Will Electric Cars Live Up to the Hype?

Will it be remembered as a landmark? Or as just a tiny footnote?

News that Nissan has started mass production of its all-electric Leaf in Japan could go down in history as the day that the car as we know it changed forever. Or it could be relegated to a footnote, the beginning of an industrywide misadventure with a technology that never quite reaches mass acceptance.

Which will it be? There are a lot of reasons to think that electric cars like the Leaf represent the future of the automobile. But there are also reasons to think that the hype won't be matched by the reality.

A big investment in an uncertain future
As Toyota's (NYSE: TM) experience with its hybrid Prius proves, consumers are willing to embrace new auto propulsion technologies if they're packaged in a way that fits their established habits. Like other hybrids, the Prius has a complex electrical drive system and funky brakes that help recharge its batteries, but for the most part, living with it is like living with any other car. It has a normal-sounding engine under the hood, it runs on gasoline, and every few months you get the oil changed.

The technology may be novel, in other words, but the experience mostly isn't.

Contrast that with the experience awaiting Leaf owners: There's no conventional engine at all, just an electric motor. It needs to be recharged frequently -- if you come home tired after a long day at work and forget to plug it in, you might not be going anywhere tomorrow. Its range will probably vary quite a bit from day to day: A little zestful driving (or a cold snap) could mean the difference between a relaxed detour and a white-knuckled please-let-me-make-it-home drive.

Still, I don't think Nissan will have too much trouble selling the 20,000 or so Leafs it hopes to bring to the U.S. next year. Preproduction models made available to the media have received solid reviews, and with 20,000 "reservations" for the car already made, the company's chances of a successful launch look good.

Defining "success" carefully
Success, of course, is relative. Having 20,000 new electric cars on U.S. roads might seem like a big deal, but in terms of total U.S. vehicle sales, it's a drop in the bucket. It's expected that automakers will sell close to 12 million new cars and trucks here this year, and that's actually a low number by recent historical standards.

But Nissan, and the other manufacturers like Ford (NYSE: F) that are gearing up to launch EVs, are understandably treading carefully here. It takes several years and hundreds of millions of dollars to develop a totally new vehicle and bring it to market. It's a huge commitment, and manufacturers are reluctant to make that commitment to a technology when there's no proven market for it.

Contrast EVs with hybrids, which over the last decade have become part of the automotive mainstream. Toyota's success showed the way, Honda (NYSE: HMC) and Ford have had them for years now, and nearly all manufacturers have come to embrace the technology. Even Porsche has said that it will offer a hybrid version of every one of its models before too long, and Ferrari is planning hybrids as well.

Purely electric-powered cars are still a different story. Until the Leaf, Tesla Motors (Nasdaq: TSLA) was arguably the technology's most visible proponent, but with sales of fewer than 2,000 cars to date, the Silicon Valley automaker's impact has been more heard about than seen. Tesla hopes to change that with its upcoming Model S sedan, but even if the Model S is a success, its sales numbers seem likely to be in the same range as Nissan's projections for the Leaf.

And while Tesla's management talks a good game, that's still a huge "if."

A boondoggle in the making?
Auto suppliers like Magna International (NYSE: MGA) and Johnson Controls (NYSE: JCI) have placed heavy bets on an electrified automotive future, investing millions in efforts to mass-produce lithium-ion batteries and other electric-auto components. Hybrids will absorb some of that capacity, but how much? A J.D. Power study released this week suggested that hybrids and EVs combined might still represent less than 10% of the global auto market by 2020.

That's not exactly a revolutionary number. Like I said, I don't think Nissan will have too much trouble selling 20,000 Leafs next year. But the company expects to be able to produce as many as 500,000 a year by the end of 2012.

What do you think? Will the Leaf (or any all-electric car) ever sell in those kinds of numbers? Scroll down to leave a comment and let me know.

Ford may be wading slowly into the electrified future, but its latest blowout quarter shows it's selling plenty of cars in the here and now.