Electric Cars Get Charged for Battle

The first serious contenders for a mass-scale electric car are on the road. They’ve already changed GM and Nissan; will they change the world?

Most of the drivers on the 101 Freeway in Marin County, Calif., on this foggy December morning are oblivious to the black snub-nosed car gliding along beside them. Every so often, however, someone does a double take, gives a thumbs-up, or snaps a cell phone picture, because the car in the next lane is one they’ve never seen before: a Nissan Leaf, the world’s first affordable, mass-produced electric vehicle, or EV.

This particular Leaf happens to be No. 1: The very first sold anywhere. At the wheel is Olivier Chalouhi, who took delivery an hour before amid some impressive hoopla at a Nissan dealership in Petaluma. Now, driving south to San Francisco with Nissan (NSNAY) Americas Chairman Carlos Tavares riding shotgun, Chalouhi, a 31-year-old Web entrepreneur, is explaining how he came to be the first person to buy this car. His voice is soft but easy to hear from the backseat because, with no internal combustion engine, the Leaf (nationally about $25,000 after a $7,500 federal tax credit) is eerily quiet, almost as cocoon-like as Nissan’s $50,000-plus Infiniti M.

“It all started,” Chalouhi says, “when I saw an ad for the Chevy Volt.” The Volt, which started shipping to dealers in mid-December, is the Leaf’s chief competitor in the green-car sweepstakes. It runs for about 40 miles on an electric charge before a small gasoline engine kicks in to recharge the battery. That gives the Volt more than 350 miles of range—unlike the Leaf, which runs for 60 to 100 miles, varying with weather and terrain and driving style, before needing a recharge that can take 30 minutes to 7 hours, depending on the strength of the charger. The Volt’s gasoline engine makes it less attractive to some eco-minded consumers like Chalouhi. “In all the articles I read about the Volt, the Leaf was discussed as well,” he says. “As soon as I found out about the Leaf, I forgot about the Volt. The Volt wasn’t going to project the image I wanted. It has a tailpipe.”

“The Volt is a hybrid,” Tavares, 52, says happily from the passenger seat. “A very nice hybrid. But we see it as a transitional vehicle, and we were always of the opinion that we were providing the ultimate destination: 100 percent clean. No emissions. No gasoline. No tailpipe.”

The energy chain is more complicated than that—the electricity powering a Leaf may or may not come from low-emission sources—but right now it’s time to enjoy the ride. Chalouhi turns off the highway and guns the car up a steep, winding road in the Marin Headlands overlooking San Francisco Bay. The Leaf is surprisingly agile and sure-footed; its electric motor has plenty of pep, and 600 pounds of laminated lithium-ion batteries below the floorboards help it hug the road. Chalouhi is having fun with the tight turns heading into the hills, where Nissan has stationed a media team to capture the moment with some suitably dramatic images. Alas, the Golden Gate Bridge is hiding behind the fog, making the glamour shot impossible, so Chalouhi guides the car back down toward the 101 while a product manager, Paul Hawson, briefs him on the next photo op, at City Hall in San Francisco. “At the end of the ceremony,” Hawson says, “you and Mr. Tavares will go to the car and plug in the charger together.”

Chalouhi looks worried. “So I’m not going to be charging for long?”

“A short amount of time, yes.”

Chalouhi lives 35 miles to the south in Redwood City; the Leaf’s sophisticated NAV screen is telling him he has 37 miles left before his battery runs out of juice. The owner of the first mass-produced EV, in other words, is experiencing his very first twinge of what GM (GM) marketers have helpfully named “range anxiety.”

“So I won’t get much charge at City Hall,” Chalouhi says.

“You’ll get some,” Hawson assures him. “You’ll get home. We’ll make sure you get home.”

The psychology of the American car buyer is the biggest roadblock Nissan must get past for the Leaf to become the hit that the company promises it will be. Nissan’s chief executive officer, Carlos Ghosn, likes to point out that 95 percent of drivers travel less than 100 miles per day, making the Leaf practical for most. Yet practicality doesn’t always translate into peace of mind. A recent study by Synovate Motoresearch showed that 60 percent of 1,600 U.S. consumers surveyed think their gasoline-powered cars are reliable. Only 30 percent of those surveyed think hybrid-electric cars are reliable (even after a decade of virtually trouble-free performance), and only 10 percent think electric cars will be trouble-free. “The main thing holding back electric vehicles is the customer,” says John German, a former strategic planner for Honda (HMC) who is now a program director for the International Council on Clean Transportation, a green think tank in Washington. “It’s risk aversion.”

