December 31, 2010
THE RESISTANCE IS ALL IN THEIR HEADS...:
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? (Eric Pooley, 12/30/10, Business Week)
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."
...the acceptance will come out of their wallets.
