It Works for Tesla: EV Buyers Should Have Battery Pack Size Options

By · April 21, 2014

BMW i3

BMW chose a range-extender gas engine for its new i3, rather than a range of battery packs. Still, the i3 consumer has a choice between a 100- and 200-mile car. (Jim Motavalli photo)

Tesla Motors launched the Model S with three battery options—40, 60 and 85 kilowatt-hours. The 40-kwh pack was dropped last year before it ever went into production, because only five percent of buyers were opting for it. That says something interesting about Tesla, since consumers were saying no to the cheapest point of entry. In fact, surveys I've seen show buyers opting for the most expensive, 85-kwh pack over the 60.

It’s human nature. Comedian Eric Bogosian has a routine positing a guy buying a BMW 5-Series. When he pulls up at a stoplight next to a 7-Series, he gets pissed off that he didn’t go for the upmarket choice. Something similar is at work with Tesla buyers, because the 60-kwh model has a range estimated at 230 miles at 55 mph, and the 85-kwh ups the ante to 300 miles. Tesla also gave buyers the option of a “Performance” model with faster zero-to-60 times, again on the theory that people will want the best of the best.

Nissan LEAF

A Nissan LEAF at the New York Auto Show. Two models, base and premium, may be coming. (Jim Motavalli photo)

Price is Paramount?

Although BMW, for one, allows customers to choose a range-extender model i3 with an auxiliary gas engine, no automaker besides Tesla offers more than one battery pack. Yet, we heard late last year that Nissan is considering offering of multiple battery pack sizes. That was confirmed again at the auto show, when Nissan product chief Andy Palmer told reporters that the idea of two or three multiple pack options with different ranges (maybe up to 150 miles) is being intensely debated internally, possibly for 2016 or 2017.

At this stage, the focus is on keeping the cars affordable. Here's the argument: EVs are expensive, and most people don’t drive more than 40 miles a day, so keeping the price down is paramount. Right after press days at the New York Auto Show, the German American Chamber of Commerce held a “Is the Future Electric?” forum, and I was able to ask about Tesla’s actual experience, versus that industry assumption.

Douglas Skorupski, manager of product strategy for Volkswagen, played the price card. “The average car in the U.S. is something like $23,000,” he said. “Electric cars at $40,000 or more are a challenge, and VW competes in volume segments. There are circumstances in which drivers need extra range, but we need to focus on price—when that comes down, we can increase sales.”

Jack Nerad, executive editorial director at Kelley Blue Book, concurs. "Tesla has proven that some luxury buyers will opt for much longer range, but persuading non-luxury buyers to invest thousands if not tens of thousands in additional battery capacity is going to be a difficult task."

Of course, the packaging of bigger battery packs could also represent a challenge for some electric models, especially those converted from traditional gas-powered vehicles.

Absolutely a Good Idea

But Chelsea Sexton, a veteran industry advisor and consultant, said she is a “big fan” of automakers offering different pack sizes. “It’s absolutely a good idea,” she said. Sexton thinks the sweet spot for range is probably between 80 and 120 real-world miles, and we’re not at the point where the battery EV is a road-trip car, but consumers would benefit from more choice.

EV Panel

The New York EV panel included (from left) Chelsea Sexton, Doug Skorupski of VW, John Voelcker, Jacob Harb of BMW, and Nic Lutsey of the International Council on Clean Transportation. (Jim Motavalli photo)

Also endorsing the idea is the panel’s moderator, John Voelcker, editor of Green Car Reports. “In the same way that auto companies offer engines with different levels of performance and fuel efficiency, a range of packs sizes and prices will make electric cars more appealing to a wider range of buyers,” he said. “Suburban U.S. drivers have longer and more dispersed travel patterns than those in Europe or Asia. So the first company that can offer an affordable electric car with two or three battery-pack options giving different ranges is likely to do quite well against the current crop of sub-100-mile cars.”

I totally agree with that. Range anxiety, justified or not, is still holding back a significant number of potential EV buyers, and Tesla’s experience proves that people will pay for bigger batteries (and greater performance, too).

I wanted to get a wider perspective on this. Mike McQuary, CEO of Wheego, says it’s all about keeping the cars affordable. “Everyone would take bigger packs if they were affordable,” he said. But Brian Wynne, president of the Washington-based Electric Drive Transportation Association, thinks choice is key. “We think that drivers have different needs, so the more options we have for consumers, the better.”

The Cars (May) Be Coming

Wynne said actual market experience is giving automakers some sense of EV buyer behavior, and pointed to news reports that the next generation Chevrolet Volt, due late next year as a 2016 model, will be offered with more than one powertrain option, and will include both a low-cost base model and a new premium offering with longer range.

At the auto show, Nissan held a press conference, and one common assumption was that the company was going to announce a new, longer-range LEAF. It didn’t—the announcement was about free public charging in 25 cities, with an EZ-Charge card that will handle billing from four companies. But Nissan’s Fred Diaz, a senior vice president with a specialty in after-sales, was asked about plans for beefing up the packs. “I can’t say anything about longer-range batteries because we can’t talk about future product,” he said.

C’mon guys, get off the one-size-fits-all mentality. Study those Tesla sales reports and give consumers two or more pack choices.

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