Formula E

Would you watch an electric-car racing series?

February 13, 2014: 5:00 AM ET

Formula E, a new global motorsport, has big sponsors, seasoned drivers, and social media gimmicks. Can it find mainstream popularity?

By Daniel Roberts, writer-reporter

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FORTUNE -- The notion that electric cars are only for crunchy hippies might get squashed flat in September -- by an electric race car.

The FIA Formula E Championship, a new global racing series with only electric cars, will launch Sept. 13 in Beijing. From there it will head to nine cities: Putrajaya, Malaysia; Rio de Janeiro; Punta del Este, Uruguay; Buenos Aires; Los Angeles; Miami; Monte Carlo; Berlin; and London. Most of the races will happen on city streets, not in closed circuits.

The cars are open-cockpit, open-wheel, like European race cars, not like the autos in NASCAR. For now, each driver will be in the same exact model: the Spark-Renault SRT_01E, which was unveiled at the Consumer Electronics Show in Las Vegas last month. It can hit a maximum speed of 150 mph -- far below NASCAR's top speeds of over 200 mph, but hardly slow. It emits a high-pitched whine (you can watch a test drive here), making it look and sound like a life-sized toy car. That may be a tech nerd's dream, but will it appeal to red-blooded racing fans?

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"The big stigma they have to get over is that when people think electric, they think 'eco,' and people who care about racing, that's the last thing they care about," says Dan Neely, CEO of marketing analysis firm Networked Insights. "There's still that perception that electric is slow. Shoot, if you go look at a Tesla, that's not a slow car, but [consumers] think of electric as Prius, not Tesla."

Still, the series has funding and celebrity firepower. In addition to the $100 million that founding partners Alejandro Agag and Enrique Banuelos have committed to invest, Boston/Silicon Valley-based Causeway Partners, which has ownership stakes in the Boston Celtics and San Francisco 49ers, invested $20 million in the series. The actor Leonardo DiCaprio (who was also an investor in bankrupt hybrid-maker Fisker) partnered with Venturi Automobiles to enter a team in the series, and has said that the eco-friendliness of the cars is what appealed to him.

The electric car perception problem will rear its head in a number of ways. Speeds are relatively low. (The phrase isn't, "Now you're cooking with electricity!") The battery charge lasts for a maximum of 25 minutes -- in some cases even less, since the speed of depletion will depend on how fast the driver goes. That means when drivers pull in to the pit, it won't be for fuel and new tires, it will be to physically change cars -- and they'll do it twice. Formula E races will last 50 minutes, so why twice, instead of just once? "What we gain by that is that the strategies will vary," says Agag, who is CEO of Formula E. "If there was only one pit stop, everyone would run 25 minutes and change cars at the same time. And it is not so exciting." The current plan: Each driver will begin each race with two fully charged cars and can make the two switches at whatever intervals he chooses. (Agag cautions that the rules could still change.) A potential TV concern: If drivers take too long to hop into the spare car, or if too many are switching at the same time, it could look boring to viewers.

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Boring is the last thing that Fox wants. Fox Sports purchased the rights to broadcast Formula E's first three seasons on TV in 88 different countries. And TV has played a role in shaping the event itself: Races will be 50 minutes because, Agag says, "TV is asking us for a total content time of 50 minutes to an hour; no one wants more than an hour of a light sport. We think all the races now are taking too long. The attention span is getting shorter, especially with the younger generation."

That's certainly true -- live sports are competing with more forms of entertainment than ever for young eyeballs. And so, "social media needs to be a core strategy to what we do, not just an add-on," says CMO Ali Russell. "Our target audience is really a 15- t0 25-year-old, far younger than the usual motorsport fan." To cater to that group, Russell and team have discussed real-time gaming possibilities. They're also planning a social media strategy that may work with teens, but will almost certainly elicit eye-rolls from seasoned car guys: rewarding drivers for social media popularity.

Fans will have a way to vote for their favorite drivers through social media right up until the start of each race, and the five drivers who get the most votes will be able to use a 10-second, 60-horsepower speed burst whenever they choose. (All cars will have that extra oomph stored, but only five will get to use it.) That may risk turning off older racing aficionados. Shouldn't a race be determined only by racing skill, not by which driver sent out the best tweets?

But at least 16 famous drivers, who have publicly endorsed Formula E (not the same, yet, as committing to drive in it), are impressed. "Being in city streets instead of circuits, it underlines that they're trying to be different," says Karun Chandhok, a former F1 racer and potential Formula E driver. "They're not trying to be IndyCar or Formula 1."

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Another group that sees potential already: sponsors. Formula E landed Tag Heuer, Michelin, Qualcomm (QCOM), Renault, and DHL. Qualcomm is especially notable as the first big tech company to back it. "Now that they have seen the car and we've brought it around, it's very easy [for other sponsors] to jump on," says Agag, "but Qualcomm did that before anything was there." Notably absent, though, are the mainstream consumer brands that are perennial sponsors of big sports events: Coca-Cola and Pepsi, McDonald's, Nike, and Adidas.

Formula E is already looking down the road at its second season, when it will open up the car design to other manufacturers. That's exciting even to would-be competitors. John Lopes, CMO of Andretti Autosport, says, "It's the one place that will truly be the Wild West in terms of technical development. Things like battery life and safety and how you deal with fires and what happens in a crash, this is the perfect place to build out that technology." Andretti chiefly competes in IndyCar, but will have a team in Formula E, which it is viewing not as a competitor, but simply a diversification of offerings for fans. "We're really bullish on the series," says Lopes. "Does it have big challenges? Definitely. But I can tell you that we have seen more sponsor interest in this series than any other series we've been involved in. From a market standpoint and a technology standpoint, this is a space IndyCar is not in."

Agag, the Formula E co-founder and CEO, is a former European Parliament politician and longtime motorsport executive. He owned a team that raced in the GP2 series (a feeder for Formula 1), ran a consultancy in London and co-owned the British soccer team Queens Park Rangers with steel titan Lakshmi Mittal. Agag is just the sort of well-connected, savvy sports exec you'd expect to launch an ambitious new sports series that incorporates green technology and social media. But his success will depend in part on consumer opinions about owning electric cars.

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Some of Formula E's supporters have high hopes that the sport will influence the electric auto market. "If we make electric vehicles seem cooler and more attractive, it may pay off with more electric sales to this category of fans," says Causeway managing partner and Celtics CEO Wyc Grousbeck. Causeway's investment success is not directly dependent on electric car sales, but it will depend on sponsors wanting to advertise with the series, and that will grow and wane along with the health of the electric car market.

Perhaps Agag should have tapped Tesla (TSLA) as the inaugural manufacturer, not Renault. BMW, Fiat, Nissan, and Honda (HMCall make an electric model now; might they ever jump in to Formula E? It would certainly help with the cool quotient. And that is the sport's challenge: to shift the narrative that electric cars aren't cool--Elon Musk notwithstanding.

If attitudes around electric cars can't evolve, then an electric racing series, no matter how many eager brands and smart investors are behind it, might crash and burn.

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