Nissan and GM missed the decade-long trend toward gasoline-electric hybrid vehicles—Toyota’s (TM) Prius dominates that segment, which still accounts for less than 3 percent of all cars sold in the U.S. When Ghosn joined Nissan as chief operating officer in 1999, the company was flirting with bankruptcy; as CEO starting in 2001 he slashed 60 percent of its research and development projects but kept the costly battery program that led to the Leaf. In 2005 he also became chief executive of Renault, which owns 44.3 percent of Nissan, while Nissan holds 15 percent of Renault. The Renault-Nissan alliance has now spent more than 4 billion euros ($5.2 billion) developing EVs and batteries, according to the company.

Both Nissan and GM began work on their new electric vehicles in 2006, when the rest of the auto industry had more or less given up on EVs after a brief foray in the late 1990s and early 2000s. When Nissan announced its project that year, “Nobody took us seriously,” Ghosn, 56, says in a telephone interview. “We had many very ironic comments coming from our competitors about the illusion of the electric car.”

The sniping never stopped. Former GM Vice-Chairman Robert A. Lutz, who helped develop the Volt, told Bloomberg News last year that all-electric vehicles were still years away from widespread adoption. “He’s rolling the dice,” Lutz said of Ghosn’s battery-only approach. “I don’t see it happening.”

Until a next-generation battery emerged with better range at less cost, the industry decided, all-electric vehicles were too limited for the mainstream. (Some investors seem to agree these days. Last week electric car manufacturer Tesla’s (TSLA) stock dropped 15 percent on the day the insiders’ lock-up period expired.) Everyone remembered the fiasco of the first abortive EV era, from 1996 to 2003, when California required GM and other carmakers to offer the vehicles. The cars were too expensive to be profitable, so the carmakers succeeded in overturning the state mandate, then scrapped the program. In GM’s case, the company crushed many of the cars, called EV-1s—a PR nightmare captured in the 2006 documentary Who Killed the Electric Car?

Now, says Ghosn, “Everybody is competing for the electric car market. People who don’t really have an electric car are saying, ‘We have one, too.’ Even the hybrids want to look electric, which was not obvious four or five years ago. My call was the right one. It doesn’t always work out that way, so you’re happy when you’re vindicated.”

His declaration of victory is a little premature. For one thing, major automakers no longer have a choice about going electric. They have to, largely because of government mandate. California law requires the largest automakers to have low- or no-emissions cars in their fleets by 2012, and the Obama Administration’s new fuel economy standards, which raise fleet averages to 35.5 mpg by 2016, a 40 percent improvement over current levels, make having a zero-emissions vehicle a smart way to balance out the gas-guzzlers.

While it’s true that more than a dozen electric and plug-in hybrids are slated to go on sale in the next two years—entries from Ford (F), Honda, Toyota, Mazda, and many more will be on display at the Detroit auto show, which begins on Jan. 10—Nissan is the only major automaker betting so heavily on all-electric technology. GM is hedging, with cars that run on electricity but use a gasoline engine to recharge. Honda has put its R&D muscle into hydrogen fuel-cell technology, which remains prohibitively expensive. (The Honda FCX Clarity hydrogen vehicle is a machine of great beauty, and each one costs Honda more than $100,000 to produce, according to K.G. Duleep, a fuel-cell expert at Virginia-based Energy & Environmental Analysis.) BMW, Volkswagen (VLKAY), and Mercedes-Benz (DAI) have focused on ultra-efficient diesel engines. Toyota’s main EV offering is an incremental play: a plug-in Prius that adds about 15 miles of all-electric range before the hybrid motor takes over.

