Electric Car Startups To Square Off Against Big Auto Competition

2011 Coda Sedan advertisement

2011 Coda Sedan advertisement

Competition is heating up in the electric car sector, and the next few years will be a challenging testing ground for startups looking to gain a foothold among consumers as more and more major automakers launch electric and hybrid cars.

Some startups have lofty ambitions. Electric car startup Coda said today it aims to sell 50,000 cars by 2015, or 12,500 cars a year. It will launch its electric sedan (pictured, here) late this year, with about 100 miles of range and a $44,900 pre-tax incentive price tag.

The company has said in the past it wants to sell 14,000 cars in the first year of release, targeting 40 percent of sales going to corporate fleets, an ambitious goal.

Newcomers like luxury hybrid maker Fisker, and smaller players Wheego and Think are looking to make a mark on the market, too.

But startups are jostling in an increasingly crowded space, and one of their top reasonings for their company’s success — low supply and high demand for electric cars — may not last for long as automakers like Nissan, Chevrolet, Toyota and Ford ramp up production and launch more green car offerings.

Coda has made such an argument in the past, saying the sedan will sell because there’s more demand than supply for electric cars. Ditto for Wheego, a startup selling a two-seater electric car for $32,995.

While there is potentially an opportunity for startups to make a mark, asking consumers to pay a premium price for an unestablished brand of car that doesn’t seem remarkably different from its better-known competitors seems like a stretch.

Indeed, a consumer survey conducted last year by Pike Research found that a small number of consumers are willing to pay a premium of more than 20 percent for an electric car.

“While there is greater demand than the small supply today, we don’t expect that to continue very far into the future when more models are introduced, and the major brands are producing (electric vehicles) in greater numbers,” says Pike analyst John Gartner.

“There may be a brief window in 2011 to 2012 when some customers tire of waiting for Leafs and Volts [and] may consider paying more for vehicle Fisker or Coda,  but those will be few in number.”

Tesla Model S Sedan

Tesla Model S Sedan

The Coda sedan’s specs don’t appear to be hugely different from the Leaf, but costs $12,000 more. One analyst told us last year “it’s really hard to see how this will be successful” given that it doesn’t come from a brand name.

Coda’s potential success, however, lays partially in its ability to nail down fleet sales. It will also be opening concept stores in high-traffic malls where customers can test-drive the cars and learn about electric vehicles in an environment free of sales pressure. The company says it is pointedly differentiating itself from the car buying experience offered by traditional automakers.

Trying to break into the auto manufacturing and selling business is no easy task.

One of the most successful car startups to date, electric carmaker Tesla, IPO’d last year and is now planning to fully produce from scratch the all-electric Model S sedan (pictured, here) at its first-ever factory.

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