By Chris Betros

Executive Impact Mar. 14, 2011 - 06:50AM JST ( 9 )

TOKYO —

If there is one thing that Kevin Yu loves to do, it is drive. If you visit the Tesla Motors Asia Pacific director at his showroom in Tokyo, he’ll be happy to take you for a drive around the block. On weekends, he’s often on the roads in one of his company’s colorful electric cars.

Tesla opened its Aoyama showroom last November to much fanfare, the first Asian destination for the lithium ion battery-powered Roadster – the only car it currently makes. The hand-built, carbon fiber electric Roadster accelerates from 0-100 kilometers in 3.7 seconds. Last year, Tesla formed a partnership with Panasonic Corp to market battery packs for electric cars and more recently, Toyota Motor Corp invested $50 million in Tesla which will help develop an electric version of Toyota’s RAV4 crossover vehicle.

Tesla has so far sold only about 1,500 of its Roadster sports cars worldwide. In February, the Palo Alto, California-based company reported that its 4th-quarter net loss doubled to $51.4 million from a year earlier as research and development costs for its upcoming Model S sedan soared. However, revenue almost doubled to $36.3 million from $18.6 million a year earlier.

Yu, who also oversees Hong Kong, has high hopes for Japan. Since the showroom opened last November, Tesla has sold several dozen Roadsters. Prior to joining Tesla last year, he spent four years here as head of PayPal (whose founder Elon Musk is also Tesla Chief Executive). Japan Today editor Chris Betros visits Yu at the Tesla showroom to hear more.

What are some of the biggest misperceptions that people have about electric cars?

The biggest one in general that people have about electric cars worldwide is that they think electric cars do not perform as well as gasoline cars, that there’s a technical limitation that prevents electric cars from outperforming gasoline cars. That’s wrong.

Another is that somehow, electricity is more dangerous than gasoline. I don’t see how that’s possible. Most people drive around with explosive gasoline in their car every day and think nothing of it. I’ve also had people look at a Roadster and ask: “Can it go down the block?”

What is your approach to marketing?

Tesla’s goal in Japan is to prepare the market for mainstream electric vehicles and change people’s mindsets about electric cars. We think the best marketing is word of mouth – specifically from our owners – and therefore, we place a high priority on finding real-world customers for the Roadster. We have to basically introduce consumers to what is a brand new concept to many of them. Up until Tesla came out and even after, many consumers thought about electric cars the same way they thought about golf carts. The golf cart is probably the most common electric vehicle that consumers are acquainted with. Many of the people who come into the showroom think our cars are like that, despite the fact that they obviously look like sports cars.

How well known is Tesla’s name in Japan?

Not as well known as in the U.S. where there has been more news about the company for years. There was no concerted effort to get the word out in Japan until last year. In general, though, Japanese consumers are familiar with electric cars because Nissan and Mitsubishi are marketing them.

How many Roadsters have been sold so far?

We have sold 1,500 worldwide. Sales in Japan started last year, but we can’t give country-level specifics.

What sort of interest does the showroom draw?

Weekends, especially in warmer weather, we get a lot of people. It has even become a tourist destination. We get people from Thailand, Taiwan, Korea, all over Asia, and more and more Europeans. You’d be surprised at how many people from Europe and the U.S. have their first Tesla experience here in Tokyo. Many people who never thought about electric cars at home check it out when they walk by.

One unique thing about our showroom is that we allow visitors to go on test drives. No matter who you are, if you have an interest in trying out a Tesla, you can come by and have a ride around the block. On weekends, there is a line. We don’t do that in any other country.

How much does the Roadster cost?

The price, which includes all the taxes and inspection fees, starts at 12.8 million yen and can go past 20 million, depending on options.

That’s much more expensive than what Nissan and Mitsubishi Motors are selling.

That’s true. If you’re looking for an economy car that seats four people, then you don’t buy the Roadster. If you’re looking for a super car that will accelerate from 0 to 100 in a third of the time that most other cars take, you buy this.

