Our Conversation With Smart Boss: Electric Drive A Hit In US, Consumers Love Renting Batteries, And Future Plans
Exactly a year ago this week, the smart fortwo Electric drive went into production in Hambach, France, and just last month (May 10th) it was launched in the US. In the car’s first partial month of sales, smart sold 60 copies of the 68 mile EV, the third best debut month of any BEV in the US.
But what of the car’s debut? Was the 60 sold good or bad? How did consumers respond to smart’s US industry first battery rental program? Is the American car buyer looking for a convertible EV? What about the future?
Generally we pride ourselves on knowing the answers to these kinds of questions; but when it comes to smart, we found ourselves coming up a bit short; after all, we never had reason to contact them before now.
So, using month end sales reporting as an opportunity to reach out, we asked smart if they would be so kind as to not only break out electric fortwo sales from conventional ones for our report, but if they would also be willing to do a little Q&A with us.
It turned out that by the time our request got circulated, we had already reported that smart had sold 60 copies in the ED’s first month (it is kind of what we do)…and our response back from the automaker was that they already knew we had the numbers reported, (as smart apparently reads the site – “(we) saw them in the grid for the May story,”) but that they had set up some face-time for us with smart USA boss, Mark Webster.
Excellent, we already love smart even before we talk to them!
Officially, Mark is the GM of smart under Daimler, and just recently took over the job in May, with his official duties listed as “Mr. Webster oversees all business operations for this iconic brand in the United States.”
Q & A With Mark Webster:
Perhaps you could give us some background on the smart ED launch in the US
We just launched it (the smart ED) in the 8 ZEV states that we have dealers in. In seven of them we launched on May 10th, and in California on May 17th. And we have gotten off to a great start with 60 sales last month, that was right were we expected it to be…and we expect it to grow each from there
So looking ahead, and at your current total sales for the smart brand at about 600 to 800 units a month (gas + electric), you are looking for the smart ED to range between 10% & 15% of that?
Yes, well we will go with a 50 state launch in October, so we expect a little bit of an increase for October, but for right now we will just be in those 8 states and probably get a little bit more than those 60 per month until October, then we think it will go up a little bit after that.
(Of interest: Originally it was expected the smart ED would go nationally in September…but not a big slippage there)
UPDATE (October 2013): Bigger slippage has seen that national rollout move into early 2014
smart is the first US automaker to offer battery rental, and it is still early with only 60 units sold to date, but just based on the early returns, how are US customers receiving the battery rental program ($80/month), as part of buying and leasing the car?
Of those 60, it is about 53, or about 90% (who opted for the “Battery Assurance Plus” program) . Customers are really seeing the value in that. If you look at it like you are buying an Apple computer or a cell phone and the manufacturer was guaranteeing the battery, because a lot of times that is what people are concerned about, that is what we are doing, and provided free maintenance, and providing that replacement guarantee.
Both our dealers and our customers love the idea, and it has been received very well.
That is a very high percentage, much higher than we expected actually.
Lets say you buy the car, its $25,000, but if you are going to rent the battery, the price goes down to $20,000 ($19,995), so you would have to hold it for 5 years to gain back that rent. So in any form, lease or rent, it makes sense. We offer a very favorable lease from $199, (with the battery rental program) it is $119 plus the $80…and there is unlimited mileage warranty on the battery itself. Not on the vehicle itself, but on the battery.
So it is fair to say that everyone who is leasing the vehicle is just naturally opting for this program because they are intended to pay $199 a month for 36 months, so why not opt for the battery rental inside of the lease. Is that fair?
Exactly. And in California especially, we and other manufacturers have a very high lease rate, so it works well.
Moving to Europe, we see that smart internationally sells the BRABUS Edition of the smart ED, (with some augmented styling and added performance for €6,310.00 ~$8,000 USD more), any thoughts of plans for that in the US, or will that be a Euro-only offering?
Well, we have the BRABUS trim edition here, which is part of the personality of smart. We have a great relationship both here (in the US) and worldwide with Brabus, but as of right now we are not going to offer the BRABUS powertrain version, just the trim level version. Some of our dealers offer that, and do very well in special markets, like Miami and Los Angeles.
Currently smart is the only EV maker offering a convertible or a “Cabrio” version (from $28,000). How are customers receiving that option so far? Are customers leaning more to the convertible or the standard coupe?
The coupe has been more popular, but I was just talking to one of our dealers in San Francisco and the convertible is doing very well too. I would argue, and you can verify this, that it is the least expensive electric vehicle on the market so far (laughs). So when you think about spring-time and the urban environment with the top down, and electric, and being good for the environment, it is all good.
So of the first 60 sold, and looking ahead to future sales and the convertible, you think it will be/was around a 50-50 split, a third, or…
No. I can give you the exact numbers, its about 25%, in the first month we sold 13 of them.
How strong are sales in California compared to the other 7 states?
They (Californians) are the early adopters. I would say, just off the top of my head, 40% of our sales are from California. We have 10 of our current 28 (electric) dealers out there, and they (the customers) are the most engaged, they are really loving it.
Editor’s note: In actual fact, Mr. Webster got back to us later via email to break down smart’s first 60 sales by state and 32 (53%) were sold in California in May, despite 7 fewer selling days than the rest of the available states.
The smart ED has just completed its first year of production worldwide, but the next generation gas version is in development now, and switching to the Renault A platform. From your end of things, will the smart ED carry over to that platform, or will smart overbuild (current ED inventory), so you will have this model for the next couple years? Is there plans for the smart ED already for the next generation?
(The standard version release for) Europe is next year, and we are early 2015….the smart electric vehicle, we will have that a little bit longer in the current model form, just because it is expensive to produce.
But you still expect that to continue the smart ED over to the new platform sometime in 2015?
Yes. We are committed to an electric vehicle with smart.
Over the years, we have spoken to a lot of executives, and often times we come away with the feeling that an automaker is not as enthused about plug-in technology as we are; however, in talking to Mr. Webster and his team the past few days, this certainly can not be said of smart.
Perhaps the reason for this is that the electric drive version of the fortwo could easy account for 1 in every 5 or 6 vehicle sales at smart, and likely upwards of 25%-30% of the overall revenue for the brand in the future (unlike all the other major players not named Tesla), but regardless as to the why, it is refreshing to hear a company honestly be excited about an electric future.