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Published on February 19th, 2016 | by James Ayre

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Carlos Ghosn Thinks Truly Low-Cost Electric Cars Will Dominate In China

February 19th, 2016 by  

Originally published on EV Obsession.

The Chinese government is currently aiming to have at least 5 million electric cars on its roads by the year 2020 — largely as a means of cutting down on the country’s very high levels of air pollution. Unsurprisingly, this stated goal looks like a giant money sign to many auto manufacturers — as the country offers very substantial incentives to electric vehicle buyers.

The CEO of Renault–Nissan, Carlos Ghosn, recently commented on this matter, revealing that the company has high hopes for the Chinese electric vehicle (EV) market — especially as it pertains to low-cost cars that could appeal to the broad demographics unwilling to plop down the cash for luxury EVs, like those on offer from Tesla currently. Or even the much-lower-cost Nissan LEAF, for that matter.

Carlos ghosn

Ghosn commented: “The Nissan LEAF is sold in China. It is a very nice car but it is selling a few hundred per month. We envision much bigger (sales) than that. We know price is a handicap. For me the solution will be a very cheap electric car.”

Going on: “Obviously, however, with very low performance you can manage that. So the question is, what is the best compromise between an acceptable performance and the lowest price possible? This is something that doesn’t exist today and we are willing to find a solution. I bet there is going to be a lot of development work on very affordable electric cars.”


 

Our sister site Gas 2 provides more context and quotes:

Chinese regulations make it essential for foreign companies to build their cars in China with a local partner in order to avoid steep import duties. Nissan is partnering with Dongfeng to make a version of the Renault Fluence for the Chinese market. Thierry Bollore, Renault’s chief competitive officer, says that he expects sales to be in the thousands of units per month.

But mass sales will depend on Nissan and Dongfeng producing a very inexpensive electric car. “The Chinese government wants more electric cars, so we say ‘yes’, but the customer wants them to be cheap and there is a limit to how much of a (government) incentive they can put on every car,” Ghosn tells Autocar.

Bollore adds that any new government legislation could force a rapid pace of change among China’s car owners. He points out that when China put regulations in place that favored electric scooters, gas-powered scooters disappeared from China’s roads almost overnight.

“China is typically a market where things can move very suddenly. It could move very quickly if the government decided to make it a state project,” Ghosn continued.

With Nissan’s apparently glacial speed of change in the US EV market over the last few years, I do have to wonder if it’s simply (or partly) that the company has prioritized the Chinese market over the American one. The American auto market is, in general, expected to contract over the coming decades, while the Chinese one is expected to continue growing… fast.


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About the Author

's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy. You can follow his work on Google+.



  • Bob_Wallace

    Renault tends to not get a lot of attention here as they aren’t sold in the US (as far as I know).

    Low speed EVs are legal in the US. I see people driving them around town from time to time. But they aren’t widely popular. The real interest is in an EV that can fully replace gasmobiles.

    • Bo Chen

      Indeed, Renault is quite France/Euro centered. But it is pushing electro-mobility hard, especially with this plan in China.

      I think LSEVs are called Neighborhood EVs in the US right ? Well, I don’t think China’s case is the same. First the volume : 1 million+ on the road within 5 years. Then, models like Yogomo e330 or Levdeo D70 (you can Google them) are closer and closer to “real” cars. Finally, they are mostly sold in suburbs and lower tier cities.

      I know the US is a crucial market for EV. But let’s think international here, especially when it comes to China. I believe EVs will not fully replace a gasmobile in the short term. The cost/benefit of switching to EVs is simply not good enough for the majority. I believe we need to thing different. And Renault seems to think different because it has no choice, which is a good thing!

      • Bob_Wallace

        Are you in China? We’ve been looking for someone who follows EVs and energy in China and would like to report on developments there.

        Yes, neighborhood vehicles. We also have few electric bikes while I believe China has millions.

        When battery prices drop a bit more it will cost the same or less to manufacture an EV as an ICEV. Purchase price parity. We may hit purchase price parity by 2020. EVs already cost far less to operate per mile.

  • Bob_Wallace

    OK, I’ll try again.

    The engines in fuel powered cars represent a modest proportion of the cost of the car. The majority of the car is made up of the sun visors, fenders, glass stuff.

    We are approaching cost parity for internal combustion engines and batteries/electric motors. It will soon cost car manufacturers about the same amount of money to purchase the parts for an EV as for a ICEV. Assembling them will likely cost less.

    Car companies can switch to EVs very rapidly once they perceive that market demand has shifted. Ford set up their three Focus assembly lines so that they could be switched from EV to ICEV or back again in just a few days. Entirely new models are created and brought into production in three years or less.

    Charging? Over 50% of all US drivers already have a place to charge when they park. That’s over 100 million drivers. Tesla has built an impressive rapid charging system in only three years.

    Gas will not stay at $2/gallon. Oil producing countries cannot provide enough at that price. Their economies would crash, they’ll find a way to boost the price. At least until EVs have very significantly eroded their market.

