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Study on Volkswagen's existence, market adoption strategies and a measure of EV intro acceptance

Prepared for

MGT324

Marketing Research

Claremont Graduate University

Prepared by

Pratik Chakraborty

Sai Teja Vallabhaneni

December 17, 2018

1 CONTENTS

2 Table of Figures 2

3 Section 1 3

3.1 ABSTRACT 3

3.2 Introduction 4

4 The Automobile industry and Volkswagen 5

4.1.1 Growth post REME 6

4.1.2 Expansion and Innovation 8

4.1.3 Platform Sharing 10

4.1.4 Self-Driving 10

4.1.5 Changing the way we interact with cars 10

5 Electric Vehicle – History & timeline 10

6 research study 14

6.1.1 SIGNIFICANCE OF THE STUDY 14

6.1.2 SOURCE OF DATA 14

6.1.3 PROBLEM DEFINITION 14

6.1.4 SCOPE OF WORK 14

6.1.5 RESEARCH METHODOLOGY 14

6.1.6 KEY FINDINGS 15

6.1.7 LIMITATIONS OF THE STUDY 15

7 CONCLUSION 15

8 references 15

2 TABLE OF FIGURES

Figure 1: Year 2017 6

Figure 2: Year 2018 6

3 SECTION 1

3.1 ABSTRACT

The automobile industry since its existence, has seen massive transformations across all segments. From the inclusion of assembly line by Ford to the creation of self-driven cars, technology has pushed the boundaries of development in all aspects. However, one thing that the industry has realized in the last couple of years is that it has been left behind in the electric car race, and is set to spend up to $90 billion, according to Reuters, to catch up. Ford has announced an $11 billion investment to include 16 fully electric models and 24 plug-in hybrids as part of its range within five years, with the first arriving in 2020. Bill Ford's efforts are a reaction to Mary Barra's moves at GM, which last October unveiled two electric models as part of an initiative that will lead to 20 fully electric models before 2023, running on batteries and hydrogen fuel cells. A few days ago GM announced a completely autonomous model without pedals or steering wheel. Nevertheless, the car companies are still talking up their ambitious visions and the need to reconquer the streets, but have set no deadlines, effectively reducing their claims to the level of science fiction. Even the automotive industry's leading players are trying to give the impression that they are abreast of the latest technology - even Ferrari aims to launch an electric model in a bid to show it can match Tesla.

With such advancements taking place in the incarnation of an alternative fuel technology and the hence rise of rise of electric cars, it becomes highly necessary for companies to bring their innovative ideas to the plate and serve customer demands. Volkswagen has been a household name in the automobile segment, since its inception as a “people's car” in 1937 by the Hitler ruled Nazi Government. This paper briefly discusses upon the changing market trends of the automobile industry and how Volkswagen has been able to drift itself smoothly along the years to be where it is currently, with twelve luxury automobile brands under its name and a global presence. The paper also tries to determine the important factors that affect a customer's automobile buying decisions and analyses them to calculate the effect of the electric vehicle concept ad developed by Volkswagen.

3.2 INTRODUCTION

Germany is considered to be the birthplace of the automobile industry, as motor-car pioneers Karl Benz and Nikolaus Otto independently developed the four-stroke internal combustion engines in the late 1870s. Karl Benz fit his design to a coach in 1887, which led to the modern-day motor car. By 1901, Germany was producing about 900 cars a year, and today, its automotive industry is one of the largest employers in the country, with a labor force of over 820,500 (2018) working in the industry. The German automobile industry is regarded as the most competitive and innovative in the world, has the highest automobile production across Europe (5.5 million) and also generates 20% of total domestic industry revenue generated by automotive industry. The collapse of the global economy during the Great Depression in the early 1930s plunged Germany's auto industry into a severe crisis. While eighty-six auto companies had existed in Germany during the 1920s, barely twelve survived the depression, including Daimler-Benz, Opel and Ford's factory in Cologne. In addition, four of the country's major car manufacturers — Horch, Dampf Kraft Wagen (DKW), Wanderer and Audi — formed a joint venture known as the Auto Union in 1932, which was to play a leading role in Germany's comeback from the depression.

