Cover Story

Electric Cars Get Charged for Battle







"A short amount of time, yes."
























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.

Pooley is deputy editor of Bloomberg Businessweek.

GM's New General

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

blog comments powered by Disqus