Search This Blog

Monday, August 22, 2011

VW: The Microcar…A Marketing Tool?

August 22, 2011
VW: The Microcar…A Marketing Tool?
All eyes on VW, which claims to be ready to reveal its carbon-free, single-seater microcar in about two weeks. According to an article in the Financial Times today, VW is aiming to "capture the lead in electric cars" and expects battery-powered vehicles to contribute 3% of total sales by 2018. A "full-service package" will supposedly be available to customers to purchase power from "renewable sources." According to Prof. Dr. Martin Winterkorn, Chairman of the Board "[VW's] pursuit of innovation and perfection and [the company's] responsible approach are designed to make [VW] the world's leading automaker by 2018 – both economically and ecologically." The effort by VW to "drive green" deserves applause. 
Let's rewind.
Who would not be supportive of exploring alternate energy sources, reducing carbon emissions, going green, etc? Governments across the globe have clearly emphasized their interest in developing carbon-free vehicles and support for driving innovation in this area. Look at China and the U.S. In his January 2011 State of the Union Address, President Obama stated "We can break our dependence on oil… and become the first country to have one million electric vehicles on the road by 2015." With promises of tax breaks and other incentives, consumers are encouraged to invest in the new kind of transportation, ...but they have not. Plenty of hurdles remain in the way of broader adoption, yet it is understandable, given the government interest and $$ support, that anybody in the space would want to position themselves as a leader in "green" technology.
Considering existing hurdles surrounding consumer hesitation to "buy-in", VW just seems to add another, practically speaking. I do not struggle with the value and importance of investing in the development of carbon-free vehicles; more so with the development of this particular "concept-car". Explain to me, someone, the purpose, value, and expected adoption rate of a single-seater microcar? This simply cannot be more than a promotional tool for VW… [Which on a side note, has done a fabulous job in marketing and advertising in my opinion – a true break from the mold!]
Explained by Juergen Leohold, Head of Research at VW, as suitable for "limited journeys, such as commuting", this particular concept seems to have very limited potential. Did it truly warrant the investment? [Total R&D expenditures in 2010 exceeded €2.8 billion or 6.1% of sales.] It could be as simple as me misunderstanding the expectations for and purpose of this vehicle. If it's main objective is to showcase the company's ability and ambition in the area of "carbon-free motoring", fine, no argument here. [So it really is a sales and marketing expense…] But it does appear as if actual sales of this microcar are part of VW's revenue forecast. As a lay(wo)man, I do not claim to be abreast of all the innovation and development taking place in this space. Yet it seems that there is quite a focus by all major car manufacturers on building carbon-free vehicles, and some with more practical applications than a single-seater. So where is VW going with this? Practically, where other than downtown Paris, France, would this be a suitable solution?

On the other hand...there is a picture circulating of a black, very slick-looking, space like single-seater that is supposed to be launched in 2011 with fuel efficiency of 258 miles per gallon. Can't say if this is the one, but the automobile-community seemed rather excited about it. Maybe VW's microcar will become a status symbol and the iPad of the auto world [...only with less applications]?
Back in 2007, an MIT group called "Smart Cities" promoted the idea of stackable electric cars, designed for two people, among other "green" transportation innovation. Without question, smart and innovative thinking has gone into these methods of transportation. The adoption of such automobiles, however, realistically still has to be decades away unless radical changes in the cost structure and ease-of-use occur. [The design looks strangely like that of vehicles from science-fiction movies created in the 80's and 90's.]
Maybe, VW's reveal will shock us with a dramatic reduction in cost that will allow consumers to consider the purchase of a car for commuting only. So far, no features of VW's microcar have been announced. According to the Institute for Energy Research, by March 2011, a total of 1,101 electric vehicles had been sold in the U.S.  "At the pace of 350 vehicle sales per month, a whopping 16,800 electric vehicles will be on the road by 2015." Not quite what President Obama is envisioning.
The ambitions of the governments and the car manufacturers are commendable as we clearly need to address the reliance on oil and the environmental impact of the ever-growing car-population and associated pollution. However, the tech revolution here needs to be more radical and not only focus on vehicle size.
To be clear, let's not halt innovation. Miniaturization efforts are key to reducing costs, however, in order to have a real impact, solutions need to be more practical and focus on lowering cost beyond miniaturization. There appears to be some kind of hesitation by automakers to openly discuss the cost of batteries. Analysts estimate battery costs to be around $900 per kilowatt hour for electric cars today. Expectations are that they need to come down to at least $350 per kilowatt hour in order to make them competitive.  Whether the American consumer should be more welcoming and supportive of these technology advancements in the area of transportation is quickly answered with a simple: Yes. However, at this stage, in this economy, the idea is simply not sustainable. [This is probably also much more politically intertwined than my naive little brain can imagine.]
In either case, I am eager to see how investors will respond when the VW microcar is revealed and possibly more light will be shed on its purpose. Today, as of this posting, VW stock was down -0.9%.
For now, I question whether this single-seater-endeavor should not be booked as a sales and marketing expense instead of part of R&D expenditures…


  1. It's going to be finish of mine day, however before finish I am reading this wonderful paragraph to increase my know-how.

    my site - best website affiliate programs
    My weblog ;

  2. Heya just wanted to give you a quick heads up and let you know a few of the images aren't loading correctly. I'm not sure why but I think its a linking issue.
    I've tried it in two different web browsers and both show the same outcome.
    My web-site :: private krankenversicherung kinder

  3. It's in fact very complicated in this busy life to listen news on TV, thus I simply use the web for that purpose, and get the most up-to-date news.
    Have a look at my webpage - kredit ohne schufa und bonität

