Anyone with the desire to see mass-market battery electric vehicles (EVs) increase to greater prominence probably owes a debt of gratitude to Nissan, Renault, and the head of the Renault-Nissan Alliance, Carlos Ghosn.
The company with presence on every continent has had to restrain some of its initial EV enthusiasm, has faced critics, but is otherwise steady as she goes pushing back the mainstream EV frontier to a degree that no one else has.
Americans are more familiar with Nissan, and its Leaf which last month quietly crested past 175,000 global sales surpassing the next-nearest competitor by a veritable order of magnitude, but Nissan is actually the U.S. face of the global corporation led by Ghosn.
While news lately has been of mass-market EV promises from GM and Tesla – these and all others represent future potential whereas Renault-Nissan has done the heavy lifting starting from nothing and selling 238,000 EVs out of 510,000 cumulative total from all automakers.
Beyond the Leaf launched December 2010, Japan’s Nissan is branching into light commercial markets with its e-NV200, and French partner Renault has its Zoe, Twizy, Kangoo Z.E., and SM3 Z.E.
More often news reports have observed early lofty goals not met, and there’s truth to that, but those stories paint only part of the picture. The models Renault-Nissan sells are all real electric cars from a major automaker priced as close to mainstream as feasible that can be bought now – not just future talk – or no talk at all.
The next closest EV seller is Tesla which has done an amazing job selling 75,000 new cars and raising awareness for EVs but so far zero have been for under $45,000. Then you have Mitsubishi with around 50,000 now-aging and largely bypassed i-MiEVs badged also for Citreon and Peugeot. Next-in-line is BMW doing respectably since November 2013 with more than 25,000 i3s sold, and Daimler with 13,000 Smart EDs and 2,000 B-Class Electrics. Green car sales tracker Mario R. Duran observed VW is noteworthy too having delivered about 15,000 e-Golfs and e-ups! in about a year.
To be sure Renault-Nissan is not alone, but its head start and persistence mean of all sub-$45,000 EVs sold in the world, it accounts for more than half delivered to date.
The underlying reasons for why Ghosn bet more than $6 billion to be on the ground floor include the usual suspects – energy security, curbing climate change, needs of present and emerging markets, and related concerns.
“Do you think there is more chance that oil prices will go up or down? Do you think environmental regulations will become stricter or looser? And how long do you think the superpowers will accept dependence on oil?” Ghosn rhetorically asked in 2010 at the Stanford Graduate School of Business. “The only way to disconnect from oil dependency is to bring electricity to the car, which can be generated from many sources — coal, wind, solar, and others. If one becomes unavailable, you can switch to another. Any kind of environmental disaster, energy crisis, or war in country that produces oil — all of which are likely scenarios in the next 10 years — will create demand for electric vehicles.”
If he was optimistic to a fault when he said zero-emission cars could comprise 10 percent of the global market by 2020, this has nonetheless made the company err on EV protagonists’ side.
Not All Rosy
With bets, sometimes you lose, and Renault-Nissan’s push to make it happen has faced setbacks.
Included are the Renault Fluence Z.E. developed with swappable battery for failed Israeli startup Better Place, and questionable expenditures on huge battery factories.
While we hear often of Tesla’s Gigafactory – taking risks on one li-ion form factor not unlike chances taken now costing Renault-Nissan – Ghosn and company have already built battery factories in Japan, the UK, and Tennessee with far more capacity than needed in anticipation of growth.
Last September, Ghosn conceded he was prepared to phase out U.S. and British production. The biggest problem was with a deal with NEC and its Zama, Japan plant, which produces 220,000 power packs a year. Nissan is required to pay for every single one, but in 2013 the company sold only 67,000 EVs and at the time it had only delivered 176,000.
The company instead started talking about outsourcing to LG Chem, and this March the company was again reported as weighing this decision which either way will cost it more than it originally planned.
Another fundamental issue has been the EV market itself.
Ghosn made a name for himself as the most bullish on EVs and originally projected one in 10 cars from all automakers would be electric by 2020. He also said his own company would sell 1.5 million by 2016. This was readjusted in 2013 to be 1.5 million by 2020 and we don’t hear him making 10-percent market share projections any more.
Among reasons Ghosn cites for slower than anticipated proliferation have been insufficient government support in places where it was originally expected, slower than expected rollout of infrastructure, and an unexpected downturn in gas prices.
More recently, Ghosn said his vision was still right, but the growth will be “slow and steady.”
A Counterpoint To Elon Musk
Tesla CEO Elon Musk comes as a Silicon Valley outsider to the car business, has never sullied his company with production of even one gas-powered car, and has a lot of credibility but Ghosn has been celebrated as well, if less obviously.
Not a billionaire, Ghosn may well have earned every cent of his $10 million reported in 2013 and well before that, as he holds the position of CEO for three carmakers – Renault, Nissan, and Russia’s AvtoVAZ.
