Power Drain
It’s been one year since the roll-out of the first mass-produced electric car in modern times, and owners of General Motors Corp.’s sleek EV1 will probably whoop it up at today’s birthday party hosted by the giant auto maker. But it will doubtless be a much smaller gathering at the Los Angeles Airport Hilton than GM would like.
GM has leased just 288 cars in a year’s time despite a deep price reduction and the offer of a free home charger last May. GM says it is not disappointed by the level of leasing, which is handled by its Saturn Corp. dealer chain, even though it falls below internal targets and raises questions about the future of electric cars.
Although they praise the car’s technology and owner enthusiasm, analysts fault GM’s stringent buyer qualifying requirements and its somewhat spotty marketing campaign for the low leasing activity. But they also say EV1s are competing against traditional vehicles, a cheaper and more convenient alternative. And losing badly.
“We are finding out the difference between what people say they want and what they actually do in the marketplace,” said Lincoln Merrihew, automotive analyst with J.D. Power & Associates in Agoura Hills.
Capping a 10-year research and design effort, GM unveiled the EV1 amid much fanfare. It valued the car at $33,995 but offered it on three-year lease terms only.
Available at first only in Southern California and Arizona, the company expanded EV1 leasing to Sacramento this month and will begin leasing them in the San Francisco Bay area in March. The car, manufactured at a special Lansing, Mich., factory, also takes GM a step closer to meeting a California mandate that 10% of all new vehicles offered for sale by 2002 in the state be non-polluting.
Company and industry observers said from the outset that interest would be limited by the car’s 80-miles-per-charge range, its two-seater design and a scarcity of charging facilities.
Ironically, today the public charging stations far outnumber the electric vehicles on the road. There are 400 public chargers in Southern California and Arizona, and 115 more are due by March.
At roll-out, the giant auto maker refused to make forecasts, but top officials told reporters that they hoped to lease 100 cars a month. But EV1 leasing activity has been less than one quarter of that goal.
For Honda Motor Co., the other major manufacturer selling passenger electric vehicles, the leasing pace has been even slower--79 of its EV Plus four-seaters have been leased since last May. But Honda said it expected to lease only 300 cars in three years.
“Certainly we would like to continue growing and developing our market, but we are satisfied with the 288 customers we have,” said Sharon Sarris, GM’s Western region director of corporate communications. She said market acceptance of electric vehicle technology will take years.
But analysts such as Merrihew question whether the demand will increase without significant strides in technology. Still missing is a key element--cheaper batteries with a longer life. Officials at American Honda say nickel metal hydride batteries, seen as the next generation replacement to lead acid batteries, still cost more than $30,000.
In the meantime, the car industry may have to come up with new answers, such as Toyota Motor Corp.’s Prius, a hybrid gasoline-electric powered vehicle now being introduced in Japan.
Although GM may be disappointed, EV1 lessees appear to be content. Many say their cars are faster, more comfortable and more economical to operate than they expected. And for Greg Hanssen, an Irvine computer hardware engineer, the free charger and the cut in monthly lease rates to $399 from $480 in May sealed his decision to lease an EV1.
“Unless you are Bill Gates, price is going to be a factor,” Hanssen said. “But the problem isn’t price. I fault GM for coming out with a great car and a crappy ad campaign. I get stopped and asked by people where they can go to look at them. There is a shocking number of people out there unaware of EV1s.”
Another selling point, Hanssen said, is that the cost of charging his car equates to 1 cent per mile, compared with 6 cents per mile to run his Toyota sport-utility vehicle. And he said the growing number of recharging stations was making longer drives more convenient.
Marshall Duffield, a Costa Mesa-based electric boat manufacturer and dealer, who leased an EV1 shortly after they were introduced, typifies many owners in saying the environmental benefits are what he likes most about his car.
“We’ll all be driving them in 10 years, and I get to drive it today,” Duffield said. “And that’s pretty cool for me.”
But GM could be enjoying better volume if it weren’t so stringent in its pre-qualifying of buyers. GM screens for affluent buyers--the median household income is $150,000--who own an alternative means of transportation.
“If you don’t want to sell 100,000 cars but you want happy owners, this is the way to do it,” James Hall, vice president of industry analysis at AutoPacific Inc., a Detroit market research and consulting firm.
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Not Enough Juice?
Deliveries of General Motors’ landmark electric car, the EV1, have totaled just 288 in a year, despite a big price cut. But the company insists it’s not disappointed. Monthly leases in the car’s only markets, California and Arizona:
January 1997: 71
November 1997: 13
In May, GM reduced the monthly lease payment to $399 from $480 in California and began giving customers the home chargers, which previously cost $2,000.
Source: Saturn Corp.
