I've been writing a lot about sustainable business recently for a secret reason that will soon be revealed. One of the lessons I came across time and again when researching the subject (and one I've already commented on elsewhere) is that it's absolutely great having, say, environmentally friendly products. But if you really want to be serious in sustainability, you have to be able to sell those products at a similar price to the non-friendly alternative. People do want to be sustainable, but not at a huge price.I really thought manufacturers had got the hang of this. Then along comes the Nissan Leaf. My main car use is pootling around on 5 to 20 mile journeys, so for me an electric car would be ideal. (When I do long journeys I swap cars with 'er indoors.) The Leaf looks superb. Usually the cars I feel that I really want are totally impractical. (Words like Aston Martin and Morgan spring to mind.) But I genuinely would love a Leaf. It looks good, the performance is fine and it is indubitably green. (You can argue about the greenness production side, but that's for another post.)
Great, I thought. Where do I sign up? Now an equivalent petrol car would probably start at around £12,000. Fair enough. I expected a bit of a premium, but there's a £5,000 government incentive, so that should cover the difference. After all, lesson #1 is 'don't price your sustainable products much higher than the normal ones.' So what does it cost? Prices start at £23,990. And that's with the £5,000 off.
Come on, Nissan. It might have to be a loss leader to start with, but if you get production up high enough, you can crack a decent price. You know it makes sense.
Yes, the price looks unreasonable, but there are companies, and public sector organizations and quangos, who are willing to pay a lot for a greenwash. So they'll be prepared to pay quite a premium for electric cars; the economical non-viability will be not too much of an issue for many of these "early adopters".
ReplyDeleteAbsolutely - there will always be early adopters. But the message if you want to get greenness/sustainability into the mainstream is you can't charge much of a premium at all - but you will still reap the reward, because the consumer can see the benefit, both to the environment and to their pocket (in this case, electricity is a lot cheaper per mile than petrol).
ReplyDeleteBut even if there is a long term saving, if you price the green product with a significant premium, you still will only reach the niche and won't change the world.
Quite. The environmentalist response will of course be to adopt ways that try to force people to choose the "green" product. They plan things like making it mandatory to buy a certain amount of "green" electricity if you buy any electricity at all. Or force you to get an electric car if you want to park downtown. Etc. There's a lot of ingenuity around when people invent ideas for what to force other people to do, or in general, what to do with other people's money.
ReplyDeleteI don't really put any blame to Nissan, they just do what is economically (etc) viable.
Brian - I Know Your Secret.
ReplyDeleteI wish I did, Henry.
ReplyDelete