the aftermath of the IPO, its market capitalization was $2 billion. By that point Tesla had sold about a thousand of its Roadsters. Less than a year later, the company opened its showroom in Washington, D.C., a half dozen blocks from the White House.14
The Tesla Roadster can be an exhilarating car to drive—0 to 60 in under four seconds—but its price point was not made for a mass market. The starting price was $109,000—or “only” $101,500 with the $7,500 tax credit from the federal government. Moreover, recharging the car with a standard 110-volt outlet would take about 32 hours. With a 220-volt outlet, it’s 4.5 hours, although fast charging is promised down the road. The Roadster is described as a “limited edition vehicle,” to be succeeded by Tesla’s luxury sedan, the Model S.
Whatever Tesla’s ultimate commercial prospects, it did something notable. It demonstrated that the electric car could be something far more than an egg on wheels or a golf cart. A green car could also be a supercar.15
Meanwhile, other entrepreneurs joined the fray, trying to find different niches through different business models. Coda, with one leg in California and the other in China, is seeking to come up with a modestly priced electric car that would be lost next to a Tesla Roadster but would be available to a lot more pocketbooks.
Shai Agassi, a young software executive, launched his EV concept with a very different business model. His company wouldn’t make the cars. Instead it would own the batteries that it would lease to motorists. It would also establish, in place of gas stations, new “battery stations” into which motorists would drive when the battery ran down. There an attendant would swap out the battery and replace it with a recharged battery.
In 2007 Agassi officially launched his company Better Place. By 2010 the company had raised $700 million, and it was planning to launch recharging networks in both Israel and Denmark, in partnership with Renault, which had designed a new car to go with the system. One of many challenges, however, is lack of standardization in battery size. EVs and PHEVs are likely to compete on the size, weight, and range of their batteries. Standardization has still yet to occur for the lead-acid batteries that have been starting internal combustion engine vehicles for many decades now.
In theory, however, the Better Place experience for motorists is intended to be the functional equivalent of pulling into a gas station and filling up. Except that, with the battery exchange, there will be no self-service.
TAKING A LEAF
Today all the major automakers are moving, with varying degrees of conviction, toward an electric-car offering. Certainly all car companies would be more than happy to find some way to blunt their vulnerability to high oil prices. But among the major international companies, none has been more fervent about the electric car than the Nissan-Renault alliance. And no one more outspoken than its joint CEO, Carlos Ghosn.
Ghosn is about as international as an executive of a global company can be. Raised in both Lebanon and Brazil and educated further in France, he ran Michelin Tires in the United States, and then became a senior executive at Renault. After Renault formed an alliance with Japan’s Nissan, Ghosn set out to rescue Nissan, which was teetering on collapse with $20 billion of debt. He became famous for bringing Nissan back from the brink and ended up as the CEO of both companies.
Toyota has its hybrid, Prius. Honda is the “engine company,” focused on the superior characteristics of a more-efficient internal combustion engine. By contrast, going “all-electric” gives Nissan a distinctive leadership. The opportunity emerged by accident out of the company’s financial wreck.
When Ghosn arrived at Nissan in Japan in 1999, he slashed costs almost everywhere. But something about the battery program gave him pause. “Nissan had been working on the electric battery for 18 years,” said Ghosn. “I was really struck by those engineers when I met with them. They thought that an electric car could be feasible and affordable. I had no clue, but I was very impressed by their passion.” Despite Nissan’s perilous financial condition, that was one cut he did not make. “Sometimes you only connect the dots afterward,” he added.
By 2002 Nissan had what it considered a breakthrough in lithium-ion technology. “After 2003, Nissan was out of turn-around,” said Ghosn. “But I was very surprised by the amount of criticism that we were getting for not having a hybrid. I asked myself why there was