Carlos Ghosn was once aiming to make the Renault-Nissan Alliance the world’s electric vehicle leader. To some extent (if you look at sales of electric cars to date), it currently is, but there’s obviously a looming vehicle and sales production target that looks set to blow the Alliance out of the water. I love Carlos Ghosn, and I am honestly feeling for him a bit right now.
Regarding the struggle to sell electric cars in China, which it seems all companies not founded in China are having trouble with, Carlos answered some questions recently at Auto China 2016. Here’s part of the transcript:
“Well I suppose by ‘new energy vehicle’ you mean electric cars, okay, so let’s talk about electric cars. About electric cars today we have an offer which is what I call a high spec offer, high spec offer. Nissan introduce it with the Venucia model and Renault will be introducing it with the Freelance Electric that will be introduced to the Chinese market following commitment made by Renault to introduce electric cars. This is what I call high spec which means high price with very good performance but today these models are not selling very well in China. What are selling in China are lower spec models, more affordable price, so we are both from Renault and Nissan continue to develop high spec model by making it lower cost, more autonomy, more range, that’s one thing but also we are working very hard into introducing a low spec affordable electric cars and with this we are working with our friends from Donfeng because we think that in order to be a big player in the Chinese market we need both offers – high spec, low spec, higher price, lower price – because I believe that the support that the Chinese government is giving to electric cars is going to continue and it’s going to be stronger.”
This does open up a point I’ve been arguing a bit lately. With Tesla seemingly not far off from producing the Supercharger-enabled, Autopilot-equipped, Porsche-killing Model 3 in large volume, Renault-Nissan would have to have a pretty cool trick up its sleeve to compete in the $35,000 electric car market in the coming years. Although Tesla is aiming at the much-lower-priced market eventually, Renault-Nissan has some time to try to gain a solid lead there. That seems to make the most since for the French-Japanese alliance — that along with becoming best buddies with Tesla and partnering on the Supercharger network. We’ll see if Carlos goes that route.
Going further into these topics in response to what seemed like a critical comment, Carlos “went off” a bit more:
“First let me assure you that I don’t forget any one of the questions please, keep that in mind. The first one is yes, we are disappointed. We are a promoter of electric cars, we are, we were the first one in 2006 to go the electric car has a future in this industry and we were the only one, the only one, okay. Nissan and Renault took the lead on electric cars in 2006, we announced it, we told you what we were going to do and we are moving with the electric car. At that moment there is nobody coming with electric car, now everybody is coming with electric car, that’s fact. In Europe in 2015 Renault and Nissan had more than 50 percent market share of electric share. Good, the European market is growing and both Zoe and Leaf are leading, good, this is fair. In the United States we are moving ahead, we are facing some headwinds but we are coming with higher range cars because the range is an issue, there is competition coming from General Motors and from Tesla, good. In China we brought the car but we are not selling it and we’re not selling it because we are being told that it is too expensive and the range is maybe not as big as the consumer wants.
“So what’s selling? We look at what are the electric cars that are selling in China and the electric cars that are selling are 25 percent lower POC price than the Venucia and with the range that is higher than the Venucia. So we have to be very clear, we need to lower the price and increase the range. We know how to do that, it is going to take a little bit of time but we know how to do it but at the same time what is really evolving are the cheap electric cars and this is where we have no offer and this is where we need to develop an offer. So I don’t want you to have the impression that we have a car and it’s okay, we said we are not selling it and it’s a problem. No, we need to follow the market, not only the market follows us but we need to follow the market so our strategy in China is going to be first adapt our product to the market needs but at the same time come with other products that is really selling today in China. So I cannot tell you I am happy with the sales of Venucia electric, I’m not but at the same time that’s not sufficient, what is important is what are the root causes, why are we not selling this car, what should we do in order to sell this car and what are the Chinese consumers buying in terms of electric cars? I am convinced that China will be a very large electric car market, not hybrid, electric because the Chinese government has been very clear in supporting zero emissions and putting a lot of incentives behind electric cars. So we have a very clear signal from the Chinese government that they want electric cars and they want the development of electric cars so we are going to follow and we are going to contribute.”
On the matter of the competing trends of gas-guzzling SUVs and über efficient electric cars, a guy from Automotive News had a good question and Carlos had a rather interesting and telling answer. I don’t see a point in summarizing this quite yet (have an article planned diving deeper), so here’s the full Q&A:
“Hello, Hans Dremel from Automotive News. I’d like you to talk a little bit about the split personality that we see in the China market here. That being at the show here we saw a lot of car makers talk about two things, SUVs and NEVs and they are almost at the opposite extremes of the market, kind of cancelling out the intentions of the other. Which of these two ways will win? The NEVs are being spurred by these government incentives, the SUVs are being spurred by actual market demand for people who want it, which of these is a safer bet long term?”
Ghosn: “Well first you can have SUVs, which are EVs at the same time, just saying but we are not there, we’re not there. SUV is a market driven sales, we are seeing the surge of SUVs and crossovers in China, we’re seeing it in the United States, in Europe, everywhere crossovers and SUVs are contributing to the growth of the industry, okay. In our opinion this is a trend which is going to continue, particularly because the offer on crossover and SUV is becoming more and more competitive and more and more diversified which is going to stimulate this trend, so this is a market driven trend and car makers are going to continue to feed into this trend. That’s number one.