    There’s already a used EV market. The market values used Teslas and undervalues low range EVs. A used Leaf or other lower range EV is a huge bargain for those who can live with the range. I expect we’ll see a turnaround over the next few years with used EVs selling at a premium and less efficient ICEVs losing value quickly.

    Meaningful numbers? More than 500,000 EVs per year in North America and Europe by 2020. Possibly closer to 1 million. That many or more in China. And then sales take off….

    • Jfake Hname

      ice tech =internal combustion engine tech,not sun visors thats a ridiculous statement. fact a used honda civic is a much cheaper form of transportation. i made a statement about today, not batteries in a few years or gas price futures.
      your wrong the engine is by far the most expensive part of an ice car its not even close.
      its estimated there are over 1 billion ice cars in the world not counting farm and off road vehicles. ice car sales are up and growing how many are ecars? world total still under a million? even if your overly optimistic projections come true, even if it was 100% ecars at 80 mill a year(not gonna happen for a long time) it would take over a decade to reach 50%. ice cars sales GROWTH outpaces all ecars sold by millions still. current future projections have ice cars selling more/per year for the next few years.
      dont get me wrong i root for the ecar but reality says otherwise. lets hope ecars achieve over a million sold in one year soon. while the ecar will be cheaper to buy/produce someday you are still underestimating the impact a dedicated assembly line has on cost. there still hand building ecars because the cost of building the line exceeds all their sales. and no you cant just swap a line to ecars overnite nor will anyone try without sales in the millions. think about it your producing/selling 6 million units/year why would you spend millions of dollars to change an assembly line if you cant pay for the cost of the line? you might but auto manufacturers will run that line for every car they can including selling units at a discount to a fleet sale. they will hire efficiency experts, they will work to lower costs, improve production numbers, etc. think of it as a chess game and the ice manufacturers get to make a move also.
      so again my point without a sudden increase in gas prices or an advancement of batteries(cost/range) this will be a much slower transition.
      meaningful numbers? 500k/year by 2020 thats not even 1% ? as compared to the projected ice car sales? which is projected to go up over the next four years?

      Annual Global Auto Sales
      2013: 82.8 million
      2012: 79.5 million
      2011: 76.7 million
      2010: 73.2 million

      • Bob_Wallace

        Look up market prices for a 2012 Nissan Leaf and a 2012 Honda Civic.

        “your wrong the engine is by far the most expensive part of an ice car its not even close.”

        That is exactly the opposite of what I said.

        Comparing the number of ICEVs and EVs in the world today is meaningless.
        I quit reading your comment. Your lack of capitalization, run on sentences and lack of paragraphing makes it too difficult.

        • Jfake Hname

          your comparison is false, what about 1995 honda civic? we were talking about cost to operate not comparing model years.
          it is the opposite of what you said cuz what you said was false and my statement is true…opposite.
          your right i dont write correctly but at least i know what im talking about. im betting you can read my writing just fine, no need to grammar nancy on me. scroll down to the bottom read the numbers.
          so in the end your point was less than 1% of the market by 2020? “and then sales take off”. what to 5% by 2030? 10%? whoa!

          • Bob_Wallace

            Have a nice day….

    • neroden

      The Leaf is known to suffer from excess battery degradation, and it’s also hard to sell a Leaf to someone a long way away because they can’t transport it there due to a lack of charging along the route. That’s what’s been keeping the used Leaf prices rock-bottom. It’ll be interesting to see how the used prices look for “medium-range” (100 mi rather than 200 mi) EVs that don’t have the Leaf’s battery degradation problem.

  • ROBwithaB

    I am watching this entire story unfold with keen interest.

  • John Moore

    Consider a stripped to the bone (as in Chinese or Indian stripped. Think Tata-esque) small car. If it has a 100 mile range and a cost of $100 kwh, how cheap could it be? Could we get anywhere near to $15k? Lower? Higher?

    • Anant Bhatia

      The most premium gasoline powered Tata hatchback in India sells for just about $10k all taxes included.

      Take out the turbo Petrol engine and the manual gearbox inside it and you take the price down by at least $2500.

      At $100/KWh, you could buy 25KWh worth of Batteries for the $2500 saved. That gives you at least 100-125 miles of range.

      I have no idea how much would a decent 60-65 Kw electric motor would cost but we shouldn’t go much above $12000 which is about par with the price(including taxes) of an AT Turbo Diesel hatchback (had it existed).

      This brings me to the thought, what is stopping Tata from getting this done. With all their financial & RnD muscle from Jaguar & Land Rover, no other company in India is in a better position to get this done.

      • Matt

        Eating your own market! They are making good money now. They would have to do missionary sales work to help set up the EV market. Without a push, as we have seen, most big players want to wait as long as possible and have someone else do the ground work for them.

        • Adrian

          China’s market is… Very different than Europe/North America. EV demand is exploding due to government regulations around registration fees, restricted plates, etc.

          Put it this way, BYD is now scaling EV production faster than Tesla and isn’t nearly able to satisfy Chinese demand. There is lots of room for more players.

