Feasibility Study - Alternative Fuel Vehicles
...portunity to experience and drive an AFV offers additional market share. Each of these offers opportunity to enhance and capitalize on the environmental friendly corporate image. Prior to establishing itself as “the company that cares about the environment” through the rental of AFVs, consumer perception of the AFV must be considered. If perception is negative, this same negative tone may be reflected toward the company offering such a product. Consumer Perception Corporate image is greatly influenced through consumer perception. Before corporate image can be considered as an asset, consumer perception must be favorable. According to a recently published article from autoswalk.com (2004), current consumer perception of the AFV is unfavorable. They state, “Americans seem to have a stereotype of energy efficient vehicles that are not powered by fossil fuels,” says Donna Wagner, president of the Council. “They think these cars have a top speed of 30 mph and an extension cords (sp). That’s not how it works in the new millennium.” In an article written by Darwin Burkhart for the U.S. Department of Energy’s Alternative Fuel News (2002, p. 2), Burkhart believes part of the consumer negativity toward the AFV is within the name, “alternative.” Burkhart speaks of alternative schools, alternative religious groups, of alternative methods in medicine, and, of course, of the alternative vehicle. He goes on to state, “‘Alternative’ is often synonymous with experimental, unproven, and demonstration, and brings the guinea pig to mind. You won’t find that in the dictionary, but that’s how it is perceived. In fact, “alternative fuel” is the only example I can think of in which “alternative” means something positive. (But I’m biased.) It is amazing that “alternative fuels” and “alternative fuel vehicles” have made it this far, and with such success.” The suggestion of Burkhart is to change the meaning of “A” in alternative to “American,” the American Fuel Vehicle. Within this same article, Shelley Launey, of the U.S. Department of Energy agrees. She states, “…the term “American Fuels” is much more appropriate terminology than “alternative fuels.” I for one have a much greater sense of pride knowing that I drive an American Fuel Vehicle (AFV).” Consumer perception can be changed. When this change takes place, will Lotus Rental Car be in position to capitalize on this change? The Alternative Fuel Vehicle It would be difficult to continue further study without first understanding the concept and design of the AFV. A brief description is given of the electric and hybrid-electric vehicles. Electric Vehicles The electric vehicle is the only vehicle having zero emissions. Electric vehicles use batteries that store electricity as energy. These vehicles offer a smooth quiet ride, while remaining pollutant free during operation. Electric vehicles are range limited and require recharging. However, battery technology advances have led to better integration, longer battery life, and charge capacity, making electric vehicles very capable for road use. “The electric vehicles from the major automotive manufacturers have many of the safety features found in internal combustion engine vehicles such as air bags, power steering and antilock braking systems.” (ABC’s of AFV’s, 1999, p. 29.) One of the main differences between an electric vehicle and a standard vehicle, as we know it, is the engine. The combustion engine is replaced with an electric motor. Other differences include no fuel tank, no ignition system, as this is replaced with electronic controls, and both a high and low-voltage electrical system. Hybrid-Electric Vehicles Hybrid-electric vehicles use both gasoline engines and electric motors for their combined benefits. Hybrid-electric cars benefit from this combination through increased power for electronic devices, improvement in power, and increased fuel economy. “It’s no accident the most fuel-efficient vehicles in some classes for the 2005 model year are hybrid-electric vehicles, (HEVs)” (www.fueleconomy.gov, 2004.) An internal combustion engine, just like conventional vehicles, primarily propels hybrid-electric vehicles. However, “hybrid-electric cars convert energy that is normally wasted during coasting and braking into electricity, which is then stored in a battery until needed by the electric motor. The electric motor is used to assist the engine when accelerating or climbing up steep hills and in low-speed driving conditions where internal combustion engines are least efficient. Hybrid-electric cars now being offered do not need to be plugged into an external source of electricity to be recharged unlike all electric vehicles regular gasoline and braking provide all the energy the vehicle needs” (Fuel Economy Guide, 2004, p. 16.) Costs Factors If consumer perception of the AFV changes to favorable, a number of costs factors need to be analyzed prior to incorporating the vehicle into the Lotus fleet. Market research will need to be conducted to determine what, if any, profit margin Lotus is to expect if choosing to implement these types of vehicles. Next, Lotus will need to spend additional money on training, maintenance, and raising customer awareness of the AFV. Initially, money will need to be invested into market research to better evaluate the risks involved and the consumer demand for the AFV. The strength of the consumer’s support of the AFV will need to be determined. This strength will determine if there is enough justification to introduce these vehicles. For this introduction to be successful, the current customer base will need to be solidified and a new customer market segment will need to be targeted. AFVs will require additional staff training. Mechanics will need to learn how to service these types of vehicles. When mechanical problems arise, quick and efficient repairs must be made to return these cars back to the line. Only when in rental use will profits be incurred. As the AFV is within new technology, training will need to be ongoing as new advancements are made. Additionally, the sales staff will need to be trained so that they can competently discuss and explain the features and benefits of the AFV to inquiring customers. This may be the first opportunity for many customers to drive an AFV. The Lotus staff needs to assure that all of the customer’s questions can be answered. The required training should be minimal, but it will be a necessity to ensure Lotus’s success. ...