Hey, Ford! Steal This Car (Idea) From Nissan!

In the race to build America's next great electric car, Ford Motor (NYSE: F  ) hasn't even exited the garage.

So far this year, General Motors (NYSE: GM  ) has sold more than 8,800 Chevy Volts, and says it's on track to sell 18,000 by year end. That's comparable to Tesla Motors' (Nasdaq: TSLA  ) success with the Model S electric sedan, and twice as good as Nissan's performance with the LEAF. But as my fellow Fool John Rosevear wrote a few weeks ago, the real laggard in this race remains Ford, which as of June 2012 had sold a whopping 135 electric Ford Focuses.

Forget "lately" -- have you driven a Ford electric Focus ever?
So what's it going to take for Ford to get into this race? John put his finger on that problem, too: In a nutshell, electric vehicles like Ford's newest Focus model "don't have the range or versatility of ... gas-powered cars. Most drivers get fewer than 100 miles on a charge from a Leaf or a Focus Electric, a fraction of the 300-plus an average compact car with a full tank of gas can claim." For a family of four planning a week-long getaway to the beach, 100 miles just won't cut it.

But if this is a problem common to all the old-line automakers, trying to break into the EV market, where's the solution?

Here's the solution
Faced with the same problem, EV pioneer Tesla decided to load up its top-of-the-line Model S with extra batteries, give it a 300-mile driving range... and a sticker price twice that of the competition. Ford apparently decided that's not an option for it, but there is an alternative.

Nissan has just pioneered a novel plan, which it's billing as "Go the Distance." In a nutshell, it works like this: You buy an electric LEAF, use it as your daily driver 355 days of the year, and never buy gas. (So far, so good.) Then, when road trip season arrives, you ring up your local Nissan dealer, and they provide you with a gasoline-powered car free of charge. Abracadabra -- suddenly you've got no "range limitation" on your ride.

It's really quite an elegant solution to a problem that's likely to persist until someone figures out how to run an electric car several hundred miles on a charge, while making sure the batteries don't take up all the cargo space and keeping the sticker price in the lower five-digits. So kudos to Nissan for figuring this out.

Close, but no battery-operated cigar
Of course, just because Nissan came up with the idea, doesn't mean Ford can't improve upon it -- and steal Nissan's thunder, its sales, and its market share in the process. You see, while Nissan's making a bold and clever first step toward addressing EV car-buyers' concerns, it still doesn't have all the details right to make this true game-changer of a solution to EV range problems.

For example, Go the Distance, or GTD, currently offers free rental of a standard-issue Nissan for only 10 days -- which is about four days shy of the average annual paid vacation in the U.S. Nissan's also only committing to "go the distance" for its customers through March 31, 2013 -- great news for anyone planning to buy a LEAF within the next five months. After that, the program expires. The free rental "punches" don't automatically expire at the end of the program, but longer-term owners may be less than thrilled with this shortsightedness that the punches are gone forever after just 10 rental days.

The company also dropped the ball in failing to promise that the GTD vehicle will be one of sufficient size to carry a family on a long vacation. If the replacement vehicles Nissan offers turn out to be of a size comparable to the LEAF... well, let's just say that things could get a bit tight on a 500-mile road trip in one of these electro-buggies.

Go the distance, then go just a little bit farther
These failures to fully think through the GTD program offer Ford an opportunity to correct the details that Nissan missed the first time around, and thereby leapfrog its competition. Consider for a moment how electric Focus sales might react to a Ford offer like this one:

  • Ford will lend you a replacement, gas-operated car for up to 15 days a year if you need it...
  • and not just any car, but a fully loaded Ford Explorer or Expedition SUV...
  • "each year, every year, for as long as you own your electric Focus."
  • And hey, if it turns out that you prefer the high-profit-margin SUV over the low-margin electric Focus -- heck, Ford can even cut you a nice deal on the upgrade.

Nissan may have come up with the idea of "going the distance." Ford's task is to bring the idea the rest of the way home. For more ideas on how the company can reach its fullest potential -- and for Fool analysts' expert opinion at what the stock might be worth if it succeeds, download your copy of our premium research report on Ford right here.

Fool contributor Rich Smith holds no position in any company mentioned, but The Motley Fool owns shares of Tesla Motors. Also, Motley Fool newsletter services have recommended buying shares of Tesla Motors, Ford Motor, and General Motors.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On August 27, 2012, at 5:39 PM, SisyphusRocks wrote:

    Although I know Ford is working on other all-electric vehicles than the Focus, why would Ford or any other company want to sell more of them right now? GM and Nissan lose money on each one sold, even though the U.S. federal government provides hefty subsidies for them. It's not a matter of amortizing capital outlays over more sales volume, as I understand it, instead they actually cost more to produce than they sell for in materials/labor. If you lose money on each unit, you can't "make it up in volume," that will just lose you more.

    Ford is smart by pushing hybrids (especially their new plug in hybrid) and not all electrics. Plug in hybrids are the best of both worlds, and the Cmax hybrid has a range of something like 300 miles, so they don't need this Nissan rental program. Plus, hybrids are in many cases actually profitable now.

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