It remains to be seen whether this flood of supply will meet with sustainable demand. In a report called “Drive Green 2020: More Hope Than Reality,” marketing firm J.D. Power and Associates projects that in nine years, battery-electric vehicles like the Leaf will enjoy annual sales of only about 100,000 units in the U.S. and 1.3 million units globally, or about 1.8 percent of the 71 million cars expected to be sold. Another 3.9 million hybrids and plug-in hybrids will be sold worldwide in 2020, the firm estimates, bringing the total electric and hybrid market to about 7 percent. “While most consumers say they want to create a smaller personal carbon footprint,” the study says, “research shows this consideration carries relatively low weight in the vehicle purchase decision.” Other studies are more bullish; Bloomberg New Energy Finance projects that plug-in cars such as the Leaf and the Volt could make up 9 percent of U.S. sales by 2020 and 22 percent by 2030. Yet after 10 years as the world leader in hybrids, Toyota has never sold more than 187,000 Priuses in the U.S. in a year, about the same amount as the Hyundai Sonata. Prius sales reached that peak in 2007, just before the financial meltdown, and have dropped since then as lower fuel prices have lured Americans back to SUVs.

Now consider Ghosn’s projections for the Leaf. Nissan will produce only about 50,000 this year and next, but by the end of 2012 three new Leaf plants will be operating—in Oppama, Japan; Sunderland, England; and Smyrna, Tenn.—with a total capacity of 500,000 cars per year and the ability to scale up to a million, just as all those competing EVs and hybrids from Toyota and Audi and Ford will be coming to market. Ghosn is the first to admit that he’s making a huge bet.

It may not be an altogether crazy one. Tom Turrentine is director of the Plug-in Hybrid Electric Vehicle Research Center at the University of California, Davis. An anthropologist by training, Turrentine has partnered with major automakers to conduct a series of detailed studies of actual Americans driving actual electric cars—not just EV enthusiasts, but regular people driving an array of electrics. As his team observed the driving habits of more than 300 EV households over the past several years, families driving and living with their electrified Minis, plug-in Priuses, and Nissan hyperminis, the data told him that EVs “were never going to be ‘just like’ internal combustion cars.” They were different, and in some ways superior.


“There’s something about electric drive, with its quiet glide and immediately available torque, that drivers really enjoy. Even when they aren’t going fast, people think they are having fun,” says Turrentine. “Engineers at BMW tell me it’s the way the cars accelerate. You don’t have clutches and transmissions, so your accelerator pedal is feeding electricity directly to the motor, and you feel it accelerate the car. There’s nothing in between you and the tires. Some people fall in love with that feeling.”

For all his confidence, Ghosn understands the immense challenges to expanding Leaf sales. That’s why, for the past three years, his company has had a team of traveling executives—the Zero Emission Mobility Team—meeting with city, state, and utility officials around the country to solve crucial infrastructure problems such as the cumbersome permitting process for home chargers and the need to create a network of high-speed public chargers in cities and along interstate highways. “We are not the provider of just a car this time,” he says. “We are the provider of a whole new system.”

Utilities may welcome the opportunity to sell more electricity, but they also worry about the load. Several new EVs suddenly plugged into the same suburban block could fry a local transformer. More difficult is installing the needed network of charging stations, both in the home and in public, to allay range anxiety; 13,000 public chargers are expected to be in the ground by the end of 2011. (The U.S., by Nissan’s count, has 106,000 gas stations coast to coast.)

The most important issue of all has to do with customer education and acceptance. To appeal to the “pragmatic majority” of buyers, Nissan needs to sell the cost advantage of ownership: year in and year out, EVs cost far less to own and operate than internal-combustion vehicles—about 2 cents per mile to drive, compared with about 13 cents per mile for an average gasoline-powered car, according to Nissan—and less to maintain as well. To buy Leafs in serious numbers, these pragmatic men and women need to be able to imagine themselves behind the wheel of an electric vehicle.

For the product to be competitive, however, Nissan must also keep the price down. Nissan manufactures its own batteries in a joint venture with NEC, and they account for roughly half the cost of the car, making the initial price of an EV more than that of comparable gas-powered vehicles. For now, federal and state tax credits and rebates are required to make the cars cost competitive. The Leaf’s sticker price of about $33,000 makes it $10,000 costlier than a well-equipped Honda Civic, for example. Factor in the $7,500 federal tax credit (along with rebates and tax credits available in 16 states, such as a $5,000 price break in California and a $4,500 rebate in Hawaii), and the EV becomes competitive. Assuming the new Congress doesn’t roll it back, that federal tax credit is available to the first 200,000 EV customers of each carmaker; when it runs out, Nissan expects to be selling so many Leafs that economies of scale will bring costs down. Ghosn says the company needs to sell between 500,000 and 1 million Leafs a year in order to enjoy those economies. “Then we’ll be able to compete without any government subsidies. Our battery costs are already coming way, way down. Everybody in the business has estimates, but nobody really knows everything we’re up to. The Leaf is going to be one of the most profitable products Nissan has ever made.”

