Posted by: David Welch on May 26, 2010
Nissan Motor Co. CEO Carlos Ghosn made the rounds in the U.S. the last two days pumping up his electric-car plans. He said the automaker and its global partner, French carmaker Renault SA, will be able to build 500,000 electric cars a year by 2014. To back up his bold plan, he announced a $1.7 billion investment in a lithium-ion battery plant in Smyrna, Tenn. All told, Nissan is dropping $5 billion from 2007 to 2012 for its ambitious play to be the leader in electric cars. The U.S. government loaned Nissan $1.4 billion of the cash for the battery plant. So in essence, we all have a piece of his gamble.
And it’s a big one. The challenges to selling electric cars in big numbers are pretty obvious. The Leaf, Nissan’s five-passenger compact that hits the market later this year, can go 100 miles before needing to recharge. That recharge takes hours. And be careful about that 100 miles. That’s in the city, where stop-and-go driving recharges the battery. Out on the highway, it could get half of that, says Jim Hall, principal of auto consulting firm 2953 Analytics. That will limit its appeal, especially because American city boulevards aren’t exactly electric avenues lined with charging stations. The cars aren’t cheap either. The Leaf will sell for $25,280 after U.S. tax subsidies. That’s at least $5,000 more than most cars its size.
Cue up the ire of green-car fans. They hate hearing that electric cars might not populate every garage from here to Shanghai. Yes, many Americans only drive 20 miles to work and back. For them, the Leaf will be wonderful. Ghosn is also counting on China to snap up a lot of these. He said that his goal of selling half a million EVs would be less than 1 percent of the global car market.
All of that makes sense. But Ghosn will be rolling out cars faster than most big car markets—namely the U.S., Europe and even China—plan to install public charging stations. Renault and Nissan won’t be the only companies selling some kind of high-tech car. Ghosn says he doesn’t see the Chevrolet Volt as a rival to the Leaf since the Chevy has a small gasoline engine to recharge the battery, while the Leaf is electric-only.
I beg to differ. Some buyers want something green and clean. Whether the car runs only on electricity or gets super-high gas mileage makes little difference to some of those customers. To them, the Volt is more practical and has the same high-tech, green appeal. It will be an alternative. Adding more to the fray, Ford plans to sell two electric vehicles by 2012. Toyota is now teaming up with Tesla to build an electric car.
Is Ghosn crazy? Plenty of critics said so when Renault bought a stake in troubled Nissan in 1999. Ghosn made a money maker out of it. He may be overreaching this time. But he remains undeterred. He said the critics will not change the path he is on. He could prove them wrong again by becoming a leader well before others have the derring-do to go electric. He may also lose a lot of money in the process.