Nissan's Ghosn gambles big on electric cars

Posted by: David Welch on May 26, 2010

View image

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.

Reader Comments

Haris

May 26, 2010 7:25 PM

The biggest problem with electric cars is that the ones available today can run only about 200 miles on paper. Turn on the AC and you have a 120 miles range already. Accelerate and stop (as you would in city limits) and you shave off another 50miles.

the 200 miles range on paper is the range for highway driving without ac.

Not to mention they need to be charged like every time battery is almost out. Its a pain charging a mere cell phone for us today, forget about charging cars ritualistically.

They are far from practical. The range must be at least 500 miles despite AC and city limits riving. This can only be achieved by Japanese companies like the one above.

Till that time, natural gas is our best bet.

blowfish

May 26, 2010 7:44 PM

They hate hearing that electric cars might not populate every garage from here to Shanghai.

EVs needs a lot of education for the folks to go total E. As the biggest hurdle is how to get charge up in a hurry, perhaps stations who carries charged up batteries for rent, when your car almost running on empty then gimp to them for a new lease of life again. But as some Mini E drivers in the East Coast find out with the rude awakening.

The GM Volt has an onboard engine to recharge so it will never run out of juice not with standing gas though.

The sale of Evs in Middle Kingdom has not been exactly being described as flying off the shelf.

The Ev market as a car manufacturer I would not ignore it but not going to wage a Pyrrhic battle to win at all cost.

Sean Maslow

May 26, 2010 9:16 PM

The two big arguments for EVs are less pollution and eliminating dependence on foreign and domestic oil. The easy argument is against the EV's "green quotient." Take that away and you've still got the stranglehold crude holds over us. I'm convinced electric cars mitigate both problems and I don't want to buy any more gasoline ever period - I've reserved my Leaf. Plug-in hybrids are timid steps when bold moves are needed. Ghosn is a visionary and has the amps to stand behind his beliefs.

blowfish

May 27, 2010 12:38 PM

eliminating dependence on foreign and domestic oil.

In US of A a good 70% of Electricity came from Coal or Natural gas fired Gen plant, 30% or so from real Water dam Gen and miniscule amount from Sun & Wind.

The rest of the World are not up there yet.

So if its neatly came off the wall does not necessary it was prodeuced neatly at all. Just your dirt was being produced in another place or NIMBY thats all.

mjw149

May 27, 2010 2:12 PM

There are a few non-green advantages for an all-electric that make up the price difference for some people. Electric engines are smooth, silent and offer plenty of torque. They are also very low on maintenance - mile for mile, they are cheaper to operate, so it's cheaper than it appears. And while charging stations are rare, electric sockets are common (the charging stations are faster).

apollo

May 27, 2010 9:56 PM

"Is Ghosn crazy?"

In a historic paradigm shift, it pays to be crazy. Critics criticize - and talk, no matter how intelligent, is cheap. As CEO Ghosn has the power to bet, to deliver, to put his mark on history. It's OK to be crazy. As long as it's not combined with stupidity and egotism. Ghosn reputation puts that to rest. Let's wait for Ghosn electric cars and see how he sells it. Then learn.

Singh

May 28, 2010 12:45 AM

Haris, even taken into your calculation of real mileage of 50 miles (from 200miles cliamed by Leaf), four members of our family still need one time charge for whole week for each of our car if it is electric car. We anyway fill once a week our petrol cars. Now on top of that, cost to run will be 1/4, almost nill poluation. Do I need to still think which is better option for me? Can you please advise me. May be I am missing something.

Paul

May 28, 2010 9:19 AM

100 miles is simply not enough. People want security in the form of reliability that their cars don't run out of gas, in this case power while half way to their destination. Nobody likes to be weary half way when driving worrying about the power if it was gonna stop half way. So until a full EV car can do a comfortable 400km - 500km, only those "totally" "green" people with sufficient deep pockets may be totally convinced.

Allannde

May 29, 2010 7:23 PM

I have driven an electric vehicle for four years. I agree it is not practical as an only car. but it is VERY useful. I just do not understand this need for an electric car to have all of the attributes of a gasoline car. NO car is everything for everyone.

Those of us who can, need to get OFF the dependence on oil. The quiet smoothness and easy availability of an electric car is VERY attractive and will draw many whose need it satisfies. If it doesn't work for you, don't get one.

Snoz

May 29, 2010 11:02 PM

Ghosen elected to install a 100mile range battery instead of minimum 150miles or the more desirable 200miles as cost cutting measures. He has miscalculated. The short range will disappoint consumers and may even hurt the future EV market.

Evan

June 8, 2010 10:57 AM

I think as soon as a few of these cars start hitting the streets there will be much more pressure on the governments and electricty companies to start putting in electric charge points. Most countries have plans to put down a certain number but they're usually way off whats really needed. I dont have any doubts that they will get there but these things always need to be pushed until finally someone decides to do something about it.
I think an electric car is just different to an ICE car and people will just have to think differently about how they drive and recharge but their life wont be any worse off with one.

Ed

June 23, 2010 11:09 AM

I don't know why stores, apartments, etc. can't have charging stations available for their clients. Sounds reasonable to me. Cost could be an issue, but why not make it so all they have to do is plug in with an extension cord and have all the conversion stuff on board the car?

Jared

July 2, 2010 1:48 PM

I know I could find a way to live with a 100 mile charge on a car. I see a bigger problem with trying to get the 230v 40 amp receptacle (same as an electric range plug). How would it work on older houses with a 60 amp service, or people living in a condo/apartment with a parkade.

The leaf does report that it can achieve an 80% charge in about 25 minutes. Impressive. What if the leaf was installed with 5 of these chargers for the battery bank. If a power station could supply that much electricity, you could have an 80% charge in 5 minutes... that's just a guess though.

Doug Terry

August 5, 2010 10:44 AM

The Leaf will be a new type of car for a new sort of application. We aren't used to thinking of cars for custom trips or a particular set of driving needs. For some people, this will be an irritant which they won't want to overcome. So be it.

In my own case, we have two cars. It is unusual to take trips of more than 50 miles each way, although we used to drive between DC and New York three or four times a year. It seems fairly simple: use an electric car for commuting, but have a gasoline car for longer trips or when the other is recharging.

Chevrolet has priced the Volt not to sell. GM is sticking its toe in the water, ready to pull back in a flash. Nissan is prepared to leap forward rather than crawl. Both have billions at stake and both could lose. If Nissan could come out with an all electric in three years with a 200 to 300 mile range, they would sweep the market.

terryreport com

Post a comment

 

About

Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

BW Mall - Sponsored Links

Buy a link now!