Selling the Electric Car

“It’s not saving the environment,” groused Rush Limbaugh on The Jay Leno Show last month. The conservative commentator was talking about the electric Ford Focus ST, which he was about to drive for the show’s Green Car Challenge segment. (Celebrity guests are timed racing around an obstacle-laden track behind the soundstage.) Limbaugh’s remark interrupted Leno introducing Ford and noting the benefits the technology has on the environment. But for the automaker, things worked out in the end: Limbaugh finished his drive and pronounced, “I like the electric car.”

Whether Limbaugh relished the ride or just the fact that he ran over Al Gore’s cardboard image (one of the obstacles) not once, but twice, he played his part well in a classic marketing tactic to stimulate consumer interest: the good old-fashioned test drive, in this case one broadcast to a national TV audience.

The segment is “a fun way to get the [electric car] story out there in a mainstream way, and it shows that electric vehicles aren’t wheezing golf carts,” says Toby Barlow, CCO of Ford advertising agency JWT Team Detroit.
 
The Green Car Challenge is one of the most recent efforts in a nascent advertising category: the all-electric car, a handful of which are currently on the market, and many more of which are being introduced over the next couple of years. New entrants will include Ford’s sedan (planned for 2011), General Motor’s Chevrolet Volt (2010) and Nissan’s Leaf (also planned for 2010). Previously encumbered by battery technology that limited speed and driving range, the electric car market, aided by technical advances, the American Recovery and Reinvestment Act and heightened consumer concerns over global warming is a segment automakers hope is poised for mass growth.

“You see this enormous momentum, an avalanche of activity to bring electric cars to the market,” says Darryl Siry, the former CMO of Tesla Motors, which has an electric sports car on the market and has plans to roll out a sedan. Siry has spent the last year advising Coda Automotive’s Coda EV, which is launching in 2010.

But with rollouts just around the corner, automakers concede that they and their agencies face a substantial hurdle: changing the consumer perception that electric cars are more trouble than they’re worth. Issues include “range” anxiety — the fear batteries will run out before drivers reach home due to a virtually nonexistent charging infrastructure — to higher price points and the need to learn about the various options in the new category.

“The threat to any new technology is that ‘c’ word: ‘compromise,'” says Mark Turner, chief strategy officer of Saatchi & Saatchi in Torrance, Calif., which handles advertising for Toyota, which plans to roll out a plug-in Prius next year. “The U.S. consumer is especially loathe to compromise,” he adds. “It’s not in our DNA. … If I look at the electric vehicles offered in the near future, my gut tells me many consumers may [indeed] view them as a compromise. It’s a functionality and price issue. At the moment, it’s easy to own a car with a conventional gas engine.”

Add to this plummeting auto sales and the assumption that buyers returning to the market will be more cautious than ever, and it’s clear that for electric-car makers, the road ahead is bumpy.

“You’re going to need some significant inflection point to really have the majority of the masses consider an electric car,” says Ed Cotton, director of strategy at Mini agency Butler, Shine, Stern & Partners in Sausalito, Calif. (BMW recently completed a yearlong test of the Mini-E electric car in New York, New Jersey and Los Angeles.) “The catalyst will probably be a gas price of around seven or eight dollars a gallon.”

Addressing these concerns through marketing has only just begun. GM’s Volt grabbed early buzz this summer with a viral marketing campaign that centered on the number 230, the estimated MPG rating for the upcoming hybrid. Chevrolet’s Web site now touts the Volt with the slogan, “Charge the battery. Change the world.”

For Nissan, which projects that 10 percent of its global sales could come from electric vehicles by 2020 (and has a goal of selling 50,000 vehicles globally, a majority from the U.S., in Leaf’s initial year), the first outreach is about education. “As we move to mass market we have to educate people about what the experience is like,” says Mark Perry, director of product planning at Nissan North America. “The task we have is to make it uncomplicated.”

Last month, Nissan, which plans to first roll out the Leaf in Los Angeles, San Diego, Portland, Ore., Seattle and Tucson, Ariz., is so far focusing on online efforts including Twitter and a Q&A-style Web site to help educate consumers about the car. As for traditional advertising, which isn’t expected to hit until at least the middle of 2010, Rob Schwartz, CCO at Nissan ad agency TBWA\Chiat\Day in Playa del Rey, Calif., would say only that “we’re going to need some thought leadership work and we’re going to need some mainstream work.”
 
Perry predicts, however, that the early adopters, at least, will come fairly easily. “They’re waiting for this and are saying, ‘What took you so long?'” he says. (He estimates that Nissan has 20,000 initial orders for the car.)

As for range anxiety, says Schwartz, “the best thing Nissan can do is tell people [recharging is] a lot easier than you think and we’re making it effortless. Once people understand that it’s doable, that’s when adoption rates are going to rise.”

Until recently EVs went about 60-80 miles; newer ones go approximately 100. Also, some manufacturers say they have addressed the issue by either back-up methods — the Volt, for instance, has a gasoline-run generator — and/or investments in building charging stations.

Higher prices associated with the cars are another roadblock. Sales prices should hover around $40,000 and luxury models may hit $100,000. Paul Scott, vp and founder of Plug in America, an organization that has accused carmakers of moving too slowly on electric cars-most publicly in the 2006 documentary Who Killed the Electric Car? — explains that high price has a lot to do with the cost of batteries. “The battery price is poised to come down much more dramatically as the battery factories that are under construction come on line,” he says. “Several billion dollars have been invested worldwide, mostly in Asia [and] a lot in Europe, and now we’re getting religion here in the U.S.”