While Ghosn was planning the Leaf in 2006, Bob Lutz and Jon Lauckner, GM’s vice-chairman and director of product planning at the time, were also trying to dream up an electric car that would leapfrog the Prius. Like Nissan, GM was after some much needed public acclaim and green credibility. The company had been derided for shutting down its EV-1 and crushing the cars, and Lutz thought a pure EV that used no gasoline would be a public relations coup.

Lauckner, now president of General Motors Ventures, the automaker’s technology venture capital group, studied American driving habits just as Ghosn and Tavares were doing at Nissan. Where the Nissan team focused on the fewer than 100 miles a day traveled by 95 percent of drivers, Lauckner lingered over another set of numbers: 78 percent drive fewer than 40 miles a day. He figured a car equipped with enough battery power to go that far, plus a gasoline engine to recharge it on the fly, “would be a game-changing concept that would address the shortfalls of electric vehicles on one side and go beyond the top hybrids on the other. We wanted this to be someone’s first car, not their second or third commuter car,” he says.

Lauckner showed Lutz a schematic for the Chevy Volt, a car that would allow many drivers to forget about gasoline unless they were taking a special trip. Someone with a 30-mile commute would get roughly 150 miles per gallon, and the car would travel well over 300 miles on a tank of gas. (The EPA, using a new metric designed to compare different fuel types, now estimates the Volt’s average fuel economy at 93 “mpg equivalent” in electric mode, 37 in gas-only. The Leaf’s mpg equivalent is 99.) Later that summer, they took the proposal to then-CEO Rick Wagoner, who had killed GM’s EV-1 after $1 billion in investments because he was convinced consumers didn’t want it. Wagoner bought into the idea.

Once Wagoner and GM’s board approved, engineers had to build the thing. Getting beyond the early adopters and selling to the general public meant GM needed to offer more than just fuel economy, especially since the Volt was going to list at more than $40,000 before tax credits. The car had to be upscale, says Tony Posawatz, the Volt’s vehicle line director, but it wasn’t going to be a luxury vehicle.

In his small office deep inside GM’s Vehicle Engineering Center in suburban Detroit, Posawatz pulls out some books on the history of electric vehicles, which date back to 1881 and outsold gasoline-powered cars in the early days. Henry Ford’s wife drove one. Posawatz points to a 1910 ad for the Baker Electric. Beneath a drawing of a woman at the wheel, the ad copy boasts of the “quietest and most refined electric car.” Back then, he says, electric carmakers like Baker, Detroit Electric, and Waverly Electric targeted women, who wouldn’t have to crank a starter or tolerate the noise and soot of gas-powered cars.

No one has to crank a car anymore, but electric cars are still quiet and clean. That meant that even if the Volt wasn’t going to be a luxury car, it could be premium in many ways. A near-silent ride would be a selling point. Like Nissan’s engineers, Posawatz knew that when you get rid of a car’s exhaust note, the vehicle is so quiet that passengers get a bigger dose of road and wind noise. In conventional cars, “the gasoline engine masks a lot of your sins,” Posawatz says. The engineers worked to tighten the gaps between doors and body panels to reduce wind noise, then packed the car with sound-deadening material to hide the growl of the gasoline engine when it’s running. GM also engineered a body that is stiffer than most luxury cars to give it a smoother ride and more precise handling, something the hybrids on the market traditionally do not offer. With 80 percent high-strength steel and a buttoned-up body, the Volt is as stiff as most luxury sports cars, built to handle hairpin turns. It drives as well or better than a Leaf. One thing is certain: Neither will ever be mistaken for a golf cart.