“EVs for the moment are mainly supported by governments. Why are they supported by governments? Because the consumer is not ready to jump into EV as long as he sees the price is at best equivalent, he doesn’t see infrastructure so most of the consumers say okay, I like the EV, it’s very interesting but where am I going to charge the car and how long is it going to take to charge the car? Third, he is waiting for some kind of incentive coming from the government in order to jump in and incentive is not only about money, it is also about infrastructure. So without any doubt, EVs development are going to be driven by regulation, without any doubt. But hey, let me remind you of another market that was driven by regulation and by incentive – it was diesels in Europe. How come that Europe has more than 50 percent of its market in diesel when the United States has zero percent or Japan has zero percent? They are the same car makers by the way, they are the same car makers in the United States, in Europe and in Japan, same technology, same car maker, 50 percent of the European car market is diesel, zero percent practically of Japan and zero percent of the United States. Same car maker, what’s the difference? Regulation, incentives, willingness of the government to weigh on one particular technology to the detriment of the other and I can tell you that on EVs government are going to have a lot of influence on the development of the EVs.
“So what I want to say is yes, you’re right, SUV is mainly market driven, consumer driven. EVs are going to be heavily supported by government at the beginning but wait a second, when costs are going to go down, batteries are becoming more efficient and infrastructure is going to be stronger, we are going to see a surge of EV. Where is this surge? Well we’ve seen it in the orders, the huge orders that Tesla has been having. It looks like when you cross the 300 kilometres range and you go below $35,000 price and you have a sleek design, you start to be extremely interesting for the consumer but it has to have from the beginning strong support from the government.”
Hmm… interesting stuff.
Getting into other specifics….
Carlos noted that Renault and Nissan are buying EV batteries from LG Chem because of the qualities of its batteries. “So we don’t select suppliers by nationality, we don’t. We select the suppliers who can give us what we need. For example on batteries we are working with LG Chemical, we are buying some batteries from LG Chemical, LG Chemical is a Korean company, it’s not Japanese, it’s not French, etc. Why are we working with LG Chemical? Because we think LG Chemical has the best performance.”
Regarding autonomous driving, unless I’m missing something important, it seems he also let out of the bag that Renault and Nissan are a bit behind Tesla, as he implied that they haven’t definitively decided on key supplier Mobileye vs others, while Tesla has been using Mobileye tech for over a year now and is involved in its own internal “deep learning” program to significantly build on top of that and further improve autonomous driving — on a continuous (like, every moment) basis. Here’s Ghosn’s quote on this topic:
“Now on autonomous drive you are going to see every kind of configuration, you know the Germany company collides together to buy Here which is an affiliate of Nokia. Okay, fine, does it mean we’re going to join? We don’t know but we are considering the offer from Here, we are considering the offer from Mobileye, we are considering other offers and we are going to continue to have as much as possible the choice. What is important is not so much how comfortable you feel with the supplier, it is how effective you think the supplier is going to be into delivering this performance because I can tell you that on autonomous drive, on connectivity and on electric cars, the competition is going to be very tough so you cannot be complacent or select people only because you’re comfortable with them or because they speak the same language as you. You are going to have to select on function, their ability to deliver the performance that you want.”
Expounding on that topic again, highlighting what Carlos considers Nissan and Renault leadership, he responds to another question:
“I don’t think Nissan has the intention to bring the first autonomous car in China but I can tell you that it will come very soon because obviously immediately when the technology will be available China being a very large market for Nissan, we are intending to bring this technology as soon as possible. We have a plan and we have already outlined the different steps to introduce autonomous drive. We are going to have cars coming in 2017, 2018, 2019 with different bricks of autonomous drive, ending up in 2020 which is what we call the real autonomous drive which is what we call the city drive. So we are going to start with one lane highway, multi lane highway and then city driving. So it is going to be a progressive technology and China is obviously top of our mind to introduce this technology. Now I cannot commit to you that the first cars in every step are going to be launched in China, we are going to be very pragmatic and launching the first significant cars can be in Japan, it can be in Europe, it can be in the United States and China also will be a major market for us to introduce this technology”
Closing with electric vehicles, which dominated the discussion in the press conference (isn’t that refreshing), Carlos did make clear that Nissan and Renault are aiming to compete with Tesla, but were holding their cards close to their chests for obvious reasons:
“First obviously we have many products coming but we we’re not ready to talk about them because what we want today is to sell the products we have. If we start talking about the products coming in the future somehow it always handicaps the sales of today. Tesla has not this problem because they launched Tesla Model 3 which is a completely new car so even though they announce it today and it will be selling one year and a half down the road, it is not replacing any existing product so there is no impact on that, okay. We have to be more careful because today we are selling electric cars and even though we want to continue to promote these cars I don’t want you to think these are the only cars we are going to be launching on the market. There is going to be a lot of innovation coming from Nissan and Renault and we are intending to compete against all the other car makers on electric cars. So I don’t want you to think that what you are seeing today is everything you are going to see from us, we are watching competition, we are measuring what they will be coming with and we will be more than happy to show you the capability in terms of electric cars coming from both Nissan and Renault.”
So, we’ll see what that means. Will they bring long-range, affordable, compelling electric cars to market that come with super-fast charging and autonomous driving? We’ll see.