Consumer confidence in the driving experience is also key, which is why test drives and communications that reassure people everything they love about driving will remain the same are so important. “People want to know, ‘Will it be fun to drive? Will you get the same sensation that you get driving a car today?'” says Rob Strasberg, CCO at Mazda agency Doner in Southfield, Mich. (Mazda reportedly has plans to debut an electric vehicle in 2010.) The marketing, Strasberg adds, “is going to have to … get people behind the wheel.”

Conversely, say marketers and agencies, they need to keep consumers from expecting too much from the new technology. And managing expectations can be tricky, especially when automakers want to do all they can to encourage the public to buy their new models. GM, for instance, was criticized for its teaser campaign’s claim that its estimated MPG rating was 230, as it used miles-per-gallon ratings that don’t exist in the electric market.

Some say this raises unrealistic consumer expectations that can potentially backfire if not met once the cars hit the road. But finding a way to talk about the EV’s attributes in ways consumers will understand is an industry-wide issue.

“It’s going to be very important that the messages don’t set the wrong expectations with consumers,” warns Siry. “The tendency is to communicate the range in a way that is too optimistic.”

Regardless of the hurdles, electric cars are automakers’ Next Big Thing. More are coming from companies including Wheego Electric Car — an Atlanta startup that plans to upgrade its neighborhood electric vehicle, the Whip, to a highway-ready car — Renault, Audi and Volkswagen.

“When it gets to mass, then it’ll get into the competition,” says Strasberg. The question, he adds, will be, “Will you have a smile on your face as you save the world?”

THE PRIMARY CIRCUIT

Picture the electric car of tomorrow: a sleek aluminum alloy body, solar-absorptive window glass, keypad entry system, computer-controlled propulsion and — best of all — a zero-to-60 acceleration rate of just under 9 seconds. Just where can drivers take a peek at this vision of the future?

Try the Smithsonian. The General Motors EV-1 is now a museum piece; the last one of these zippy coupes rolled off the assembly line a decade ago.

Amid the current hype about the electric car’s promise lurks an instructive and slightly embarrassing truth: We’ve been here before. Between roughly 1996 and 2006, a gaggle of automakers either tested or sold electric cars on the American market, most of which never had the chance to become household names: the Ford Th!nk, Nissan’s Altra EV, the Honda EV Plus and, of course, GM’s EV-1, of which 1,117 were built.

What happened?

Like most gambits that went bust, it was more than one thing. What stranded the first-generation of electric cars was a combination of factors including a product out of sync with consumer demands, technological shortcomings and simple bad timing.

Start with the timing. “A decade ago when the first electric cars were put out, green technology was for fringe-type people,” observes auto analyst Wes Brown of brand consultancy Iceology. “The cars were designed at a time when there was no real focus on the environment — or a sense that people had to do something about it.”

The idea that consumers could rescue the planet by choosing the right car is a craze introduced by gas/electric hybrids like Toyota’s Prius, Brown adds. But the Prius (which hit U.S. showrooms in 2001) rolled along a bit too late to help the early EVs. “Today, because of hybrids, most people have an understanding of what electric cars are like,” Brown says. “But back in the ’90s, people didn’t know anything. The perception was, ‘I’ll get three miles, and that’ll be it.'”

OK, it wasn’t quite that bad. “The range was 80 miles — but where are you going to go with that?” recalls Todd Turner, president of Car Concepts, Thousand Oaks, Calif. “And if you ran the AC, it reduced it even further. There were way too many compromises.” Like the fact that there were only two seats. Or that the cars had never been crash tested. Or the trunk space. On second thought, what trunk space?

Worst of all, the cutting-edge nickel-metal hydride battery technology helped to drive the cost of the early EVs well beyond the pocketbooks of many. The EV-1’s list price (though the car was tested only on a closed-lease basis) was $33,995, creating the perception that EVs were rich-boy runabout cars, not practical family vehicles.

A real or perceived lack of marketplace demand became, in fact, the rationale for GM and other brands to pull the vehicles. But don’t mention that to John Dabels. “When GM says there was no interest and no demand, [that] is just bullshit,” says Dabels, who headed up marketing for the EV-1. “The EV-1 got more positive press for GM than the rest of the company combined.” In addition to faulting a design that was “innovative but impractical,” Dabels — who now heads EV Power Systems, a company that retrofits commercial truck fleets with EV technology — says that GM’s entrenched and gas-engine-centered culture was unwilling to embrace the potential that electrics represented. “The technology was ready,” he says, “but introducing a disruptive technology into an existing organization is difficult if not impossible.”

If Dabels is correct, it’s probably why many of the newest entrants to the EV market (with the notable exception of cars like the Nissan Leaf and the Chevy Volt) are indie makers with names like Zap, Fisker, Coda and Tesla. Meanwhile, Dabels laments what he saw as a needless and expensive end to a project that would have been a winner for GM, to say nothing of the environment. “I still get frustrated,” he says. “[GM] passed up a great opportunity. Even Rick Waggoner has admitted that. Cancelling the EV-1 was a mistake.”

Nielsen Business Media