Image Credit: Frank Hebbert
So I’m willing to bet that you are pretty proud of your product. You believe that you are using your product development definition to provide your customers with a high quality product that can meet their needs better than any other product that is currently on the market. This is all fine and good as long as the product that you are delivering is truly high quality. It can only be high quality if it is built out of high quality parts. What is a product manager to do if they suddenly discover that some of the parts that are going into their product are NOT high quality?
The Problem With Batteries
If we are going to talk about the challenge of dealing with defective parts that find their way into our products, then we’re going to need to have an example to discuss. The good news is that we have such an example. Over at General Motors their plans to ramp up electric-vehicle production in China were set back after the product managers determined that the Chinese-made batteries it intended to use failed to meet its own performance and safety standards during testing.
GM was set to enter production on its plug-in hybrid Buick Velite 6, a local variant of the Volt, with a pure-electric version due to follow early next year. That launch schedule had to be postponed, with internal tests showing the battery, supplied by A123 Systems, didn’t meet GM’s quality standards. EV batteries are complex components that can’t easily be switched, potentially spelling lengthy delays in getting the Velite 6 into production. The product managers still intend to launch 10 EVs in China. However, that target was announced over a year ago, long before the battery supply problem arose. GM’s plan is to deliver 20 EVs globally. In China, they are on track to introduce 10 new energy vehicles. What all of this means is that all-electric vehicles like the Velite 6 battery electric vehicle are obviously a key priority. If General Motor’s product managers are not able to do this, then it’s not going to look good on their product manager resume.
A123 Systems was bought out of bankruptcy by Chinese auto-parts giant Wanxiang Group Corp. in 2013, and it operates a battery plant in the eastern city of Hangzhou to supply the China market. Auto makers operating in China are scrambling to fulfill a Chinese government order requiring them to start building electric vehicles next year. Without a battery, GM is one of those in danger of missing Beijing’s target. China’s timetable is “difficult to achieve” for longtime manufacturers of gasoline cars being forced to make the rapid switch to electric. The situation is different company by company with some players well set to meet the target, and others floundering.
Solving The Bad Battery Problem
Though seen as an EV market leader in the U.S., where it sells the Chevrolet Bolt and Volt electric cars, GM has had difficulty translating that advantage into success in China, the world’s biggest EV market. GM originally planned to use batteries from South Korea’s LG Chem Ltd. But China mandated that auto makers use batteries from a list of approved suppliers, all of which are Chinese. China-owned Volvo Car Group, however, is an exception: It is allowed to use batteries using LG Chem-licensed technology in its locally built cars.
Product managers cite the exclusion of foreign batteries as an example of Chinese government protectionism that handicaps both foreign battery firms and the auto makers they supply, while handing advantages to local rivals. The Chinese are on course to buy more than 1 million electric vehicles this year – nearly all of them built by local auto makers. Riding the boom are fast-growing Chinese battery suppliers such as BYD Co. and Contemporary Amperex Technology Co. now among the world’s biggest lithium-ion battery companies.
In its rush to develop battery technology, China risks shortcomings in quality and safety performance. There are concerns with the quality of Chinese-manufactured cells and batteries. Chinese cells are very attractive because they’re inexpensive, but people may not realize that these cells may not have gone through the necessary qualification testing before going to market. China’s EV policies have created a dilemma for foreign product managers: They are obliged to build electric vehicles and use Chinese batteries, but they can’t compromise their global standards and use components in which they lack confidence – especially batteries, which may have a history of catching fire.
While most foreign product managers have publicly expressed confidence in their ability to meet the EV quota, few have explained in detail how they will achieve a target requiring electric vehicles to make up roughly 3% – 4% of their output. Some are making tangible progress. Nissan Motor Co. has started production of its first made-for-China electric car, while Volkswagen AG has unveiled its first pure-electric car for China. Ford Motor Co. – which began developing electric vehicles later than rivals such as GM – has one plug-in hybrid model on the market in China, and plans to launch its first pure-electric car.
What All Of This Means For You
As product managers, just like it says on our product manager job description, we all want to be able to deliver high quality products to our customers. We figure that if we can do this, then our customers will fall in love with us and buy more from us. However, our products can only be as good as the components that we use to build them. Where things can get tricky is if one of the components that we use to build our product turns out to be faulty. Product managers need to know how to handle situations like this.
A good example of having your product suffer because one of the components that is used to build it is faulty can be seen at General Motors. The electric vehicles that they are planning on building in China have suffered a setback because <>the battery that they were going to use is not up to their standards. The failure of this one part has set their launch date for their new vehicle back. Just to make things worse, General Motors is under the gun to start to produce and sell electric vehicles by next year. General Motors originally planned on using batteries in their cars that they got from Korea. However, the Chinese government has mandated that cars in China have to use locally produced batteries. Chinese batteries are very cheap, but their quality may not be very good. Product managers still think that they can deliver their new cars on time.
Product managers need to anticipate that there always may be problems with the different parts that are used to build their products. What this means is that we have to come up with alternatives and work-arounds for those situations where we run into component problems. The General Motors product managers ran into production problems with a component and they didn’t have a backup plan. Product managers need to make sure that we always have a backup plan – just in case!
– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™
Question For You: Do you think that the GM product managers should slip their schedule or use the risky batteries?
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What We’ll Be Talking About Next Time
The one thing that every product manager would love to have would be a product that everyone needed. We could count on eventually selling it to everyone. Over at Biogen, their product managers thought that they just might have such a product. The life sciences company had developed what they thought might be a cure for the dreaded Alzheimer’s disease. There’s good chance that a lot of us may eventually get Alzheimer’s and so the market for this type of product could be huge. However, due to a series of missteps, they seem to have dropped the ball. What went wrong?