In the early 1930s, the German auto industry was still largely composed of luxury models, and the average German could rarely afford anything more than a motorcycle. As a result, only one German out of 50 owned a car. Seeking a potential new market, some car makers began independent "people's car" projects – the Mercedes 170H, Adler AutoBahn, Steyr 55, and Hanomag 1.3L, among others. But the fortunes for the German motor industry turned in the mid 1930s following the election of the Nazi Party to power. The Nazis instituted a policy known as “Motorisierung” -("motorization"), a transport policy which Adolf Hitler himself considered a key element of attempts to legitimize the Nazi government by raising the people's standard of living. In addition to development and extensions of major highway schemes (which saw the completion of the first Autobahn in 1935), the “Volkswagen” project was also conceived to design and construct a robust but inexpensive "people's car", the product of which was the Volkswagen Beetle, launched in 1937. Hitler's pet project was the development and mass production of an affordable yet still speedy vehicle that could sell for less than 1,000 Reich marks (about $140 at the time). To provide the design for this “people's car,” Hitler then called in the Austrian automotive engineer Ferdinand Porsche.

The VW group has overcome all the thick and thins of the automobile industry since the past 80 years of existence and has been able to establish itself as a major household commercial car brand across the globe. The following parts of the paper briefly discusses the journey of Volkswagen as a “people's car” in 1934 to the “TOGETHER – Strategy 2025” future program, developed by the Volkswagen Group. It is paving the way for the biggest change process in its history: the realignment of one of the best carmakers to become a globally leading provider of sustainable mobility. To achieve that, the Group will be transforming its automotive core business, and will among other things be launching further 30-plus fully electric cars by 2025, as well as expanding battery technology and autonomous driving as new core competences. Throughout the course of the paper, we discuss upon the strategies implemented by the VW group to withstand the market trends over the years and conduct a market study to understand its brand effect on the implementation of its newly implemented Strategy 2025 of electric vehicles. As one of the major parameters of Strategy 2025 deals with the production of electric vehicles, we also conduct a market acceptance comparison with one of its major competitors, Tesla. The paper accompanies three surveys collected over a group of 50 people to analyze the parameters that persuade a customer's automobile buying decisions and determine the effect of Volkswagen concept ad upon a customer's purchasing factors. One of the motives of the paper also lies in determining the likeliness of purchasing a Volkswagen electric vehicle as compared to Tesla's electric vehicle.

4 THE AUTOMOBILE INDUSTRY AND VOLKSWAGEN  

The idea of a people's car has inspired many engineers to search for new technical concepts. In 1925, the 18-year old technology student Béla Barényi designed a chassis for a people's car. His design featured rear-wheel drive, a boxer engine and air cooling, all elements later characteristic of the Beetle. However, it was Tin Lizzy who transformed the automobile in the USA from a luxury item into an everyday article. Ford Model-T was the first people's car and more than 15 million units were produced between 1908 and 1927. On the other hand, German car makers attempt to build a “people's car” in the 1930s – an inexpensive vehicle with low running costs and low fuel consumption met with numerous challenges. The small cars produced in Germany during this period never acquired the status of a people's car due to unfavorable conditions such as high vehicle taxes and insufficient per capita income.

During the launch of the first Volkswagen in 1939 at the Berlin motor show, the Fuhrer declared: “It is for the broad masses that this car has been built. Its purpose is to answer their transportation needs, and it is intended to give them joy.” Adolf Hitler also announced that the vehicle to be built in the Volkswagenwerk will be called “KdF-Wagen” (“Strength through Joy”). Soon after it was displayed for the first time at the Berlin Motor Show in 1939, World War II began, and Volkswagen halted production. After the war ended, with the factory in ruins, the Allies would make Volkswagen the focus of their attempts to resuscitate the German auto industry. A new city (known as Wolfsburg from 1945) was developed around the factory to house its huge workforce. The first VW Beetle rolled off the production line in Wolfsburg. Until production was halted in 2002, the Beetle was the world's biggest selling car. Today, the Group comprises twelve brands from seven European countries: Volkswagen Passenger Cars, Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania and MAN. In addition, the Volkswagen Group offers a wide range of financial services, including dealer and customer financing, leasing, banking and insurance activities, and fleet management.

