Introduced in 1996, The EV1 electric cars were available in California and Arizona with a 3 year/30,000 mile lease only agreement. This was because the EV1 and its leasees were to be participants in a "real-world" engineering evaluation created by GM's Advanced Technology Vehicles group. GM was doing a market analysis and feasibility study as to the feasibility of producing and marketing a electric car in the U.S.
The EV1 was directly based on a prototype vehicle created by AeroVironment called the GM Impact. The Impact in turn had been based on design ideas first tested out in a record-breaking race car called the Sunraycer, a solar-electric vehicle the company created in 1987 specifically to win the World Solar Challenge, a trans-Australia race open to solar powered cars only.
All this effort was a result of the ZEV Mandate which required by 1998, 2% of all new cars sold by the seven major auto manufacturers in the state of California were to meet 'zero emission' standards as defined by the California Air Resources Board and 10% by 2003. The California ZEB mandate was subsequently cancelled.
In late 2003, GM officially canceled the EV1 program. GM stated that it could not sell enough of the cars to make the EV1 profitable. GM alleges that the EV1 cost GM $1 billion dollars. This, combined with the fact that their parts and service infrastructure costs required to maintain the existing EV1's for the state legislated minimum of 15 years, would mean the existing leases would not be renewed and all the cars would have to be returned to GM's possession.
According to GM Chairman and CEO Rick Wagoner, his worst decision of his tenure at GM was "axing the EV1 electric-car program and not putting the right resources into hybrids. It didn’t affect profitability, but it did affect image." Wagoner repeated his assertion after the December 2008 Senate hearings on the U.S. auto industry bailout request.
According to the March 13, 2007, issue of Newsweek, "GM R&D chief Larry Burns . . . now wishes GM hadn't killed the plug-in hybrid EV1 prototype his engineers had on the road a decade ago: 'If we could turn back the hands of time,' says Burns, 'we could have had the Chevy Volt 10 years earlier.'"
A documentary film debuted entitled Who Killed the Electric Car?, which outlines the debate. Also, people who had leases on EV1's were refusing to turn their cars in after the lease ended, that should have indicated something to the GM brass.
My take is that the EV1 was a decade ahead of its time. GM basically looked at the numbers and figured that it had cost enough money $1 billion dollars. The problem is GM did not have the vision to fully develop the project. The battery was the limiting factor at the time, the EV1 did not have the driving range necessary to be a commuter for many people. If GM had the vision to complete this project, GM would still be the largest car company in the world with the profits to match.