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The Electric [Car] Strikes Back!

Presidio Marketing | Saturday April 23rd, 2011 | 1 Comment

This post is part of a blogging series by marketing students at the Presidio Graduate School’s MBA program. You can follow along here.

By Christian Reyes

This spring, at the 2011 Tribeca Film Festival, filmmaker Chris Paine returns with the debut of the sequel to his 2006 documentary “Who Killed the Electric Car?”.  The original film told the story of the origins and controversial demise of many of the first electric cars, including the General Motors EV1, the first entrant from a major American automobile manufacturer. Originally conceived and marketed in anticipation of increased air quality regulation from the California Air Resources Board, just over 1100 EV1s were produced from 1996-2002 and were made available to customers through a leasing program.  After several years on the market, the EV1 leasing program was halted, all leased cars were returned and subsequently passed through the car crusher.

Almost a decade later, the electric car has been resurrected as told through Paine’s sequel “The Revenge of the Electric Car”. The film will bring audiences into the boardrooms and manufacturing facilities of several of the major auto manufacturers now jockeying for first mover advantage in the race to be the leader in the electric vehicle category.  Featured in the film are Nissan and General Motors who have both entered the market with distinct offerings within the past year. Last December, GM entered the fray with the Chevy Volt, a first of its kind ‘Plug in Hybrid’ electric car with extended range.  It’s basically an electric plus gas car in one.  Nissan hit the market at about the same time with the Nissan Leaf, the most mass produced and affordable all electric vehicle in North America.  With a ‘before tax break’ MSRP of $32,780, the Leaf is $7500 below the Volt’s ‘before tax’ MSRP of $40,820.  Both cars have won accolades from the automobile industry with the Volt taking Motor Trend’s 2011 Car of the Year with the Leaf taking the 2011 European Car of the Year award.  From a brand positioning perspective, both cars are being positioned as ‘Green Cars’, with the Leaf claiming a smaller eco-footprint due to its Zero Emissions technology.  Both cars, though technically distinct are aimed at a similar target segment, young environmentally minded gas pump price conscious consumers.  Both companies have been investing in social media marketing campaigns through twitter and facebook to build up awareness and engagement with their target segment.

While North American sales to date have been low for both models, with March 2011 unit sales at 608 and 298 for the Volt and Leaf respectively, production has been limited as GM and Nissan ramp up their facilities.  Inventory has been non-existent even in the limited markets they are being sold and dealership markups have been reported at $5000 over sticker price.  Chevy and Nissan report online reservations numbers in the tens of thousands for each outstripping year 1 planned inventory, but not all those numbers have converted to sales. Despite doubts from analysts and the press, both companies have doubled down on their production capabilities.  To meet their expected demand, Nissan is developing a manufacturing facility in Smyrna Tennessee with expected output of 150K vehicles per year by 2013.  Another plant in England will produce 50K, for a worldwide total of over 200K per year.  GM on the other hand is gearing up their Detroit facilities to produce up to 60K in 2012.  Federal funding from the DOE for these plant constructions, and bailout money in GM’s case, accelerated these build outs.

Despite GM and Nissan’s bullish forecasts, the cars face some pretty significant adoption barriers and market competition. Number one being the lack of electric vehicle charging infrastructure in place to service the cars.  With up to 100 miles per charge with the Leaf and minimum recharge times of several hours, the Leaf is convenient as a short distance commuter car only, which makes it great as a second car, but pretty inconvenient as an only car.  This significantly limits the total addressable market of the product. The Volt’s strategy of running on both puts it at a functionality and convenience advantage, which does reduce the adoption barrier but it comes at a higher price.  Both cars are priced at a premium above products in the hybrid car segment where the Prius reigns supreme with a retail price just over $23,000.   This is still lower than the electrics would cost with the $7500 worth of tax credits included.

So what do you think? Is this beginning of the EV revolution? Will all the eco-friendly brand positioning and auto enthusiast accolades be enough to drive sales of either of these two offerings?  Will higher gas prices and the higher cost of ownership of traditional gas guzzlers be the force that nudges people past the price and inconvenience barriers to purchase them?  If you were gearing up for a new ‘green car’ purchase which would you pick?


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  • http://www.1000hummingbirds.concarino.org Corrina McFarlane

    I would go for the TRIAC over Nissan or GM. As a working model in the marketplace it is truly new paradigm. The equivalent of the farmers market trend, it is designed to be built local for local. Cal central coast gets to be first but the manufacturing model is designed to be replicated. Looking out towards 2020 this ‘small is beautiful’ is a standard bearer for greening car manufacturing.