Rough Road Ahead for Electric Cars?

With the advent of the Chevrolet Volt and Nissan Leaf, electric vehicles are a hot topic in the auto category. But are consumers ready to embrace these battery-powered alternatives? According to new research by the Nielsen Co., the answer is both “yes” and “no.”

Nielsen found that the majority of consumers in the U.S. would consider buying an electric car. But 65 percent of consumers said they wouldn’t pay more for it (compared to a standard vehicle), and 51 percent said they wouldn’t pay more than $5,000 above the average price. (The research firm conducted the study in September among more than 2,300 consumers in the U.S. and U.K.)

So what does this mean for carmakers like Chevrolet and Nissan, which are rolling out electric vehicles this year? They’re facing the challenge of convincing consumers to make the purchase, said Sallie Hirsch, svp of research for Nielsen’s automotive unit.

“The biggest hurdle we’re seeing is price. They come with a premium, just like the hybrid. And many consumers are not willing to pay,” said Hirsch. (MSRP for the Nissan Leaf is $32,780 and $41,000 for the Chevy Volt.)

Part of the problem is getting the message out about the benefits of electric cars and effectively touting points such as fuel efficiency and environmental friendliness.

Tobe Berkovitz, an associate professor at Boston University who specializes in marketing issues, said that can be achieved through marketing. “Ads can communicate product benefits and show concrete reasons for purchasing an electric car. Ads can also use emotional content to reinforce consumers’ desire to ‘do the right thing,” said Berkovitz.

So, how can marketers sell consumers on electric cars?

Playing up the positive aspects of going green might not be wholly effective, as some studies suggest green products simply don’t sway most consumers.

Aiming for people’s sense of thrift is a natural tactic, so look for carmakers to stress price points like saving money at the gas pump.

Then there are incentives being offered by carmakers and the government for purchasing these vehicles, Nielsen’s Hirsch said. One incentive, for instance, is federal tax savings of up to $7,500 for both the Leaf and the Volt.

Nielsen measured the new TV ads that kicked off last month for the Nissan Leaf, which is scheduled to hit the U.S. market in December. The ads — part of the “Innovation for All” campaign — have been gaining traction for recall and likeability, per Nielsen. The Chevy Volt, which goes on sale in the U.S. in November, is launching a campaign for the car later this month during the World Series.

The study also found that in the first six months of the year, more than $42 million was spent in the U.S. advertising the Chevy Volt and Nissan Leaf brands. Overall, $3.5 billion was spent on auto advertising in the first half of 2010, up 27 percent over a year ago — a number Nielsen attributes to a rebound in the auto industry. In fact, the auto ad spending was driven largely by Chevrolet parent company, General Motors, which was up 95 percent over last year.

Despite the positive outlook, cracking the next buyer segment for electric cars will be more difficult until the economy improves further. Unless gas prices go through the roof, Berkovitz said. He added, “For electric cars to catch on the following is probably needed: Gas to cost $5 a gallon.”