Electric Vehicles Drive New Sales Approaches

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Government mandate, not consumer demand, is driving the battery-operated cars to market. And the small sample of people interested in such vehicles represents a highly diverse group and a headache for marketers.

"With electric vehicles, the single biggest challenge facing automakers is building acceptance with the consumer," said Jay Houghton, account manager with the Dohring Co., an automotive market research and consulting company in Glendale, Calif.

"After 100 years' history with the internal combustion engine, the industry is having a difficult time assimilating the paradigm shift," Mr. Houghton said. "The paradigm shift relates to marketing, not just to technology."

Before now, automakers have put more effort into lobbying against electric cars than into formulating a strategy to sell them.

But the political battle is close to being lost. Last week, the California Air Resources Board held hearings on whether to enforce a 1998 deadline for at least 2% of a carmaker's sales in the state to have zero emissions of pollutants, a standard that only electric vehicles could currently meet. The quota rises to 5% in 2001 and 10% in 2003.

While the state appears adamant about the deadline, it has indicated a willingness to consider so-called hybrid vehicles. These cars and trucks would operate on electricity but have an auxiliary motor fueled separately to keep the batteries charged.

In addition to California's efforts, a consortium of 12 Northeastern states is considering whether to adopt the same standards. Such a move, combined with the California mandate, would require selling 100,000 electric vehicles by 1998.

The forward momentum comes despite automakers' arguments that electric vehicles will be costly and have limited range.

"Part of the marketing problem is the automakers' own fault," said Jesse Snyder, director-vehicle planning and technology for Autofacts, an auto marketing consultancy in West Chester, Pa. "They may not have convinced the California Air Resources Board, but they did convince a good part of the public that electric vehicles are not practical."

Automakers have the technology to build a zero-emission vehicle, or ZEV, but not one that meets current consumer expectations for a car or truck.

"It's one thing to mandate building the zero-emission vehicle," said Jay Amestoy, VP-marketing and communications at Mazda Motor of America. "It's another thing entirely to market and sell the vehicle at a profit."

Toyota Motor Sales USA believes the first ZEVs will be priced between $30,000 and $40,000.

"That's the price of Lexus," said a Toyota spokesman, referring to the company's luxury line.

Given the negatives associated with ZEVs-limited range, long recharging time, lack of acceleration-"common sense dictates that not many people will want" them, the spokesman said.

The industry is looking for the state to absorb some of the cost of buying a zero-emission vehicle through direct subsidies or tax credits. Barring that, manufacturers will be forced to raise prices on other models to keep ZEV prices artificially low.

Mr. Houghton said automakers should study how computer and appliance marketers target so-called "early adopters" when they introduce a product.

"What will drive early sales will be the cachet of owning new technology," he said. "Early technology adopters are motivated to buy technology in its early stages for the psychological fulfillment of playing with it."

Mr. Snyder said affluent, environmentally conscious families with two vehicles are the best prospects for initial retail electric-vehicle purchases. But long commutes are the general rule in southern California, he noted.

"For a consumer to plunk down his money, he will have to be convinced that an electric vehicle will be as reliable as a gas-powered vehicle," Mr. Snyder said.

Nissan North America has been conducting ongoing consumer research on electric cars since 1991. It has found that both awareness and interest levels run high in California.

"But when you tell them the feasibility of an electric car-possible pricing, range, vehicle size-it drops almost to zero," said Tom Lane, Nissan corporate manager of product and market strategy.

Just last month, Nissan conducted consumer research in New York to determine regional differences in attitudes toward electric cars.

"The level of interest isn't as high [as in California], probably because they don't have the same concern with perceived air quality," Mr. Lane said.

"There's a lot of conjecture about who might buy a ZEV, but it's too early to tell," said Vince Doyle, VP-account supervisor at J. Walter Thompson USA, Detroit, agency for Ford Motor Co.'s Ford Division. "Everyone's looking for a niche where the greatest business opportunity will be."

So far, Detroit automakers are driving in different directions. Ford is testing the Ecostar, a small delivery van intended for commercial uses. Chrysler Corp. is planning to offer an electric version of its next generation of minivans.

General Motors Corp. has developed the Impact, a two-seat commuter car, and next month will start a two-year, 12-city test designed to get direct consumer feedback.

Working with utility companies, GM will loan an Impact to consumers for two- and four-week periods. An on-board log will re-cord information on how the car is driven, and drivers will fill out diaries detailing their trips and rating different aspects of the car.

The GM test will involve 50 Impacts and will cover a variety of climates and driving situations.

"Up to now, we've never given [an electric vehicle] to somebody for an extended period of time," said Sean McNamara, marketing manager at GM Electric Vehicles. "It's difficult to ask people what they expect when they don't have anything to refer to. It's one thing to know that they want a cup holder but another thing to know what they want in a charger."

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