By Jim Efstathiou Jr.

Jan. 5 (Bloomberg) -- BMW is signing up green-minded drivers to test an all-electric Mini Cooper with two seats, just enough storage space for a gym bag, and a range of only 120 miles before recharging, all for triple the cost of the gasoline-powered model.

Bayerische Motoren Werke AG will lease 250 of its new Mini Es in Southern California and 200 in metropolitan New York and New Jersey by March. Applicants, who will pay $850 a month for the zero-emissions car for one year, are outnumbering the models available by 4-to-1, according to the Munich-based carmaker.

BMW’s electric experiment beats Nissan Motor Co. and General Motors Corp. in delivering a fully alternative-fuel vehicle to drivers concerned about gas prices and global warming. Sporting a luxury-automobile brand name and being first to take corners in an environmentally friendly car trump functionality, said Mario Soto, a Southern Californian who signed up for one of the two-seaters.

“I’ve got to take my kids to school, so the car makes no sense for me from a practical point of view,” Soto, a 45-year- old graphic designer and father of three, said in an interview. “But I kinda want to be part of this.”

BMW’s Mini Cooper, almost four feet shorter than a Toyota Camry, becomes electric by sacrificing its back seat to fit a 570-pound (260-kilogram) battery. What the Mini E lacks in comfort and range it may pick up in cute and cool points. The noise-free engine goes from zero to 60 in 8.5 seconds, more than enough muscle to compete in Manhattan traffic on a recent test drive.

Energy-Saving Brakes

The Mini E boasts a braking system that lets drivers slow the car the old-fashioned way with the pedal, or by releasing the accelerator, which uses “regenerative braking.” That slows the car by transferring energy to the battery.

“People that are intrigued about what our lives are going to be like a decade or decades from now are exactly the kind of people that are going to be interested,” Jim McDowell, Mini’s chief for North America, said in an interview. “They want to tell their children and grandchildren they were the first.”

The brand loyalty attached to BMW, the world’s biggest maker of luxury cars, doesn’t hurt, Alexander Edwards, head of auto research for San Diego-based consultant Strategic Vision Inc., said in an interview.

“If Isuzu puts out the exact same vehicle, people would say ‘Why in the world would you want a car that can’t go anywhere and can’t do anything?’” Edwards said. “Mini owners love the brand. They’re getting all the equity that the brand has in these emotional assets.”

Mass Production?

BMW said it wants to learn how drivers will react to a limited-range vehicle, and how well its lithium-ion battery holds up under daily use. Those chosen for the Mini E trial must document their experience in online surveys and keep a driver’s log. The automaker, which began selling Mini Coopers in 2002 in the U.S., won’t say if it’s ready to mass-produce an electric car.

“Think of this almost as an adoption process,” Mini’s McDowell said. “We want to get to know a lot about the individuals and their driving patterns.”

GM triggered interest in a new generation of electric cars with its Volt, a sedan due by 2010 that will travel 40 miles on battery power before a small gasoline engine turns on. The Volt will cost $35,000 to $40,000, spokesman Terry Rhadigan said.

Nissan said it will lease all-electric vehicles starting in 2010 in Oregon and California’s Sonoma County. Mitsubishi Motors Corp. is testing battery-powered mini-vehicles it plans to launch in Japan next year.

Obama Interest

President-elect Barack Obama has said he wants 1 million plug-in hybrids, cars that run on electricity or motor fuel, on U.S. roads by 2015. Toyota Motor Corp.’s Prius is currently the world’s most popular hybrid.

“They certainly see a value to introducing some of these high-tech cars even if they’re not practical at this point,” said K.G. Duleep, managing director of the consulting firm Energy & Environmental Analysis Inc. “I think gas prices would have to go to $8 or $10 a gallon for these things to be competitive in any sense of the term.”

Applicants must have a garage where BMW will install a wall box for a 220 volt outlet that can charge the battery in about three hours, according to the Mini Web site. Charging from a regular wall outlet, which is not recommended, will take about 26 hours.

If the Mini E breaks down, BWM won’t provide a replacement, and the company won’t pay for a tow home if the car battery runs down on the road.

Soto said his 97 mile-a-day roundtrip commute through Los Angeles County’s canyons and cities “might be pushing the limits,” of what the Mini E can deliver. “That’s going to limit my running around at lunch time,” he said.

Cheaper Than Gasoline

The Mini E’s $850-a-month cost includes collision insurance, worth about $2,200 for the year and not typical under a lease, as well as maintenance.

Driving the car 1,200 miles a month will take $62 worth of electricity, about 40 percent less than the cost of gasoline at $2.50 a gallon in a car that gets 28 miles a gallon.

A conventional Mini costs $250 a month to lease for three years after a $2,100 down payment, said Karen Fox, Mini sales manager at BMW’s Manhattan dealership.

With $5,000 down, you can lease a BMW 528i, a four-door sedan with 230 horsepower, leather seats and a full-size trunk, for about $590 a month.

“I’m all about saving the world, one car at a time if necessary,” said Josh Lewis, owner of rawautos.com, a Web site for car enthusiasts, who test-drove the Mini E in November. “But I want to have a good time in my car. That’s exactly what the Mini E gives me.”

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

Last Updated: January 5, 2009 00:00 EST

Source:  Bloomberg