Win-Win-Win For Electric Cars, Nissan, Bhutan

Photo of a Leaf negotiating Thimphu, capital city of Bhutan, released by Nissan 2/21/14.

A new agreement between leading EV manufacturer Renault-Nissan and the Asian mountain nation of Bhutan looks like a win for both parties, and a great development for electric vehicles in general. Carlos Ghosn, Nissan’s chief executive officer, visited Bhutan this week to cement the deal with Tshering Tobgay, the Himalayan country’s progressive new prime minister.

Bhutan stands to gain strength as a nation by aggressive pursuit of non-fossil vehicles like the Leaf. It may also become an environmental role model for other nations. Wedged between India and China, Bhutan’s 27 hydroelectric plants export huge amounts of power in both directions. However, as noted in our earlier article on this topic, the country suffers from its need to import petroleum. Without the burden of internal combustion engines, Bhutan can drop major expenditures and head for energy self-sufficiency, or better. Tobgay aims to cut Bhutan’s fossil fuel imports by a whopping 70%. The nation’s compact area and its light-duty industrial focus (40% of all jobs are in agriculture) make it an ideal candidate for EV conversion.

As for Nissan, the new move doesn’t seem all that important on the surface–the giant manufacturer has deals in about 100 other countries, many of them larger–but Nissan will benefit greatly from the Bhutan agreement for a number of reasons. First, although other EV brands are also welcome, Nissan will gain most because it has captured a large share of the market up front. The government vehicles already contracted and taxis in the second purchase round make up about 10–15% of all of Bhutan’s cars and small trucks. The taxi fleet alone will equal about 3.5% of all EVs the company has sold worldwide so far. And the Leafs will start arriving in about a week….

Will the price tag on these zero-emissions Nissans be too high for local customers? Bloomberg News quoted residents of the capital city as expressing skepticism. A travel agent asked the reporter, “Will the electric cars be cheap? If not, then it won’t make a difference.”

Not much at first to individuals, perhaps, but certainly to the economy and the Franco-Japanese manufacturing alliance. World Bank data reportedly show that at a US non-discounted starting price of $28,000, the Leaf costs about 12 times times the average income of a person in Bhutan. Because few but high-income residents have cars currently, the situation for most citizens will not change. “If we can get international agencies and individuals to support us to subsidize one-third of that price, it becomes very affordable,” Tobgay pointed out.

Ghosn said it’s too early for Nissan to shake out an initial vehicle price. Government investment will probably encourage more consumers, and subsequent economies of scale will likely make EVs more affordable. Bhutan is also considering exempting electric cars from import duties and taxes. And, of course, the money saved by switching from fossil fuel imports will benefit the entire population.

John Voelcker of Green Car Reports and others note that Nissan will work with Bhutan on modifications to suit local conditions. Distance above sea level does not mandate adaptations. Although, average elevation in Bhutan is 8,000 feet (almost 3,000 meters), which makes a huge difference to propulsion of internal combustion engines (although less so when turbocharged)–however, altitude hardly matters with electric-powered cars.

Nonetheless, factors that accompany elevation do make a difference to performance of all kinds of vehicles. Bhutan’s a speck on the global scale, but consider that similar mountain ranges cover approximately 20% of the world’s surface, originate 80% of its fresh water, and house 10% of its population, totaling 715 million people. Among the world’s million-plus metropolitan areas over a mile high are several huge cities in Mexico, including its capital; urban areas in Central and South America; and other places, like Nairobi, Addis Ababa, Kabul, and Sana’a (Yemen).

High-altitude regions differ in some aspects (proximity to the equator, distance to water, types of landforms, and biomes, for example), but they share important characteristics like difficult terrain, rapid variations in weather–sometimes including more precipitation–and temperature, and increased vulnerability to natural disasters like earthquakes, volcanism, avalanche, landslides, and severe erosion. All of these factors contribute to making Bhutan an ideal laboratory for honing electric vehicles to accommodate challenging conditions like excessive slopes, switchbacks, mudslides, and even gravel or dirt roadways. (Fully 40% of Bhutan’s roads are unpaved.)

The deal between Nissan and Bhutan is likely good news for everybody involved in the electric vehicle explosion of the 20-teens. There’s no question that the position of EVs will improve in general from these guaranteed sales. Nissan brings to the table the #1 electric vehicle in the world, sales and marketing experience, and design/engineering skills. Bhutan, a laboratory for mountainous testing conditions, constitutes a mighty powerful and relatively captive test market with a favorable, environmentally motivated government. And EVs on the whole benefit not only by a guaranteed increase in their numbers and visibility. They also gain more experience with government/manufacturer partnering and a sturdier grasp on the world’s most difficult road conditions.