Unlike Musk, he does not start companies that may be positioned for buyout. He’s instead a first-rank manager of existing businesses having started at Michelin. As a car industry exec for the Renault-Nissan Alliance formed in 1999 he turned Renault around in the late 90s and then Nissan in the early 2000s from what looked like assured bankruptcy into the world’s most profitable major carmaker within five years.
Fluent in French, Portuguese, English, and Arabic with some Japanese thrown in, cross-cultural, Brazilian-born Ghosn was once offered to run General Motors and Ford Motor Co.
And while Elon Musk is considered the embodiment of Marvel Comics Ironman Tony Stark, Ghosn is the star of a 2001 Japanese comic book, The True Story of Carlos Ghosn, that in 2001 was made into a book, and has sold 300,000 copies.
If it so happens Ghosn likes electric cars, that may be fitting because he has more than a little in common with the Energizer Bunny working 15-16 hours a day, running companies stretched around the world, flying in his Gulfstream 150,000 miles annually.
Not bad for a man of 61.
What is the Renault-Nissan Alliance?
The alliance between a French company and a Japanese one was predicted to go no where far but has defied odds since 1999. It has almost 450,000 employees and controls the brands Infiniti, Renault Samsung Motors, Dacia, Datsun, Venucia and Lada, Renault, and Nissan.
A lengthy feature by Fortune on Ghosn last December says it is a creation of this indefatigable workaholic who may be hard to ever replace, and has the most complicated management structure outside of the Vatican.
Ghosn puts it in more benign terms.
“We took the alliance as a marriage between two people. Nobody wants to ‘become’ the other,” Ghosn said. “Keeping diversity within uniformity is very important because having a specific identity is the basis of performance and is what motivates people. It’s the way the world works. So we try to make sure that we don’t violate common sense.”
The Alliance partners complement each by focusing on different markets around the world.
Its goal, set in April 2013 – of course by Ghosn – to be one of the world’s top-three automakers may be as big of a stretch as its early aspirations to hit a homerun with EVs, but observers aren’t counting that out either.
The company sells about 8.5 million cars annually compared to over 10 million sold by Toyota, GM, and VW.
Why Don’t Other Automakers Do More?
Toyota got all kinds of green cred for itself with its hybrids since the 1997 Prius was launched in Japan and some had thought a jump into EVs would be a natural transition, if not moral responsibility. But hydrogen is the future for “the next 100 years” says Toyota while it quietly also works on solid state batteries for plug-in cars maybe later.
“The current capabilities of electric vehicles do not meet society’s needs, whether it may be the distance the cars can run, or the costs, or how it takes a long time to charge,” said the “Father of the Prius” Takeshi Uchiyamada, Toyota’s vice chairman.
What Uchiyamada san did not mention when the company canceled a little EV under development last year is, as noted by analyst Alan Baum, Toyota holds 70 percent of the U.S. hybrid market, is the global leader, has amortized costs and hybrids are a cash cow for it.
Elon Musk has been quoted as saying traditional automakers have a “conflict of interest” in pushing EVs when they’re so invested in regular internal combustion cars, but less often noted is the same is true for Toyota and its interest in hybrids.
Honda is following a path similar to Toyota, but its executives have upset EV fans less with controversial statements. Baum notes Honda is reputed as an “engine company” and electric motors don’t quite fit its core identity.
As for Mazda and Subaru, they are smaller, and focused on their own direction.
And as for other automakers, all have work underway, some with product for sale now. Sales show several are just staying in step with federal, California and global regulations as they look to 2018 and beyond when these emission and mpg requirements will tighten and draw them into more electrification.
True also is automakers are taking the pace they are as battery tech incrementally improves in cost and efficiency and these businesses must contend with myriad other variables not least of which being internal corporate culture and aversion to risk.
Looking Back; Looking Ahead
As the Renault-Nissan Alliance approaches one-quarter million EVs sold it has laid the groundwork for others to follow with next-generation EVs.
Is some of it also driven by Ghosn’s ego? The auto business is full of type A personalities, and this may be so, and certainly Ghosn has put his name and legacy on the line.
It’s also culled back from some of its gung-ho fervor heard more often in 2010-2012.
And, like every other automaker, it must face realities including a public which just says no to recharging that takes longer than gas car fill-ups, limited range, higher cost, and aversion to anything called “first generation.”
The Renault-Nissan Alliance notably has not proliferated more consumer models in the past few years, when initial talk was of many cars to come, including plug-in hybrids, but faced with aforementioned challenges it promises more as it otherwise bides its time.
The world’s best-selling Leaf appears due to ride out three-quarters of the decade as the same basic car albeit tweaked here and there but its effect is already made.
As much as there’s been a bit of a cooling off, Renault-Nissan has enabled a whole generation of early adopters who accept current cars as fine and feasible today while whetting the appetite for fence sitters and all others who want more.
Unclear is when the next wave of 200-mile EVs priced in the mid $30,000s from Chevrolet, Tesla and Nissan will be for sale, but unofficial reports say it could start with Chevy by 2017, with others possibly by then or 2018.
So soon enough it appears Nissan will have much more competition as it offers more competition in return, but that is a day it was waiting for – yes, it is a day it has largely prepared.