  4. It's actually a great and helpful piece of information. I am happy that you shared this helpful information with us. Please stay us informed like this. Thank you for sharing.
    Have a look at my web page refinance loans for bad credit

  5. Wonderful article! We are linking to this particularly
    great content on our website. Keep up the great writing.
    Also visit my web blog :: damenschuhe online bestellen

  6. Wow, fantastic blog layout! How long have you been blogging for?
    you make blogging look easy. The overall look of your website is
    magnificent, as well as the content!
    Feel free to visit my web page ... all inclusive vacation packages

  7. Please let me know if you're looking for a writer for your blog. You have some really great posts and I believe I would be a good asset. If you ever want to take some of the load off, I'd love to write some material for your blog in exchange for a link back to mine.
    Please shoot me an email if interested. Thank you!
    Also visit my web blog - clickbank marketplace search

  8. Usually I don't learn article on blogs, but I wish to say that this write-up very forced me to check out and do it! Your writing taste has been amazed me. Thanks, very nice post.

    Review my blog post - freiwillige krankenversicherung
    Look into my web site -

  9. Hmm it seems like your website ate my first comment (it
    was super long) so I guess I'll just sum it up what I submitted and say, I'm thoroughly enjoying your blog.
    I too am an aspiring blog blogger but I'm still new to the whole thing. Do you have any recommendations for novice blog writers? I'd certainly appreciate it.
    My blog :: hire a seo expert

  10. Howdy! Do you use Twitter? I'd like to follow you if that would be okay. I'm absolutely enjoying your blog and look forward to
    new posts.
    my site - kündigung private krankenversicherung

  11. Pretty nice post. I just stumbled upon your blog and wished to say that I have really enjoyed
    surfing around your blog posts. After all I'll be subscribing to your feed and I hope you write again very soon!
    Here is my homepage ... how do you get a home loan with bad credit

  12. You actually make it appear really easy together with your presentation however I find this topic to be actually one thing which I think I'd by no means understand. It seems too complicated and very wide for me. I'm looking
    forward to your next post, I'll attempt to get the hang of it!
    Visit my web blog - gesetzliche krankenversicherung vergleich

  13. whoah this blog is wonderful i really like studying your articles.
    Stay up the great work! You recognize, lots of individuals are searching round for this information, you can
    help them greatly.
    Feel free to surf my site Click This Link

  14. Very good blog! Do you have any helpful hints for aspiring writers?
    I'm hoping to start my own site soon but I'm a little lost on everything.
    Would you propose starting with a free platform like
    Wordpress or go for a paid option? There are so many options
    out there that I'm completely confused .. Any tips? Bless you!
    Here is my web blog - online shop kleidung

  15. Heya i am for the first time here. I found this board and I find
    It truly useful & it helped me out much. I hope
    to give something back and aid others like you aided me.
    Have a look at my blog post : search engine marketing firm

  16. Appreciation to my father who stated to me concerning this website, this web
    site is truly remarkable.
    My page > stay at home job

  17. What i don't realize is in reality how you are now not actually much more smartly-liked than you might be right now. You are so intelligent. You recognize therefore considerably in the case of this topic, produced me personally consider it from a lot of numerous angles. Its like men and women are not involved unless it's something to do with Girl
    gaga! Your own stuffs great. At all times take care of it up!
    Feel free to surf my site reseller hosting and dedicated server

  18. That is a good tip especially to those new to the blogosphere.

    Short but very accurate info… Appreciate your sharing this one.

    A must read post!
    Here is my web-site - federal consolidated loan

  19. Great article. I will be dealing with many of these issues as well.
    My web site - student loands

  20. Very rapidly this web page will be famous among all blogging people, due to it's good articles
    My web blog : designermode günstig online

  21. Wonderful, what a webpage it is! This webpage provides helpful information to us,
    keep it up.

    Also visit my web-site - home workers

  22. My spouse and I stumbled over here from a different web page and thought I should check things out.
    I like what I see so now i am following you. Look forward to going over your web page yet again.

    my web blog: Unsecured Loan

  23. It's a pity you don't have a donate button! I'd certainly donate to this excellent blog! I guess for now i'll settle
    for bookmarking and adding your RSS feed to my Google account.
    I look forward to brand new updates and will talk about
    this site with my Facebook group. Chat soon!

    My page search engine optimization is

  24. My family members all the time say that I am wasting my time here
    at net, except I know I am getting knowledge daily by reading
    thes pleasant articles.

    Also visit my web site; seriöse kredite ohne schufa

  25. naturally like your website but you need to take a
    look at the spelling on several of your posts.
    A number of them are rife with spelling issues and I to find it very bothersome to tell the
    reality however I'll certainly come again again.

    my blog - krankengeld versicherung vergleich

  26. I always spent my half an hour to read this web site's posts everyday along with a cup of coffee.

    Here is my blog post :: consolidating private student loans

  27. Fine write up ... ordinarily in no way reply to these factors, but I will
    now, thanks to selective essential information.

    Here is my homepage ... gesetzliche krankenkassen vergleichen

  28. To begin earning funds along with your web log, initially use
    Google Adsense but gradually as your traffic increases, Proceed adding
    more and more income making programmes to your web site.

    Here is my website: Visit This link

  29. Excellent post , I just deal it with my friend of Taiwan.
    I Stumble UP your net log place , you are going to determine an growth
    of website traffic inside 24 hours for pointed men and women.


    Feel free to surf to my web blog: visit the up coming webpage

  30. I discovered your weblog on yahoo and discover a handful of of your posts.
    Fantastic function! I just added you to my Google News Reader.

    My web blog - affiliate marketing programs