General Motor's EV1

I recently watched the documentary "Who Killed the Electric Car?" (official movie website - http://www.sonyclassics.com/whokilledtheelectriccar/ )It's about how GM introduced the EV1 (electric cars that could run up to 100miles per charge) in response to the zero-emissions vehicle mandate in 1990. Although only 800 EV1's were leased, people who leased them fell deeply in love with them. In 2003 when the ZEV mandate was removed, GM promptly recalled and destroyed all the EV1's.

In the beginning stock prices continued to rise, but have been on a steady decline since 2004. Clearly, GM is going through more than just a rough patch. Doing what has made it a successful company in the past just isn't working anymore. Economies of scale doesn't build brand equity. The company needs to take some extreme measure to pull itself out of this rut. Could this "extreme measure" be re-introducing the EV1?

I think that re-introducing the electric car could add significant value to the GM brand. The EV1 was a quality car that looked "cool," was very quiet to drive, and environmentally friendly. Previous owners raged about the superior driving experience, which is really a major determining factor in selling a car. GM claimed that it was losing money from the EV1's (lease payments were based on car prices of $34K-$44K but the car cost $80K to build). So why couldn't GM just charge more? With electricity costing 2/3 less than gas, tune ups costing less, and essentially having no parts to be replaced, consumers would savie a lot of money in the long-run and therefore probably be willing to pay more upfront. EV1 leasees loved the car so much that hundreds begged to renew their leases and even purchase the car. There was even a waiting list of 5,000 people. GM refused and destroyed all the EV1's (minus a few donated to museums).

So, let's recap here - great car, great driving experience, very satisfied customers, high demand, and environmentally friendly. Sure GM will suffer losses in the beginning, but overall how does this not sound like a successful product? The GM brand is taking a beating and the electric car could be an endeavor that will ressurect its brand.

-Priscilla Li