        • Anant Bhatia

          It’s not like Tata Motors is doing too well on its own anyways. They have lost sales YoY for over 2 years now (going down from #2 to #6 in India) and would have posted a loss in the last 2 financial years if not for revenues from JLR and their trucks division.

          There are good incentives for EVs here in India too. 18-35% taxes (depending on size of car) on fossil fuel cars are waived for EVs.

          Hybrids also get benefits of about 12%. This actually meant that the first indigenous Hybrids were priced lower than their equivalent non hybrid counterpart.

          Still, the only one we do have here is the rubbish Mahindra E2O with a 10KWh battery pack and both range and top speed limited to 50 miles.

    • Jfake Hname

      its really hard to beat a major auto company at anything relating to car production. the reason for lower costs in some countries tend to be a lack of safety regulations for the car combined with no pollution controls at the assembly line. the two main hurdles for ecars are the falsely low cost of oil plus the incredible low cost of an ice car. the decades of mass production have turned out a modern marvel in the ice car. its an incredibly complex machine. the die is cast the ecar will rule the future but until a company like nissan produces millions per year the ice car will win the price per/mi war. tho gas hits $10/gal or a break thru in battery/storage tech could kill the ice car much sooner.

      • Bob_Wallace

        The current price advantage for ICEVs is based only on battery cost.

        As battery prices fall it becomes less expensive to produce EVs than to produce ICEVs in all countries.

        • Jfake Hname

          what massive oil subsidies not at play? there are other factors than just battery cost, ice cars enjoy over a century of mass production/R+D. what im saying is the ice car would be a lot more expensive with out these advantages. i agree battery prices will come down as well as production costs and the ice car will become obsolete. imo they already are.

          • Bob_Wallace

            “ice cars enjoy over a century of mass production/R+D”

            Most of those advances transfer easily to EVs. Drop the expensive and complicated ICE and systems. Plug in butt-simple batteries and electric motors. The car factories will hardly change. Engine companies will be replaced by battery and motor companies. We’ve already been mass producing batteries and electric motors.

            Oil subsidies involve money not collected from the oil companies, not money given to them. Those subsidies will die away as the oil industry dies away.

          • Jfake Hname

            im not sure what your point is? most of the ice tech does not transfer to an e car unless your talking brakes and suspensions? as i stated in my op ice cars are incredibly complex machines i agree ecars have significantly fewer moving parts.
            i disagree car companies will change tremendously to switch to manufacturing ecars. will it be easier than starting from scratch? yes. will they gain an advantage from a century of manufacturing cars? yes. they have the ability to produce in the millions per year and do. its coming but it will be a few years before ecars can take advantage of that level of cost savings.
            oil subsidies include a number of things including “free” rights of way/drilling rights as well as free money given. yes the big one is not paying taxes but still affects the price at the pump which is my point. who knows how much a gal of gas would cost without decades of subsidies. battery tech could be twice the cost if gas was $3o/gal. tho yes as i said in my op a major breakthru in battery tech would be a game changer. oil subsidies arent going anywhere soon and they are slowing ecar growth/sales. its only a matter of time the ecar will dominate the worlds market but with gas this cheap ice cars are still a more cost effective mode of transportation for most americans.

          • Bob_Wallace

            Doors, windshields, seats, taillights, wheels, horns, hoods, trunk liners, shocks, steering wheels, airbags, radios, sun visors, ….

            Internal combustion engines are complex devices made up of many individual pieces which have to be manufactured to close tolerances and carefully assembled. Batteries are fairly simple packages of chemicals and all (in a single EV model) are identical.

            Panasonic/Tesla are building a very large factory that will drastically reduce the cost of batteries in only a few years from breaking ground. LG Chem is doing the same thing by building multiple smaller plants. BYD is doing the same.

            There’s no need for a breakthrough in battery technology. The batteries we have right now will allow us to build very affordable long range EVs.

            At today’s current gasoline prices it is still a lot cheaper to drive an EV. The dam breaks when EVs reach purchase price parity with ICEVs. Actually probably when the ICEV price advantage is no more than roughly 20%. As EV prices move from +20% to 0% the rate of switch over will resemble an avalanche.

          • Jfake Hname

            again im missing your point? really sun visors, horns, trunk liner? as opposed to say the engine? just camshaft evolution/refinement has probably cost more than most of the random car parts your stating. ill give you air bags, as they do provide a relevant cost savings. todays engine is a modern marvel compared to its origins. the ecar has not had the same opportunity for that level of advancement they will and we will see their costs drop dramatically.

            ive never seen cost comparisons based for less than.$2.00/gal can you cite that? does it include purchasing costs? cost for installing home charging? what about the used car market? you can buy a used honda civic cheap drive a ton of miles very efficiently. cost isnt just for new cars.

            i think ecars are the future but i also think your underestimating the time it will take production numbers to reach a meaningful %.

    • Simple INDIAN

      At these high costs, electric vehicles should be cab/taxi anywhere on the planet. It will be used more efficiently than a personal vehicle.

      • neroden

        This is already being done by the more forward-thinking cab companies — there are several in Chicago using Teslas.

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