In the spring of 2008, more than two and a half years before the Leaf would go on sale and a year before Ghosn showed it off in public for the first time, Nissan gathered executives from governmental affairs, product planning, communications, sales, and marketing, to create its Zero Emission Mobility Team. The team had a huge job: Prepare America for the EV by creating Leaf-friendly policies in states with progressive environmental agendas, partnering with local officials and utilities to encourage tax incentives, and streamlining the permitting and installation process for home chargers while building a network of public charging stations and educating drivers about the advantages of EVs. Doing all of that meant the carmaker would have to establish relationships with a range of players it hadn’t dealt with before. And it meant Nissan would have to insert itself, for the first time, between its dealers and their customers.

“We’ve never had to organize anything like this,” says Brian Carolin, Nissan’s senior vice-president for sales and marketing. “I know how to sell cars, and after 26 years with this company, I like to think I understand American psychology. But this is the most interesting and demanding car launch I’ve ever been involved with. I have a portfolio of 17 Nissan nameplates, half a dozen Infinitis, and one Leaf. I spend a wildly disproportionate amount of my time on the Leaf.”

The Mobility Team had two skillful players: executives Tracy Woodard (from government affairs) and Mark Perry (from product development), who toured the country together meeting with activists and officials, figuring out which markets to sell into first. They sorted potential launch markets according to three main criteria. First, they looked for places that had EV incentives left over from the late 1990s-early 2000s. Then they pored over maps showing the density of hybrid customers. (Of the early Leaf buyers, 80 percent have never owned a Nissan before. Amost half have owned Priuses.) Third, they focused on states where the local utilities were comfortable with the idea and willing to upgrade their grids if needed.

In the end, they came up with a Wave One map that included Washington, Oregon, California, Arizona, Tennessee, Texas, and Hawaii. (Wave Two will follow in the late summer and early fall 2011, continuing around the Sunbelt and then up the East Coast.) By limiting early sales to just seven states, Nissan could help achieve a critical mass of charging stations. Of the 13,000 stations expected nationwide by the end of 2011, almost half will be on the West Coast. Limiting the market also means Nissan will have to train, initially, only 163 of its 1,000 U.S. dealers to sell and service the car.

In the summer of 2008, Woodard, 45, and Perry, 53, began reaching out to “conveners,” influential local officials and activists who could bring together groups of stakeholders. In the fall, they held their first major meeting in San Francisco, organized by Jack P. Broadbent, CEO of the Bay Area Air Quality Management District. “Nissan did this right,” says Broadbent. “They got here six months before the competition, and they broke through the lingering suspicion of the activists.” They invited EV evangelists such as Paul Scott to Yokohama to drive the Leaf on Nissan’s test track there. Scott, vice-president of the EV activist group Plug-In America, then blogged happily about the experience. Nissan donated $25,000 to Plug-in America as well, says Scott, who now sells Leafs at Santa Monica Nissan. “We’re not bought off,” he adds. “What won us over is the fact that they’re making this EV.”

As Woodard and Perry met more people, they categorized their local partners into personality types: “bandleaders,” “trailbosses,” “cat-herders.” What they had in common, Woodard says, was that “they know everybody. And when they invite people to meetings, the people come.” Not long ago, Woodward counted up the business cards she had collected from stakeholder meetings: 1,400 people in 307 cities in 27 states. “It’s a very hands-on, personal thing,” she says. “And we surprised them, because this time, unlike regular lobbying, the ask isn’t for the company. The ask is for the customer: Give the EV buyer incentives. Set up EV charging systems. Streamline the permitting process for home chargers.”

There were plenty of cities where the local leaders looked at Woodard and Perry as if they each had six heads, but mostly there was enthusiasm, even impatience. Perry came across a local news article announcing that Portland General Electric was installing 100 charging stations, and Nissan hadn’t even visited Portland yet. “What are they doing?” he asked Woodard. “There’s nothing to charge!”

“They’re getting ready for us,” Woodard replied.

While traveling the country, Woodard and Perry began to hear footsteps. “We almost thought there was a bug in our luggage,” Woodard says, “because after we’d leave a town, there’d be another visitor coming right behind.” Usually it was Britta Gross, GM’s director of global systems and infrastructure, paving the way for the Volt. Sometimes it was an executive from Ford, or Mitsubishi, or Toyota. “That was fine, because we were saying about 80 percent the same things,” Woodard says. “Leaf is more dependent on electric charging than Volt, but we were all talking about infrastructure, planning, permits, and charging installation. It gives credibility and scale. It helps if cities know there’s a lot of interest.”


