Tuesday, 26 June 2012

Marketing Electric Cars (I)

These are exciting times for the automotive industry. The dominance of cars with internal combustion engines (ICE) is being challenged by electric cars. In many leading markets like Germany, Japan and North America electric cars are entering the playing field. In the first edition of our text book “Sustainability Marketing: A Global Perspective” we have already presented the cases of the Tesla Roadster (a full electric car) and the Toyota Prius (a hybrid car). In the upcoming months during summer 2012 we will describe and discuss the marketing of electric cars in a series of posts on our sustainability marketing blog. We will see that electric cars raise interesting questions for sustainability marketers all over the world. Electric cars are radical and disruptive technologies, which will (probably) change the way cars are perceived, sold and used.

In the first present post we will define electric cars: What do we mean, when we talk about “electric cars”? In spring 2012 there are all kinds of electric cars available on international markets, including hybrids with electric engines as well as electric cars with and without range extenders. So, how do we define “electric cars”? Where do we draw the line between hybrid and electric cars?

Most of the leading automotive companies pursue a hybrid strategy of electrification without abandoning ICEs. A first step on this road is the use of small electric engines and batteries, which support the start-up process of the car and which recovers energy during the braking of the car (“mild hybrid”). The second step towards electrification is the employment of larger batteries and electric engines, which are more powerful (and usually more expensive!). The “full hybrid” allows driving short distances at low speed with the electric engine only (e.g. Toyota Prius). Similar to the mild hybrid, energy is recovered during the braking process.

“Plug in-hybrids” are full hybrids, which use rechargeable batteries that can be charged by connecting a plug to an external power source (e.g. Chevrolet Volt). Electric Cars with a range extender mainly rely on large, powerful batteries and electric engines. In the case of longer distances a conventional engine is used as a range extender (e.g. Opel Ampera). Similar to the plug-in hybrid, the battery is recharged by connecting the plug to an external source. Full electric cars abandon ICEs altogether (e.g. BYD e6, Mia electric, Mitsibushi iMIEV, Nissan LEAF, Peugeot iOn, Renault Z.E., Smart ED, Tesla Roadster).

The following exhibit shows conventional cars with ICEs and electric cars without ICEs as the two extreme poles. The importance of ICEs diminishes from the left to the right hand side (or vice versa: The relevance of electric engines increases from the left to the right hand side). Mild and full hybrids are on the left hand side, because they still rely on ICEs. Plug-in hybrids and electric cars with range extender are positioned on the right hand side, because they mainly rely on powerful electric engines and externally rechargeable batteries. In accordance with nationaldevelopment plan “Electromobility 2020” by the German government we draw the line in the middle and characterize electric cars as cars employing powerful electric engines and larger batteries, which can be recharged by plugging it to an external energy source.

Exhibit: Conventional, Hybrid and Electric Cars

In the next post we will discuss the ‘nature’ of electric cars: How ecological are they? What are the major factors influencing the environmental performance of electric cars? What do the latest Life Cycle Assessments (LCAs) say about electric cars in comparison to conventional cars with ICEs? As emphasized in chapter 3 of our text book “Sustainability Marketing”, LCA is a very important instrument for sustainability marketing. Understanding the main socio-ecological issues involved with conventional and electric cars is crucial for credible automotive marketing. Making a (false) claim like “zero emissions” may easily be exposed as “greenwashing” and backfire. As said in the beginning: These are interesting and exciting times … Stay tuned!