Betting big - and small - on electric cars
Nissan, GM and Ford are wagering in the high-stakes game of electric driving, but it's too soon to tell whose hand will be a winner.
NEW YORK (CNNMoney.com) -- The cars of the future will run on electricity, most major automakers agree on that. What they don't agree on is how soon drivers will be ready to fully embrace electric power and how aggressively to push electric cars.
Nissan, General Motors and Ford's electric car strategies show just how differently they view America's readiness to get behind the wheel of purely electric cars.
Nissan is planning to introduce a purely electric car next year, not bothering with plug-in hybrids or other technologies that merely minimize the use of gasoline.
"We're going to the end of the spectrum, believing that is the way to go," said Eric Noziere, Nissan North America's vice-president for product planning.
Nissan is promising a five seat car that can drive 100 miles on a single charge. Noziere doesn't think fears about the relatively short driving range of electric cars, known as "range anxiety," will be a big problem.
After a while, customers will adjust their driving habits, he said. Also, to make driving range less of issue, Nissan is working with governments and energy providers in cities including Seattle, San Diego and Phoenix to install charging stations that will allow drivers to "top off" their batteries while they're at work or running errands.
The problem with this strategy according to Michael Omotoso, an industry analyst with J.D. Power and Associates, is that Nissan risks sinking a lot of development costs and manufacturing capacity into a vehicle that might not take off. If gas prices stay low, they'll have a problem, he said.
"Their only customers are going to be government fleets," Omotoso said.
But Nissan's approach is probably the best one for a company that, so far, hasn't invested much in hybrids and plug-in hybrids said Bill Pochiluk, an industry analyst with the consulting group Automotive Compass.
Nissan's president Carlos Goshn has only recently come around to green technology. He famously said hybrids were a fad and that Nissan would continue to build gasoline engines into the future.
For now, Pochiluk said, Nissan's competitors are way ahead in those areas and the best Nissan could hope for would be "me too" status. An electric-only vehicle will at least give them a better chance to stand out down the line.
When it comes to electric-only cars, GM's attitude is: "Been there, done that, don't want to do it again now."
While the movie "Who Killed the Electric Car" created the impression that GM had ignored a huge market for its EV1 electric car back in the 1990s, that wasn't the reality, according to GM. California regulations at the time required GM, and other automakers to sell zero-emission cars, so automakers greatly subsidized prices. GM lost money -- lots of of money -- on each of the roughly 800 customers who leased the car over its four years of availability.
This time out, GM wants a car with real mass appeal: Four seats and no worries about driving range. Its solution is the Chevrolet Volt, a battery-driven car with a gasoline engine to generate more electricity for long-range driving.
While a hundred miles is much longer than most people drive on a typical day, it's still not long enough for the occasional road trip. So the Volt goes 40 miles on a full battery, a range that more than covers a typical day for most Americans. But when the battery runs low, a gasoline engine starts generating electricity to allow for hundreds of miles more.
GM's approach is the right one, said Pochiluk. Consumers will need the security of that extended gasoline-powered range before large numbers will invest in an electrically driven vehicle, he said. The biggest risk for GM is that it has so much riding on this one car.
"Every part of this vehicle has to be perfect," he said, "or the whole world is going to dump on it."
Ford is readying its own all-electric car for launch in early 2011, a version of the next-generation Focus compact car. It will also offer an electric commercial van next year.
Ford isn't betting on huge sales of either vehicle, but sees them as part of a strategy to offer hi-tech vehicles to suit whatever customer appetite arises.
Ford is also working on plug-in hybrid vehicles, as is GM. Plug-in hybrids are different from range-extended electric cars like the Volt. For one thing, they rely more on gasoline power but still use much less fuel than even regular hybrids.
Ford's approach is probably the smartest, said Michael Omotoso, an industry analyst with J.D. Power and Associates.
"Being in all market segments at different price points, they can see where their sales are the highest," he said.
Ford's approach to developing its electric-only vehicles also limits risk, he said.
"They're in the electric vehicle field," he said "but they're sharing the risk with a partner."
The Focus BEV, for Battery Electric Vehicle, being developed jointly with the Canadian auto parts supplier Magna, which actually started the project on its own before involving Ford. The electric Transit Connect commercial van is also being co-developed with a partner, Smith Electric Vehicles of England.
All of these strategies depend on rising gas prices, though, Pochiluk said.