the NY Times gives the news away for free to the most important market segment, they don’t have enough money to do QC on their Op-Ed pieces. That’s why you see crap like this from Mister Ed in their paper. It would be embarrassing to charge folks for stuff like that. Reminds me of what happened to the auto industry in the 80’s. Three decades ago.

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