In the war's aftermath, a devastated Germany was divided into four sectors. Those under British, French and American control would combine to form West Germany, while the region under Soviet control became East Germany. In April 1945, KdF-Stadt and its heavily bombed factory were captured by the Americans, and subsequently handed over to the British, within whose occupation zone the town and factory fell. KdF-stat which was in relatively good shape for having been a target of Allied bombs, then under the control of the British military, began turning out Beetles again in December 1945. The Corps of Royal Electrical and Mechanical Engineers (REME) had a relationship with Volkswagen which began in 1945 with a REME detachment using the factory to repair captured enemy vehicles and later to overhaul Jeep and other British Army vehicle engines. The company owes its post-war existence largely to one man, wartime British Army officer Major Ivan Hirst who served at REME. Under the terms of the Potsdam Agreement between the USSR, USA and UK, the plant is liable for dismantling as part of war reparations because it had been used for military production, but British officer Major Ivan Hirst persuades his commanders of the potential of the car. The factories were placed under the control of Hirst, by then a civilian Military Governor with the occupying forces. Hirst repainted and demonstrated a factory's wartime 'KdF-Wagen' car that had been taken to the factory for repairs and abandoned there, to British Army headquarters. Short of light transport, in September 1945 the British Army was persuaded to place a vital order for 20,000 cars. The country was going through a crisis during that time owing to the second world war, and the company faced multiple hurdles owing to the disturbance in financial and social conditions. However, Hirst and his German assistant Heinrich Nordhoff helped re-establishing VW”s production and simultaneously stabilize the social situation. The post-war industrial plans for Germany set out rules that governed which industries Germany was allowed to retain. These rules set German car production at a maximum of 10% of 1936 car production. By 1946, the factory produced 1,000 cars a month—a remarkable feat considering it was still in disrepair.

4.1.1 Growth post REME

The car and its town changed their Second World War-era names to "Volkswagen" and "Wolfsburg" respectively, and production increased. It was still unclear what was to become of the factory. It was offered to representatives from the American, Australian, British, and French motor industries. Famously, all rejected it. Ultimately, Ferdinand Porsche's design company, which eventually becomes Porsche itself, was paid a licensing fee by VW for use of the Beetle. Over the coming decades, the Porsche and VW companies remain linked via a complex legal framework, and in 1948 the control of Volkswagen was officially passed to German control under manager Heinrich Nordoff, former Opel manager. On June 20th that year, Germany underwent a currency reform that led to the introduction of Deutschmark, establishing a functioning market, opening up import export channels, ending short-supply economy and paving the way for VW's economic growth. Finally, in October 1948, the official Volkswagen trademark was registered with the German Patent Office in Munich.

Volkswagen's first foreign markets include Switzerland, the Netherlands, Belgium, Luxemburg, Sweden and Denmark. 1,380 vehicles are exported to these countries in 1948. A total of 19,542 vehicles were produced during 1948, and 4,600 among these vehicles were exported to international markets. VW was slowly capturing the mass production industry and penetrating global markets by the end of 1948. By January 1949, VW had 16 main distributors, 31 wholesalers, 103 dealers and 81 contract service centres that handle sales and service operations in the three western zones of occupied Germany. It was 1949 when VW decided to jump into the luxury car segment by enhancing the elegance and comfort levels of exported models. The superior equipment line costs more than the basic model, had wider choice of colours and a better padding that distinguished it from the standard sedan. Also, on June 30th that year Volkswagen-Finanzierungs-Gesellschaft mbH, a finance company was founded to provide loans to customers in Germany and to dealers. This measure was set up to encourage the sales of Volkswagen, served as an instrument to compensate for the lack of purchasing power on the domestic market. Between 1949 and 1954, the number of predominantly one-year loans rose from 168 to 14,831 and the financing volume from DM 551,000 to DM 48.7 million.