When the company started, the choice was: Do they want to build a car in the $30,000 price range and compromise on things like performance and range? At what point could they make an electric car that was both less expensive and performed better than gasoline cars? The answer was at the sports car level. If you look at the Ferrari 430 which accelerates from 0 to 100 in about 4.1 seconds, and you look at the Porsche 911 Turbo that costs $130,000, you realize that there is a segment in which an electric vehicle can really be the performance and value leader. The result was the Roadster that undercuts the Porsche by 15-20% pricewise and still goes 0-100 faster than the Ferrari.

What was the reaction from Panasonic at first concerning the battery collaboration?

This is a good example of how quickly people can change their minds if you show them something that actually works. Panasonic did not think automobiles would be an acceptable use of their batteries at first. Our engineers ended up having to take matters into their own hands, and demonstrate to Panasonic that our application was not only safe, it was revolutionary. That was in the mid-2000s. In 2010, Panasonic opened a billion-dollar battery factor in Osaka specifically to build batteries for electric cars, the same type they said was not suitable five years earlier. They made a strategic shift pretty quickly all because a start-up company like Tesla did something with their technology that they had originally thought was impossible.

When will the cost of Tesla cars come down?

From next year, we will be making a 4-door Model S sedan and the price starts coming down with that. The Model S will be our bread and butter car and will cost roughly half the price of the Roadster. It will be more functional.

No more Roadsters?

This year will be the last year of production for the Roadster. It was made to establish the brand and help change people’s minds, rather than make us a lot of money. Remember, the company’s goal isn’t to just sell cars; it is to move the world away from oil toward electric vehicles.

Who are your customers?

Our buyers tend to be young entrepreneurs, mostly men, but our oldest customer is in his 70s. Most of our owners have families, so the Roadster won’t be their only car. A number have expressed interest in buying the Model S.

Does Tesla do much advertising?

The only billboard ad is the one on top of this building. We have never paid for TV advertising or magazine ads as far as I know anywhere in the world. It’s almost all word of mouth. Because it is a unique product, we attract a lot of media attention. We do collaborate at certain events in various countries with companies like Tag Heuer in Europe and Herman Miller here in Tokyo.

If I buy an electric car, where can I plug it in?

One way is to plug your car into any household socket. We give customers a 5-meter cord. Most convenience stores and parking lots have accessible electric sockets. You just don’t see them. Our car is engineered so you can use any socket. There are some dedicated recharging stations but not many yet.

The car will go about 400 kilometers on a full charge. If you plug your car in overnight for about 8 hours, you’ll get a full top-off by morning. Most owners decide to buy a high power charger for about 200,000 yen (plus about 50,000 yen installation fee). They put it in their garages, so they get a full charge in about 3 ½ hours. We have one customer in Hong Kong who lives on the 3rd floor. He runs a 30-meter extension cord down to his car. He is not supposed to do this and we don’t recommend it, but it does work.

Are you looking for more places to install chargers?

Definitely. If there is a business, especially outside of Tokyo, that is interested in hosting a Tesla high power charger, we are happy to provide the equipment and installation, provided that they make it available to the public. I’d be very happy to work with them. We’ve had a lot of luck with hotels, like the Westin Tokyo and Westin Kyoto. We try to find like-minded people so we can get things done quickly.

What sort of maintenance service do you offer?

We have service rangers. So if something happens with a car, the owners can bring it or truck it back or we can send one of our rangers out. The owners send us the log data from the car so we know what went wrong.

Will Tesla take part in the Tokyo Motor Show this year?

We plan to be there, but I’m not sure what we will be displaying. Obviously, I’d love to have the Model S prototype. However, since we have 17 stores in the world, the Model S is very much in demand.

How many are in your team?

We have about a dozen people, including sales and service staff.

What is a typical day for you?

I am in and out during the day – to change the world, you really need to get out and meet people and demonstrate the technology. Weekends, you’ll usually find me here, too. This is a seven-day-a-week business. We want to make things happen and quickly and we’re all very passionate about what we are doing.

And when you are not working?

I’m driving. I love driving to new places. I might drive to Karuizawa on a weekend. For one thing, it’s great advertising for the car, and second, people see that it can actually go to Karuizawa and back. While I am on the road, I can drop in at gas stations or any store or hotel that looks interesting, introduce myself and ask the owners if they would like to host a high power charger. We’ve actually had a lot of success like that.