Will Prius be the aol of green cars, Tesla the Webvan? ~ Brand Mix

Tuesday, July 12, 2011

Will Prius be the aol of green cars, Tesla the Webvan?

As I have crawled along the jammed-up freeway in Marin, watching hybrid after hybrid fly by me in the car pool lane (a privilege that's just ended), I would never have guessed that cars with green technology still only represent 2% of the U.S. market.

It may take a while for the rest of America to reach the level of green car penetration we have in Marin but the growth rate is impressive (twice as fast as conventional cars). J.D. Power estimates that, in the next five years, the number of hybrid and electric car models will increase fivefold, from 31 today to 159 by 2016.

Such a fast-growing category combined, as it is, with fast-changing technology is full of risk and opportunity. As the field gets more crowded, Prius, the category leader, will try and stay ahead of the pack while new players like Tesla look for a way to break in. Here are the risks and challenges for both brands with doomsday benchmarks added for effect.

Smug1 by Gamma Man (Flickr)
Toyota Prius is the undisputed green car leader with more than half of hybrid sales in the U.S. Prius owes its success to great positioning, choosing a technology that was green enough (but still practical) and a design that was distinctive enough to act as a conspicuous badge for its owners (but not as wacky as, say, the earlier models of the Honda Insight). 

As the current #1, Prius has to fend off the competition and it's planning to do that in classic leader fashion by launching new models to broaden its range and cater to different car buyer segments. It's trying to make sure it doesn't get outflanked. Its first new model will be the family-sized Prius V, then a smaller Prius C and sometime after a non-hybrid plug-in Prius. 

Doomsday benchmark: aol

The worst case scenario for Prius is that it becomes a victim of its own success, too strongly associated with hybrid technology (vs. newer, greener alternatives), too associated with a certain type of early-adopting, holier-than-thou consumer and too associated with a particular period in the evolution of the green car market. aol was forever associated with its CDs offering more and more trial hours and, as Bill Visnick, an analyst with Edmunds Auto Observer, has pointed out  Prius has its own association problems: "The fact is that it's very much known as a weeny sort of a car, and sort of a car for people who are driving too slow in the fast lane." 
Photo by NRMAdriversseat (Flickr)
Meanwhile, at the other end of the spectrum both in terms of image and sales is Tesla. Tesla has generated tons of publicity even though it has sold hardly any cars (less than 2,000 worldwide). As Fast Company says, Tesla's Roadster: "Changed the mainstream perception of EVs from clunky golf carts to sleek vehicles that can actually be driven on highways." But now the company has swerved in a new direction. The Roadster is being discontinued and Tesla is going to try and sell cars to the masses. These will be manufactured in Toyota's former NUMMI plant, the size of 88 football fields, and producer of 7.7 million vehicles in its 25-year life.

Doomsday benchmark: Webvan

The worst case scenario for Tesla is that it can't make the leap from hype to mass manufacturer in the one fell swoop now needed. That leap proved too much for Webvan, another company that committed millions to infrastructure before its business was established. Transitioning from a niche to mainstream is difficult enough  without adding in a huge plant that needs to be kept running.

There's no comparison really about the prospects of Prius vs. Tesla--the easy and safe bet is on Prius. It has some real challenges but nothing compared to the level of difficulty of Tesla, where the specter of DeLorean lurks in the perhaps not-too-distant shadows (as others have pointed out).


Anonymous said...

I am looking forward to the day when I can buy my Prius as Heavyweight Offroad SUV - perhaps with kangaroo bars attached - and finally drive with a clear conscience.

Arlyne Nelms said...

Perhaps any of those things you've described will happen, and there could be more and more players penetrating the market successfully and upping the ante in competition. The Prius will no longer hold the top spot in years to come, but I don't think it will wane and share the same fate as AOL did in terms of car choices in the future. Toyota knows how to play its strengths, which as you've mentioned, is incorporating technology that's green and yet practical enough to give immediate results. It doesn't matter in the long run what kind of stereotype will get associated to Prius owners as long as Toyota keeps up the benchmarks.

Spartan Toyota

Blog Directory - Blogged