2 Makers Press the Case for Electric Cars

From New York Times

By Bill Vlasic

The greenest cars on the market — electric vehicles and plug-in hybrids — have attracted very few buyers so far.

But instead of scaling back, major automakers are eager to bring more battery-powered models to their showrooms.

Two of the biggest producers, General Motors and Nissan, served notice at the annual Detroit auto show that they are in the electric-car business for the long haul.

G.M., the biggest American automaker, on Tuesday said it would begin production later this year of the Cadillac ELR, a luxury version of the Chevrolet Volt, the company’s current extended-range plug-in hybrid sedan.

Nissan, the Japanese automaker, is taking a different approach to lift sales of its all-electric Leaf sedan. Rather than turn more upscale, it will offer a new base-model Leaf that is $6,000, or 18 percent, cheaper than the current car.

Both strategies have the same intent — to lure a wider range of consumers to electric cars.

“We think the Volt is very much a success story for General Motors and that the ELR will feed off that success,” said Robert E. Ferguson, head of G.M.’s Cadillac brand.

Despite Mr. Ferguson’s expression of confidence, it’s debatable whether the Volt, which runs primarily on battery power but has a small gasoline engine to extend its driving range, has truly been a hit.

Last year, G.M. sold 23,000 Volts in the United States, less than 1 percent of its overall sales and well below the expectations set by the company. Much of the Volt’s volume was attributed to cut-rate lease deals that made it decidedly more affordable than its $39,000 sticker price. (Volts, Leafs and other electric cars typically qualify for a $7,500 federal tax credit and sometimes state credits that lower the effective purchase price.)

“Even with $199-a-month leases, the Volt is still barely making a dent,” said Larry Dominique, president of the auto-leasing research firm ALG. “With gas prices moderating, it’s tough to make an economic argument to buy a plug-in hybrid.”

G.M. is hopeful that its new Cadillac plug-in will attract affluent consumers who want an eco-friendly car but don’t want to scrimp on luxury options like a suede interior and a powerassisted cup holder.

“There are wealthy people who don’t consider price to be an obstacle when buying electric,” said Joseph Phillippi, head of the market-research firm AutoTrends. “In Silicon Valley, they’d write a check for the ELR without thinking about it.”

Mr. Ferguson declined to say how many ELRs that G.M. planned to build, or what the price would be. The vehicle will be built in limited numbers alongside the Volt at a plant in the Detroit area.

“We haven’t decided on the price yet,” he said. “But the car and the value it provides will be compelling.”

Analysts said G.M. would most likely build 2,000 to 3,000 ELRs a year, which represents an incremental increase in its plug-in production.

Nissan is faced with the more serious challenge of spurring demand for the Leaf at the same time that it opens a new assembly plant for the car in Tennessee.

Last year, Nissan sold only about 9,800 Leafs in the United States, less than half of what it had originally projected. Now, with a new factory producing the car, the company needs a major increase in sales to justify the costs.

Nissan’s chief executive, Carlos Ghosn, said at the Detroit show that a new, more modestly equipped Leaf would go on sale in February for $28,800, before federal and state tax credits.

That is a large reduction from the $35,000 sticker price for what previously was the car’s base model.

It is rare for an auto company to slash prices so drastically. But Nissan made the move because it fell far short of its goal of increasing global sales of the Leaf by 50 percent last year.

“We got 22 percent,” Mr. Ghosn said. “It was a disappointment for us.”

Despite the slow sales, Mr. Ghosn has hardly backed off his belief that electric cars can account for 10 percent of all Nissan sales by 2020.

“Zero emissions are here to stay,” he said.

G.M. and Nissan have placed the biggest bets on battery power among the major automakers. But they are not alone.

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