Charging an electric car with a standard 120-volt outlet can take up to 18 hours. You need six to eight hours to charge one with a more powerful 240-volt outlet. Buying one today means contacting a utility to see if the neighborhood transformer can handle the load, getting a contractor to install a 240-volt charger in your garage, and having the city inspect it. It can cost anywhere from a few hundred dollars to $3,000 and take a month or two, says Ed Kjaer, director of plug-in vehicle readiness for power utility Southern California Edison, which has had electric cars in its company fleet since 1998.

Nissan, and to a lesser extent GM, needed to make the process easier for both customers and utilities. So the company hired a contractor, Monrovia (Calif.)-based AeroVironment (AVAV), to help Leaf buyers with the installation process. Woodard and Perry also cut deals with local utilities: If Nissan sold a Leaf in a utility’s territory, they agreed, with the permission of the customer, to let the utility know. As Woodard and Perry discovered, “there are 3,000 utilities in the U.S., with 3,000 stories,” says Perry. “So this is a regional issue. In Houston, with massive homes and AC loads, adding an EV is no big deal. A San Francisco row house will have a much smaller load.” An electric vehicle charging at 240 volts draws 3,300 watts of power. A hair dryer may draw 1,600. “So we’re two hair dryers,” says Perry. “If that will cause a neighborhood transformer to blow, you’ve got bigger problems than EVs. To Portland General Electric, we were like three plasma TVs. To NRG in Houston, we were a mosquito. Our message was, ‘We’re coming, and we don’t want to be your pain point, but you need to get ready.’ ”

Soon they were giving presentations at utility conferences, places where car companies had never showed up before. And before long Southern California Edison (EIX) was setting up a booth at the Los Angeles auto show. “We’d been speaking two different languages,” says Perry, “but gradually we learned to communicate. The breakthrough came when they started calling us ‘an appliance.’ As car guys, we freaked over that. But it meant we were accepted.”

Part of what makes the emerging EV economy so intriguing is the large number of unknowns. How will EV drivers choose to charge their vehicles? The best guess of industry executives is that 80 percent of charging will take place at home. Public chargers may be no more than a security blanket, but already retailers are lining up to offer them. In Tennessee, the Cracker Barrel (CBRL) restaurant chain recently announced that it would install chargers at 24 of its interstate locations, part of an intercity network that will link Nashville, Chattanooga, and Knoxville. (It’s a return to the company’s roots: When the first Cracker Barrel opened in 1969, it sold both food and gas.) No one yet knows how Cracker Barrel or other retailers will monetize these charges. They can’t sell electricity directly to customers—in most states, only utilities and merchant generators can do that—but they could charge for a half-hour in the parking space next to the charger.

There are other open questions. Will customers happily pay for flat-fee, unlimited-use charging plans such as the one NRG is rolling out in Houston? Or will they prefer to buy their charges à la carte, for a service fee similar to the one at an ATM? Will higher prices stop “opportunity chargers” who top up their EVs after work, even if they don’t really need the charge to get home? Or will people pay any price because they want the peace of mind an afternoon charge can bring? What does that market look like? Is it different by hour of the day, by demographics? Nobody knows.


Inside the green car community—the world of academics, analysts, policymakers, and environmentalists who spend their days worrying about transportation emissions—there’s also a lively debate about which kind of low-emissions car is greenest. The Leaf produces zero emissions, and according to numerous studies touted by Nissan, even if the electricity that powers it comes from a coal-fired plant, its carbon footprint is smaller than that of an average gasoline-powered car. If its electricity comes from solar, wind, hydro or nuclear power, then the Leaf is an unassailably zero-emission vehicle. And Nissan executives rightly point out that U.S. electric generation is getting cleaner. (A Volt’s true emissions are even harder to determine, since it can be driven in all-electric mode or with a gasoline assist.)