In July 22nd that year, VW entered into the mass production of the Volkswagen Type 15, a four-seater convertible at the Wilhelm Karmann factory in Osnabruck. The vehicle attracted plenty of customers by virtue of its great practicality, and concealed stiffeners on its side panels that neutralized vibrations. By 1980, a total of 330, 281 Beetle convertibles has rolled off the line in Osnabruck. By March 4th, 1950, VW had rolled out 100,000 cars since the end of war, and had jumped into a completely new product segment. Mass production for the Transporter began on the 8th of March. The model is used for transporting goods and as a minibus, as a fire department vehicle, as a police car, a postal delivery van, and later also as a camper-van. Planned as an “uncompromising van”, the three-quarter tonne vehicle adds a second model series to Volkswagen's portfolio which, with its 4.6 cubic metre load space, appeals primarily to business users. Because of its many uses, the Type 2 is in great demand in Germany as well as overseas. 8,001 Transporter find their way to customers in 1950, which ranged from delivery van models to minibus versions. In 1950, 27,816 sedans were sold in 17 countries. Five years later the Volkswagenwerk was already selling 147,319 Beetle in 45 countries. Around 30 million DM was invested between 1945 and 1950 lay the foundation for mass production in later years.

With 81,979 sedans sold alone in 1950, Type 1 becomes a best seller for VW and represented a 96% growth compared with prior-year production. The workforce too grew by 46% to 14,966 employees globally. December of 1950 recorder the first successful year of overseas business and amounted to a global sale of 90000 units, including Germany. The Korean War that began in June, led to an increase in international demand for raw materials and lead to a temporary acute coal shortage, causing Volkswagen problems in acquiring body panels. Car production in Wolfsburg has to be shut down for a few days. Aside from short periods in the Summer of 1951, material shortages force the factory into short-time working until March 1952. While the VW Type 2 was gaining popularity even after one year of its launch, VW statistical records at the end of 1951 were highly affected by the Korean war and its aftermath. During the year 1951, VW sold 1015,301 units globally and also managed to launch its first commercial titled “Volkswagen Geschichten” (“Volkswagen stories”), that completely turned Beetle and Transformer into the starts of the silver screen. Production stabilized at Wolfsburg in 1952 as the annual production grew by 28% to 136,013 vehicles.

Technical changes and innovations lead to a continuous improvement in product quality and vehicle safety. In 1952, the Beetle is given a triangular rear quarter window and a new tire size. On Sep 11, VW Canada Ltd was founded in Toronto, Ontario, expanding VW's reach in sales and customer service network. This step is necessary because the duty free import of British products puts Volkswagen at a disadvantage, making penetration of the Canadian market difficult. A total of 94 Volkswagens were sold by the end of the year in Canada, and 135,951 globally. In January, 1953, VW establishes the non-profit community housing corporation VW-Wohnungsbau-Gemeinnützige Gesellschaft mbH. This aimed to ease the chronic housing shortage experienced by Wolfsburg factory employees, and built 1400 apartments by the end of the year. This step not only helped more than half of the employees who lived outside Wolfsburg, but also empowered the company to creating a permanent core workforce that stayed together and worked together. On March 23rd , 1953, Volkswagenwerk GmbH sets up its first foreign production company, Volkswagen do Brasil Ltda., in São Paulo. The Brazilian government's restrictive import policy, which aims at promoting the domestic car industry, means that the only way of achieving long-term success in the South American market is to manufacture directly in the country. Volkswagen has an 80 percent share in the Brazilian firm which, from July 12, 1955, is transformed into a stock corporation. Initially the imported component kits are assembled in a rented facility. At the end of 1956, assembly is transferred to a newly built factory in São Bernardo do Campo. In order to comply with the required level of domestic manufacturing, the site is rapidly transformed from an assembly plant into a production facility. Also, in 1953, the Volkswagenwerk invested 22.3 million DM in machinery and 17.7 million DM in new factory buildings. As a result, annual production increased to 179,740 vehicles. Throughout the 50's, Volkswagen expanded itself broadly and kept evolving with each passing year. Every year saw a growth in the units produced, employee strength, global revenue, and reported a net profit of 319.3 million DM in 1958 compared with a profit of 7.4 million in the previous year.

4.1.2 Expansion and Innovation

Volkswagen Group of America is formed to standardize service and sales in the United States. Production of the Type 1 Beetle increases drastically, reaching 1 million units in 1955. However, The Volkswagen Type 1 Beetle was exhibited and sold in the United States for the first time. Only two units sell that year, but sales soon pick up in 1949. Sales soar as the witty “Think Small” ad campaign by Doyle Dane Bernbach lures sophisticated (and younger) consumers in 1959. On March 11 1960, Volkswagen France S.A. is founded in Paris to service the French market after the government relaxes import controls from Common Market countries. Volkswagen takes third place behind Fiat and Opel in passenger car imports to France in 1960, while in Germany Almost every second vehicle in Germany is a Volkswagen: passenger car production in the Federal Republic of Germany in 1960 exceeded 1.6 million vehicles, of which 756,947 are Volkswagens. It was not until 1960 that Volkswagenwerk GmbH is transformed into a stock corporation, and the new Volkswagenwerk Aktiengesellschaft is entered in the Register of Companies at the District Court in Wolfsburg. On July 21, 1960, the West German parliament voted by a large majority to approve the Law relating to the privatisation of share rights in Volkswagenwerk GmbH. Pursuant to that law, 60 percent of the company's stock is sold as so-called “people's shares”. The remaining 40 percent is divided equally between the Federal Government and the State of Lower Saxony, thus safeguarding state influence over the company. On January 1, 1961, The partial privatisation of Volkswagen results in a new “people's share” in the Federal Republic of Germany. By March 15 of this year, Volkswagen shares with a total nominal value of DM 360 Million are sold at a unit price of DM 350. The proceeds from the sale are transferred to “Stiftung Volkswagenwerk”, a charitable foundation under civil law with independent decision-making powers set up in Hanover in 1961 to promote scientific research. And on the same day At 1:55 p.m., the five millionth Volkswagen built since 1945 leaves the final assembly line in Hall 12. Volkswagen is the first European car maker to achieve such a success. The pearl white anniversary vehicle decorated with colorful chrysanthemums is officially presented to the International Red Cross in Geneva at a ceremony. In one of the major acquisitions during that time, the Volkwagen group acquired the Auto Union, the company behind the historic Audi brand.  

VW buys NSU Motorenwerke, and eventually merges this with Auto Union to create the modern Audi firm as its luxury vehicle brand in 1969. Audi has the technological expertise needed as demand for VW's original air-cooled models goes into reverse. Volkswagen production expanded rapidly in the 1950s. The company introduced the Transporter van in 1950 and the Karmann Ghia coupe in 1955. Sales abroad were generally strong in most countries of export, but, because of the car's small size, unusual rounded appearance, and historical connection to Nazi Germany, sales in the United States were initially sluggish. The car began to gain acceptance there as the 1950s progressed, however, and Volkswagen of America was established in 1955. The American advertising agency Doyle Dane Bernbach was hired to represent the brand in 1959, and the result was a landmark advertising campaign that helped to popularize the car as the “Beetle” and promoted its size and unconventional design as an advantage to the consumer. The campaign was very successful, and the Beetle was for many years the most-popular imported automobile in the United States. Although Volkswagen made many detail changes to the Beetle, the basic rear-engine design and rounded shape remained the same. Competition from small cars with more-modern designs and the company's increasingly troubled finances eventually dictated a change in corporate philosophy toward developing more-contemporary and sportier car models. The company developed other rear-engine models with more-modern styling and improved engineering, but none were as successful as the Beetle. The first of those new cars was the short-lived K70 in 1970, followed by the Passat in 1973. Most significant, however, was the Golf, initially called the Rabbit in the United States, which was introduced in 1974. The Golf was an instant sales success, effectively replacing the Beetle in the company's lineup and ultimately becoming Volkswagen's best-selling model worldwide. In mid-2015 Volkswagen briefly held the distinction of being the world's largest car manufacturer by volume after surpassing Toyota Motor Corporation.

On February 17, 1972, the 15,007,034th Type 1 Beetle is made, surpassing the Ford Model T as the most produced single model in history. However, On July 30, 2003, the final Type 1 Beetle rolls off the production line in Puebla, Mexico. Car No. 21,529,464 is immediately shipped to the Volkswagen museum in Wolfsburg. Through the course of its 65 years of existence, the VW group had produced 40 million Beetle cars, becoming the most-produced car in automotive history. An idea that came from Hitler became the best-selling car of all time. 1982: VW signs a cooperation agreement with the Spanish car maker Seat. It buys a majority share in 1986 and acquires Seat outright in 1990. Volkswagen acquired a controlling stake in SEAT in 1986, making it the first non-German marque of the company, and acquired control of Škoda in 1994, of Bentley, Lamborghini and Bugatti in 1998, Scania in 2008 and of Ducati, MAN and Porsche in 2012. Since 1937, Volkswagen has been providing the world with fresh, groundbreaking ideas on a regular basis. They frequently top the list of most money spent on research and development, with $13.5 billion spent between 2013 and 2014 alone. Volkswagen, which has partnerships with nearly 30 other makes and manufacturers in its group, manages to save costs without reducing the unique personality of any of their vehicles. In fact, they have one of the most diverse-looking vehicle lineups of any major auto group.

4.1.3 Platform Sharing

Their secret lies in their ambitious MQB platform program. These modular vehicle bases allow for thousands of different possible combinations while sharing a common family of parts. The only fixed measurement is the distance between the front axle and the firewall. Everything else, from the wheelbase to the front and rear overhangs, can be altered dramatically. For the Volkswagen brand alone, the MQB is used in the Polo, Golf, Scirocco, Jetta, Tiguan, Touran, Passat and several others.

4.1.4 Self-Driving

Stanley, who now resides at the Smithsonian Air & Space Museum in Washington D.C., won the US Department of Defense's 2005 Grand Challenge for autonomous vehicles. As you may have guessed, Stanley is the name of a car — a 2004 Touareg to be exact. Using a sophisticated 3D scanning camera in conjunction with a GPS system, Stanley navigated a grueling course through the Mojave Desert to beat out the other competitors. The race included a precarious mountain pass that would force any sloppy robot driving to cause the vehicle to plummet hundreds of feet. Stanley won the race in six hours and 54 minutes, beating the runner up by ten minutes. Stanley's successor, a 2006 Passat Wagon named Junior, won the race again in 2007.

4.1.5 Changing the way we interact with cars

Volkswagen turned heads at the 2015 Consumer Electronics Show in Las Vegas, Nevada with their Golf R Touch concept. While this vehicle looks ordinary on the outside, it holds the possible key to the future of vehicle control in its interior. Three LCD screens govern literally all of the functionality and information display in the car. A digital Active Information Display shows the instrument cluster, a large touch-screen controls infotainment and navigation, and a smaller screen is dedicated to climate and audio controls. These screens may sound like nothing new, but what sets them apart is that touching them is completely optional. Cameras mounted throughout the car let drivers use gestures like pointing for button presses to avoid taking their eyes off the road — or smudging the beautiful screens with fingerprints. To open the sunroof, all you have to do is stick your hand up and pretend to push the glass backward. To adjust the seat, place your hand underneath it and use gestures to indicate direction.

5 ELECTRIC VEHICLE – HISTORY & TIMELINE

Innovators in Hungary, Netherland and the United States began toying with the concept of battery-powered vehicle and created some of the first small electric cars in the early part of the century. And while Robert Anderson, a British inventor, developed the first crude electric carriage around this same time, it wasn't until the second half of the 19th century that French and English inventors built some of the first practical electric cars. Electric vehicles from different automakers began popping up across the U.S during that time, and, New York City even had a fleet of more than 60 electric taxis back then. In the U.S., the first successful electric car made its debut around 1890, all credits to a chemist who lived in Des Moines, Iowa - William Morrison. He built a six-passenger vehicle capable of a top speed of 14 miles per hour, a little more than the conventional electrified wagon during that time, and it immediately sparked consumer interest in electric vehicles.

By 1900, electric cars accounted for around a third of all vehicles on the road, and during the next ten years they continued to show strong sales and gradual process of acceptance into the common man society. As electric vehicles came onto the market, so did a new type of vehicle -- the gasoline-powered car – owing to improvements to the internal combustion engine since the 1800s. The gasoline cars had their own faults that they carried with. They required a lot of manual effort to drive, changing gears was a no easy task and they needed to be started with a hand crank, making them difficult for some to operate. They were also noisy, and their exhaust was unpleasant. However, electric cars didn't have any of these issues associated with it. EVs were quiet, easy to drive and didn't emit a smelly pollutant like the other cars of the time. Electric cars quickly became popular with urban residents, especially women, as published in an article of NY Times during 1911. They were perfect for short trips around the city, and as more people gained access to electricity in the 1910s, it became easier to charge them, adding to their popularity. Many innovators at the time took note of the electric vehicle's high demand, exploring ways to improve the technology. Ferdinand Porsche, founder of the sports car Porsche, developed an electric car called the P1 in 1898. Also around the same time, he created the world's first hybrid electric car -- a vehicle that is powered by electricity and a gas engine. Thomas Edison also thought electric vehicles were the superior technology and worked to build a better electric vehicle battery. He partnered with Henry Ford to explore options for a low-cost electric car in 1914, according to Wired.

Yet, it was Henry Ford's mass-produced Model T that dealt a blow to the electric car. Introduced in 1908, the Model T made gasoline-powered cars widely available and affordable, owing to the inclusion of machine line production. By 1912, the gasoline car cost only $650, while an electric roadster sold for $1,750. That same year, Charles Kettering introduced the electric starter, eliminating the need for the hand crank, thus raising the chances to more gasoline-powered vehicle sales. Among other factors that may have hindered the acceptance of EVs in the United States would be the discovery of Texas crude oil. Gas became cheaper and readily available for rural Americans, and filling stations began popping up all across the country. In comparison, very few Americans outside of cities had electricity at that time. In the end, electric vehicles became obsolete by 1935. There were many starts and stops that followed the disappearance of EVs, yet, the true revival of the electric vehicle didn't happen until around the start of the 21st century. According to us, it was one of two events that sparked the interest we see today in electric vehicles.

The first turning point was the introduction of the Toyota Prius. Released in Japan in 1997, the Prius became the world's first mass-produced hybrid electric vehicle. In 2000, the Prius was released worldwide, and it became an instant success with celebrities, helping to raise the profile of the car. To make the Prius a reality, Toyota used a nickel metal hydride battery -- a technology that was supported by the Energy Department's research. Since then, rising gasoline prices and growing concern about carbon pollution have helped make the Prius the best-selling hybrid worldwide during the past decade. The other event that helped reshape electric vehicles was the announcement of the production of a luxury electric sports car that could go more than 200 miles on a single charge, by a small Silicon Valley startup, Tesla Motors in 2006. In 2010, Tesla received at $465 million loan from the Department of Energy's Loan Programs Office -- a loan that Tesla repaid a full nine years early -- to establish a manufacturing facility in California. In the short time since then, Tesla has won wide acclaim for its cars and has become the largest auto industry employer in California.

(Historical footnote: Before the Prius could be introduced in the U.S., Honda released the Insight hybrid in 1999, making it the first hybrid sold in the U.S. since the early 1900s.)

Tesla's announcement and subsequent success spurred many big automakers to accelerate work on their own electric vehicles. The Chevy Volt and the Nissan LEAF were released in the U.S. market in the late 2010. The first commercially available plug-in hybrid, the Volt had a gasoline engine that supplements its electric drive once the battery is depleted, allowing consumers to drive on electric for most trips and gasoline to extend the vehicle's range. In comparison, the LEAF was an all-electric vehicle, meaning it is only powered by an electric motor. Over the next few years, other automakers began rolling out electric vehicles in the U.S.; yet, consumers were still faced with one of the early problems of the electric vehicle -- where to charge their vehicles on the go. Through the Recovery Act, the Energy Department invested more than $115 million to help build a nation-wide charging infrastructure, installing more than 18,000 residential, commercial and public chargers across the country. Automakers and other private businesses also installed their own chargers at key locations in the U.S., bringing today's total of public electric vehicle chargers to more than 8,000 different locations with more than 20,000 charging outlets.

At the same time, new battery technology -- supported by the Energy Department's Vehicle Technologies Office -- began hitting the market, helping to improve a plug-in electric vehicle's range. In addition to the battery technology in nearly all of the first-generation hybrids, the Department's research also helped develop the lithium-ion battery technology that was ultimately used in the Volt. More recently, the Department's investment in battery research and development helped cut electric vehicle battery costs by 50 percent in the last four years, while simultaneously improving the vehicle batteries' performance (meaning their power, energy and durability). This in turn has helped lower the costs of electric vehicles, making them more affordable for consumers. Consumers now have more choices than ever when it comes to buying an electric vehicle. Today, there are 23 plug-in electric and 36 hybrid models available in a variety of sizes -- from the two-passenger Smart ED to the midsized Ford C-Max Energi to the BMW i3 luxury SUV. As gasoline prices continue to rise and the prices on electric vehicles continue to drop, electric vehicles are gaining in popularity -- with more than 234,000 plug-in electric vehicles and 3.3 million hybrids on the road in the U.S. today.

A snapshot of Electric Vehicle history:

1832-1839 - Scottish inventor Robert Anderson invents the first crude electric carriage powered by non-rechargeable primary cells.

1859 - French physicist Gaston Planté invents the rechargeable lead-acid storage battery. In 1881, his countryman Camille Faure will improve the storage battery's ability to supply current and invent the basic lead-acid battery used in automobiles.

1891 - William Morrison of Des Moines, Iowa builds the first successful electric automobile in the United States.

1897 - The first electric taxis hit the streets of New York City early in the year. The Pope Manufacturing Company of Connecticut becomes the first large-scale American electric automobile manufacturer.

1900 - The electric automobile is in its heyday. Of the 4,192 cars produced in the United States 28 percent are powered by electricity, and electric autos represent about one-third of all cars found on the roads of New York City, Boston, and Chicago.

1920 - During the 1920s the electric car ceases to be a viable commercial product. The electric car's downfall is attributable to a number of factors, including the desire for longer distance vehicles, their lack of horsepower, and the ready availability of gasoline.

1966 - Congress introduces the earliest bills recommending use of electric vehicles as a means of reducing air pollution. A Gallup poll indicates that 33 million Americans are interested in electric vehicles.

1970s - Concerns about the soaring price of oil -- peaking with the Arab Oil Embargo of 1973 -- and a growing environmental movement result in renewed interests in electric cars from both consumers and producers.

1974 - Vanguard-Sebring's CitiCar makes its debut at the Electric Vehicle Symposium in Washington, D.C. The CitiCar has a top speed of over 30 mph and a reliable warm-weather range of 40 miles. By 1975 the company is the sixth largest automaker in the U.S. but is dissolved only a few years later.

1997 - Toyota unveils the Prius -- the world's first commercially mass-produced and marketed hybrid car -- in Japan. Nearly 18,000 units were sold during the first production year.

1997 – 2000 - A few thousand all-electric cars (such as Honda's EV Plus, G.M.'s EV1, Ford's Ranger pickup EV, Nissan's Altra EV, Chevy's S-10 EV, and Toyota's RAV4 EV) are produced by big car manufacturers, but most of them are available for lease only. All of the major automakers' advanced all-electric production programs will be discontinued by the early 2000s.

2006 - Tesla Motors publicly unveils the ultra-sporty Tesla Roadster at the San Francisco International Auto Show in November. The first production Roadsters will be sold in 2008 with a base price listing of $98,950.

2009 - The Department of Energy awards $8 billion in loans to Ford, Nissan, and Tesla Motors to support the development of fuel-efficient vehicles. The automaker loans are the first distributions from a larger $25 billion fund created under the Energy Independence and Security Act of 2007.

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