Entrepreneurs have begun to retrofit ordinary combustion vehicles into all-electrics or plug-in hybrids. Here’s why this could be the “big fix” that the auto-industry needs.
Are we stuck with our oil addiction? What if millions of our middle-aged vehicles could be reincarnated as superior versions of their youthful selves, while developing new revenue streams for Detroit? What if that “fix” could start reducing the billion a day we spend on imported oil, while creating tens of thousands of local jobs in communities and cutting greenhouse gases from fossil fuels?
Automakers could do all this—by thinking of vehicles as upgradable high-tech products. For example: A pioneering Chicago startup makes a prototype Ford F-150 pickup with an all-electric range of 30 miles per charge. After that it’s a hybrid, boosting the best-selling truck’s 15 city miles per gallon to 21.
In volume, this conversion could sell for $10-15,000. Converting school and transit buses could cost $35,000, with three- to five-year paybacks and reduced diesel fumes. And delivery vans that stay on the road up to 300,000 miles, with engines replaced every 100,000, could instead get partly electrified. Solutions starting in under 10-MPG niches could then spread to gas-guzzling vans, SUVs, and large passenger vehicles.
Cash for Clunkers vs Cash for Conversions
As “Cash for Clunkers” proves the pent-up demand for new vehicles, it also reveals another significant lesson: what old products are worth. Why not monetize aging assets while retaining the energy and materials used to build them? Amidst the auto crisis, it’s a transformational opportunity to create a new future-facing business model for the industry.
Today’s auto companies are like parents launching their millions of offspring, saying, “Bye…we don’t expect to hear from you again unless something fails under warranty.” Their dealers hope for service revenue and repeat sales. Except for occasional annoying recalls, they have no way to add improved technologies to vehicles that suffer from unplanned obsolescence.
Other industries create products as platforms. Some software firms make more from upgrades than from original sales. Computer companies shift from selling hardware to providing information technology systems and services. Automobiles are our longest-lifetime technology product. Why shouldn’t OEMs (original equipment manufacturers), integrators, suppliers, and dealers acquire a lifetime interest in them?