For now, the heavy batteries that store the power in Leafs and Volts are still too expensive to be the most cost-effective option, according to a 2009 study by engineers at Carnegie-Mellon University. The study also found that plug-in EVs with 40 or more miles of all-electric range “do not offer the lowest lifetime cost in any scenario, although they could minimize greenhouse gas emissions.” Lighter plug-in hybrids with about 10 miles of all-electric range appear to offer the best mix of price, charging time, and efficiency, according to Jeremy Michalek, the Carnegie Mellon professor who led the study. Plug-ins of this sort (the Prius, due in 2012, will be one) work best for urban drivers who can charge every 20 miles or so, he says. All of these plug-in cars, of course, are far cleaner and cheaper to operate than what most Americans drive now.

In August 2009, Ghosn unveiled the Leaf at a ceremony dedicating Nissan’s new headquarters in Yokohama. That same month, Nissan opened a Leaf website and asked visitors to register if they wanted to learn more. Within a year they had 175,000 “hand-raisers” without running a single TV spot for the car. The number has since risen to more than 250,000.

It didn’t cost a cent to register, and rivals downplay the hand-raisers’ significance. Nissan says it has used them to bring some 50,000 people to Leaf test drives around the country and for surveys and focus groups. On Apr. 20, 2010, a month after the company announced pricing for the vehicle, it invited the hand-raisers to make an online “reservation” by putting down a refundable $99 fee. They got 6,000 reservations in the first 24 hours and 20,000 within five months, three months ahead of schedule. Now that the company is inviting small groups of those who reserved to contact a dealer and order a Leaf, about half of them are actually ordering a car. The ones who don’t order now can still do it when and if they are ready.

Complexity and cost have alienated at least one prospective Leaf buyer. Kenneth Shiels, a 64-year-old retired schoolteacher in El Granada, Calif., put down a $99 deposit for a Leaf on Apr. 20. He owns a Prius and a 2000 Honda Insight, the first hybrid on the market, and was dying to get into an EV. Nissan contacted him in August, inviting him to pay $100 to AeroVironment in exchange for an inspection of his electrical wiring and an estimate of the charger’s installation cost.

Shiels didn’t go for it. He guesstimated that the installation would set him back about $2,400. He added that to the $3,190 in sales tax he would pay on the $33,720 Leaf LS, and figured he was spending close to $40,000 before the federal government’s $7,500 tax credit and California’s $5,000 rebate brought the price back down. “I’m losing interest,” he says. “I was excited, but I think I’ll pull out of this. I felt like the initial price I saw in April was a come-on, and then it went sky-high.”

Nissan says it’s delighted by consumer demand for the car, demand so strong it can’t make enough Leafs until 2012. (There are no demos to be found at Nissan dealers; every Leaf made is going to paying customers, because Nissan believes word of mouth will be the most powerful seller.) Customers allowed to order a Leaf can expect to wait four to seven months for it to be built to specifications. More than 2,500 Americans have now bought the car and will take delivery in coming months. Additional waves of U.S. buyers will be invited to order cars until some 20,000 have been sold by the end of 2011. If you get to order one in the spring, you’ll see a Leaf in your driveway by the fall.

Few doubt that in the next year or two Nissan will be able to sell the 50,000 Leafs it can produce globally. As production ramps up to 10 times that, however, Nissan will need to draw customers from beyond the circle of green enthusiasts. If gasoline prices rise and the Leaf proves to be reliable and delivers its promised range at a fraction of the cost of gasoline-powered cars, Nissan might just pull it off. When mainstream pragmatists test the waters, however, they may be tempted to do so with a vehicle that uses a conventional gasoline-powered engine to augment its electric range. They may opt for a plug-in Prius. GM thinks they’ll choose the Volt. Nissan is simply happy that so much of the EV conversation now revolves around Nissan.

“We want people to be talking about Nissan as the brand that brought this car to the masses,” says Carolin, the company’s marketing boss. “The big prize for me is not how many Leafs I sell. It is, ‘How can I use the Leaf to build and improve the Nissan brand?’ I’ve worked for the company for many years, and we’ve never had a single point of focus. The lack of focus of this brand has been an issue globally. The gift of the Leaf is that it gives precision to what we stand for. Now we have a message. We stand for innovation.” The little snub-nosed car may be the start of something big.

By: Eric Pooley (Business Week)


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: