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LA show: Nissan won’t delay EV family
Carlos Ghosn says the global economic crisis will not delay Nissan’s electric cars
21 Nov 2008
By MARTON PETTENDY in LOS ANGELES
NISSAN says that, unlike some of its struggling rivals, it will not delay the development of its most advanced models as a result of the crisis facing the global financial and automotive industries.
Nissan will offer at least three electric vehicles (EVs) by 2015 and eventually a whole family of EVs.
General Motors this week confirmed it will delay until 2009 the release of its Saturn Vue hybrid crossover, which employs a two-mode petrol-electric system co-developed with Daimler, Chrysler and BMW and was due for launch in December.
And Chrysler will cease production of its Dodge Durango and Chrysler Aspen SUV hybrids on December 23, just a few months after being launched, because its Delaware factory will be closed, while Toyota says it is considering delaying the opening of a new factory in Mississippi to increase Prius production.
Renault-Nissan CEO Carlos Ghosn used his keynote address at this week’s Los Angeles Auto Show to highlight the difficulty car-makers have in investing for high-tech future models given the current economic and market environment, in which he said insufficient finance was available and that all of the world’s major automotive markets were experiencing unprecedented downturns in demand.
However, in an interview with Australian journalists at the show, Mr Ghosn said Nissan would defer investments in other, less important projects before it delayed the development of the company’s “core” future EVs.
“No, I don’t think so. I think we would push back other projects if the situation was to get worse. We would probably push back other projects before touching the electric car,” he said.
“Electric car is frankly the core demand, the core product, the core offer that we will be bringing, so it’s going to be the last thing we will move, so we will stick to it through 2009.”
Nissan’s future family of electric vehicles:Mr Ghosn said Nissan’s first EV would be a family car for the US and Japan in 2010, which would then become available worldwide in 2012.
But he also told us that at least two further Nissan EVs will emerge before 2015.
“First you’re going to see probably a family car coming out from Nissan and then the line-up will start to unfold in 2012.
“Frankly, I think giving you a plan today for 2015 would not be very credible. The first car coming 2010 will be a family car and then in 2012 we’re going to be mass-marketing it.
“Plus we’re going to see at least a couple of other electric cars coming out of Nissan. Then, after this, it depends on how the market will unfold,” he said.
In his keynote speech, Mr Ghosn said Nissan would eventually produce an entire suite of EVs.
“We will bring a smart, substantial alternative to ordinary cars – and not just one car, but a line-up of electric cars to meet a variety of customers’ needs, from small cars for cities, to mini-vans, to 4X4s.” Asked why Nissan chose not to showcase its forthcoming EV program at LA, Mr Ghosn said: “We don’t want to show an electric car under an old skin.
“We didn’t want to show a Cube with an electric motor. We want to show you the electric car the way it is, so we have decided, even though we are very advanced in development, not to show an electric car in an old skin, which is not the case with other manufacturers.”
Support for America’s ‘Big Three’ car-makers:Mr Ghosn said he supported the ‘Big Three’ US car-makers in their efforts to secure federal government funding in the term of long-term loans, but said a global lack of finance to invest in vital new products was a problem faced by all manufacturers.
“Part of what the Big Three companies are facing is the same as what all companies are facing, which is, can you make investments for the long-term in order to bring more fuel-efficient and more environmentally sound cars in the future, which obviously require a lot of investment at a time when you can hardly get loans for the short-term, and when you get them you get them at a cost which is obviously very high for any long-term endeavour?’ “The industry is in a situation where, if you really want to push long-term objectives, you don’t have any finance available that is compatible with long-term objectives. When the Big Three are asking and obtaining $25 billion of long-term loans at reasonable cost in order to transform their production into a fuel-efficient one, I feel it’s very logical, and it’s not only going to be the Big Three.
“As long as there is a disruption in the credit market, it is impossible to get long-term financing for long-term projects, and it has been like this for the past few months.
Left: Renault-Nissan CEO Carlos Ghosn.
“We have been there for the last three months and it’s not getting better. It is not getting worse, but it’s not getting better, so this is something we not only understand, but we support. 2010 could be worse because we have seen the financial disruption, we have seen the recession, but we still haven’t seen the impact on unemployment.” Mr Ghosn described the current situation as the worst he had seen in his time in the automotive industry.
“It would be fair to say the present situation we are facing, because of the financial or credit disturbance and financial dysfunction, plus the deep recession in the auto sector – 35 per cent down in the US, probably 20 per cent down in Europe and 10 per cent down in Japan and all the emerging markets starting to turn south… probably the only market only still going is China – I’ve not seen anything similar in my own experience.
“I think you have to go really far way back to see such financial dysfunction and auto recession happening at the same time. So it would be fair to say that, yes, this is probably the worst we have seen.
“And the problem is you’re not sure the worst is behind you. You cannot say we are at the end of the beginning or the beginning of the end. Is the financial market stabilised? Will it get better from here? It’s all speculation at the moment.” The Brazilian-born CEO, who speaks six languages and was responsible for reviving Nissan almost a decade ago, said he has no plans to add any more car brands within the Renault-Nissan portfolio.
“For the moment I’m not interested in anything that will take cash out of Renault-Nissan. We are managing cashflow to make sure we weather the storm in the best possible condition.”
Countries need to provide green power sources:He said it was the responsibility of car-makers to provide CO2-neutral automotive solutions and for governments to solve the issue of delivering an emissions-free electricity grid.
“Today, no matter what is the type of electricity, your car emits CO2. Our duty is to make sure that we are bringing cars that emit no CO2, no matter how you drive them.
“If the electricity you are using is made out of coal, it’s not the same story as if you are making electricity out of nuclear power, or if you are using electricity out of solar power or hydro-electric power.
“Now it’s up to government to clean the energy power – that’s not (the car industry’s) responsibility. But we are making it possible to have a completely clean process by which, from the power station to the consumer driving his car, there is absolutely very limited amounts of CO2 involved.
“In France, more than 50 per cent of power is nuclear, so you have an electric car where the CO2 balance is perfect. If you go in some country where you have power made out of wind, like in Portugal, it is the same thing.
“If we wait until all the problems are solved until we take any initiative, you never do anything. What we’re trying to do is divide the challenge into pieces, take our piece of the challenge and then comes the solution. I think the electric car is a very, very important solution to the problem.
“All of a sudden you have a fleet of cars where you don’t need any more gasoline. It becomes a substantial contribution to solving the problem of putting pressure on the price of oil and it emits no CO2.” Mr Ghosn used his keynote speech to emphasise his company’s electric car push, and to announce a new electric-vehicle partnership with the US state of Oregon, where governor Ted Kulongoski is proposing replacing the current $US1500 tax credit on hybrid vehicles with a $US5000 credit for all-electric cars.
“We see in Oregon the vision that is evident in all the places that are eager for sustainable mobility. Demonstrating their care for the environment, the state and its partners are creating the conditions that will promote zero-emission vehicles as an attractive choice for consumers,” he said.
Still a role for oil well into the future:In response to post-speech questioning, Mr Ghosn said that in 50 years oil will continue to be used for automotive purposes.
“You’ll still have the gasoline engine as well as electric. Oil is a very rich and important resource, but we are wasting it by using it in ways where you can have cheaper substitutes, or substitutes that are more respectful of the environment.
“The correction is happening now. Where you can substitute oil with something much more environmentally friendly, it is going to have to happen. You are going to have more nuclear, solar and hydroelectric power being used.
“This doesn’t mean the end of oil. I don’t believe that. On the contrary, I think this is going to preserve oil for chemical industries and other industries where you cannot substitute (anything else).
“But, when you see that you can drive an electric car and it is as pleasant as a normal car, what are you going to use oil for?”
Following is the full transcript of Carlos Ghosn’s keynote speech at the Los Angeles Auto Show:It is a pleasure to be with you today at an important time in the life of the United States of America and of the global car industry.
The recent election was an important event that citizens of the world – not just Americans – have been watching with great interest.
The decisions and actions your new president elect and his new administration will take will have a powerful influence that affects economies and societies around the globe.
Yesterday I spent the day with 100 CEOs who were gathered in Washington DC, to talk about the most pressing policy issues the new president and the new Congress will face.
For me, it was a very interesting opportunity to spend time with other corporate chiefs from different industries and institutions – talking about priorities, solutions, threats… about how things are and how they could be.
We talked about things that are on everyone’s mind today – such as finance and the U.S. economy… energy and the environment… health care… and America in the global economy.
It was a good time for both reflection and forward-thinking ideas – at a time when the United States and most of the rest of the world is in a very serious and worrying situation.
Credit flow are far from normal, and the recession that began in the U.S. is now not only deepening but spreading across the globe. Even skeptics are admitting it is going to hit everyone.
It’s fair to say that no one could have predicted how the global economy would evolve in 2008.
This extreme level of volatility and turmoil has not been experienced in decades – perhaps since 1929 – putting many of the usual rules of business up in the air. We will have no book to follow, and we will need to be lucid and innovative in order to get out of the slump.
And the turmoil is having a profound impact on our industry not only in the US but globally.
October was the worst month for US auto sales in 25 years. Last year the TIV in the United States was a little more than 16 million. Last month’s rate plunged to an annualized rate of 10.6 million.
The world’s biggest auto market is down 35 per cent – to a level that has not been seen for a very long time.
The decline is not confined to this market most of the mature auto markets are down significantly, with slowdowns in the emerging markets as well.
We are clearly in uncharted territory.
Now that there is no more denial and there is recognition of the situation, where do we go from now? It’s a legitimate question.
And for every company in this room, there is a different answer. All companies are paying attention to short-term objectives. That is making sure you maintain your company is generating a positive free cash flow and avoid burning cash.
Optimizing profit as much as you can in a recessive market, at the same time maintain minimum level of investments, make sure inventory and accounts receivables are under control.
There is always a moment where the storm is over and growth resumes and when this happens, you want to be a good contributor and good competitor which means you need to keep an eye on the long-term.
Everyone is hoping that pent-up demand is building and consumers will soon start buying again, but we really don’t know when that will happen. We have to in the meantime, adapt in function of these threatening circumstances, balance short- and long-term objectives in order to maintain viability and a future.
History has shown that in times of financial crisis, the likelihood for industry consolidations increases.
I’m not just talking about the auto industry, but for any industry. We have already seen this happening in the commercial banking and airline industries, and we have no reason to think our own industry will be an exception.
If this crisis continues and deepens, we may soon see fewer actors as well as actors seriously weakened by their struggles. Many efforts are being taken to protect the industry’s future, but there are other uncharted territories before us – relating to the products themselves.
At the end of the day what makes us attractive is what kind of technology we are providing and what kind of cars we are putting in the markets.
The one thing that is certain about the future is that people will continue to be driving cars. Cars have absolutely no substitute yet. Five, ten, 15 years down the road, people will continue to be driving cars.
They cannot be replaced by public transportation because people need and want their autonomy.
We see it all the time in emerging markets, where buying a car is still a major life event and owning a car is an important symbol of freedom, status, and personal achievement.
As soon as people gain purchasing power, the first thing they want to do is buy a car. Cars will continue to be with us in the long and in the future.
But what kind of cars will they be? Diesels? Flex fuels? Hybrids? Fuel cells? Electric? This is the question and it is a question of growing importance because of the way the world is rapidly changing.
The truth is, it’s likely that all these vehicle types will continue to be demanded for some time to come.
It’s not our job to push technologies – customers will decide. And it may be different in function of the region.
For example, diesels today represent more than sixty percent, while it is zero in the US and in Japan. You will have different technologies dominating in one region and inexistent in other regions.
But two particular trends are bringing this conversation to the forefront. The first trend is the shift in demographics.
Today the world is populated by 6.7 billion humans. By 2050, the world’s population is expected to reach over 9 billion. Today, there are 600 million vehicles worldwide rolling on the planet. By 2050, statistics show there maybe up to 2.5 billion vehicles.
And where will the growth occur? Many of those vehicles will be sold to the rising middle classes all over the world – particularly in markets such as China and India, where, today, there are fewer than 50 vehicles per 1000 inhabitants compared to 800 vehicles per 1000 in the United States.
With such rapid population growth in developing markets, it’s no wonder that consumers and governments alike are becoming concerned about the “crowding effect” and the potential for congestion, pollution and scarce resources.
In fact, the World Wildlife Fund has pointed out that if China catches up to U.S. standards of consumption, it will require two planets to sustain our livelihood for the long run.
And if the rest of the world catches up, it will require eleven. Thinking about our planet’s ability to sustain 2.5 billion oil-fueled cars 40 years from now leads us to the second key trend – the concern over the environment.
I do not need to cite the statistics on global warming and the need to curb greenhouse gas emissions because we all know the reality.
For consumers, there’s very little debate about whether global warming is real. A recent Energy Pulse survey noted that 63.4 per cent of Americans say they are “very concerned about climate change (and) global warming.” So concern about the environment is widespread – and especially among the younger generation.
And, unlike the financial crisis, which hopefully will come to an end in a foreseeable future, concern about the environment will not end soon.
Once this financial crisis is over, the factors that drove oil prices up this summer will likely drive oil prices up again… and the focus on fuel emissions will continue.
So we have a convergence on the issue… but a divergence on solutions to the issue. As automakers, we answer with a range of technologies – from hybrids to clean diesels to fuel cell vehicles.
But a 20 to 30 per cent improvement in emissions is not going to solve it. It is not the end game. The end game is zero emissions – and the best way to curb emissions is not to produce them at all.
This is why Nissan, partnering with Renault, named zero-emission leadership as one of our three key commitments in our current five-year business plan, Nissan GT 2012.
We will launch our first pure-electric car in 2010 in the United States and Japan. We will begin to mass-market electric cars worldwide in 2012.
Nissan has been working on the development of lithium-ion batteries – the most important part of the electric car – since 1992.
We own our battery company, a joint venture we started with NEC earlier this year, which gives us better control on the quality and cost.
We will bring a smart, substantial alternative to ordinary cars – and not just one car, but a lineup of electric cars to meet a variety of customers’ needs. From small cars for cities, to minivans, to 4X4s.
We know we can make an appealing car: You can see Nissan’s passion for producing attractive, competitive vehicles demonstrated in the Cube, in the new Z, and in the Infiniti G37 Convertible that are on display at this show.
The distinction that makes Nissan’s zero-emission strategy unique goes beyond the product itself, extending beyond what we can provide on our own.
Taking this new technology to mass production will require building up the infrastructure required for its use and securing the economic conditions for success.
That is our vision and we are working aggressively to make it happen. We have a holistic view of sustainable mobility.
We see the interdependence of the automakers… the government… and third parties in building a greener transportation system.
Introducing a zero-emission lineup is good, but it is one piece of a larger puzzle. People want to know: “Where will I charge my EV?” “Where can I find charging stations when I am away from home?” “Is there any tax break available to make it more affordable?” “What is going to happen in the aftermarket?” To ensure the adaption of more eco-friendly cars… to provide a good alternative for crowded city driving… to build an infrastructure that gives consumers sufficient autonomy – we need to think and develop in terms of a big-picture for the future of mobility. The good news is, based on the conversations we have been having over the past six months, our vision is one that is shared.
Ever since we announced the Alliance’s electric vehicle plans, we have been receiving calls – not just from consumers, but from presidents, prime ministers, governors, mayors, and companies.
When we talk about bringing an automotive solution that will totally eliminate vehicle pollutants and curb dependence on oil, their immediate response is, “What can we do? What do you need from us – organization? Incentives? Infrastructure?” Government leaders are extremely interested in the value of this prospect. The environmental value. The social and political value. The economic value.
One senior official told me his country now spends roughly 50 billion euros on oil, half of which is dedicated to cars. If he were to offer one to two billion Euros’ worth of incentives to encourage the purchase of electric vehicles, he thinks the savings could amount to five billion euros a year.
His country would spend less on imported oil while producing a real environmental benefit for its people and particularly with local resources. This is not just good politics. This is also good business. So the potential of electric vehicles is very appealing, which is why countries and local governments are signing agreements with Nissan and Renault, one after another.
To date, the Alliance has agreements in Japan, Israel, Denmark, Portugal, France and in Tennessee, where our North American headquarters is located.
What are these agreements about? We are talking about infrastructure system planning. For example, in Israel, customers will be able to plug their cars into charging units in any of the 500,000 charging spots located throughout the country. An on-board computer will guide the driver to the nearest charging spot.
We are talking to governments about shaping public policy… designating preferential parking or highway access… and approving tax credits that can put this new technology within the reach of car buyers.
In Portugal, for instance, customers can receive tax incentives valued up to 5000 Euros when they buy an electric car. This kind of involvement is very important.
Do we think consumers will rush to buy an electric car as soon as it is available? No, probably not. Some early adopters will jump for EVs.
Others may look, but they may not buy without some financial incentive. They will look for tax breaks, for special privileges for low- or no-emission vehicles, or for a lower total cost of ownership, which electric cars will provide.
For automakers, any new technology bears significant investments, which is one reason why the Renault-Nissan Alliance is working jointly on electric cars.
Scale will be a key factor in determining the success of green cars in the marketplace.
By sharing the risk, sharing investment costs and achieving lower costs per unit, both Nissan and Renault can execute their green strategies and make cars more affordable to the mass market. We are putting in significant investments into batteries and as we master the technology, in order to benefit from scale, we are ready to share with other OEMs.
As we’re working with national and local governments, we are also talking to electric utility companies and other third parties about building networks of EV charging stations.
You can imagine plugging your car into a charging station while you are busy grocery shopping… or watching a movie in your local theatre… or just relaxing at home while your car is parked in your garage.
Trips to a gas station could become a thing of the past.
Finally, everywhere we go, we are talking about the long-term need to boost funding for renewable energy. With electricity produced by the sun, wind or water or by nuclear power, the zero-emission cycle would be complete.
In the European Union, 20 per cent must come from renewable sources by 2020. Here in the United States, the percentage is much lower, but I am sure the new Administration has already expressed interest in developing additional renewable energy sources, which is encouraging.
At no time in history has there been so much interest and action focused on sustainable energy and sustainable mobility. People are coming up with innovative ways to improve efficiency and preserve resources.
A prime example of what can be accomplished when public and private sectors work hand in hand to do the right thing environmentally is represented with our newest electric vehicle partner: the state of Oregon.
Today I am pleased to announce that Nissan is working with Governor Ted Kulongoski and his administration on an electric vehicle partnership in a state that is fully committed to long-term sustainability.
We will launch our first electric vehicle in the United States in the state of Oregon in late 2010. Oregon provides a case study of what governments can do to promote zero-emission mobility.
The Governor is providing a clear vision to leaders throughout the state, both in the public and private sectors. In his 2009 legislative package, he is proposing replacing the $1500 tax credit on hybrid vehicles with a $5000 credit on all-electric cars.
The state is streamlining permits and certification to accelerate the installation of charging stations. Oregon has issued mandates for changing over its fleet profiles – using hybrids, plug-ins and electric cars – and has won a national award for having the greenest state vehicle fleet in the country.
Portland General Electric, which is also joining the partnership, will work with the state and with other local businesses to develop an easily accessible and reliable network of charging stations.
These progressive efforts extend to counties and cities such as Portland, a city that’s a recognized leader in urban planning and innovation. Our partners in Oregon are not waiting for a “someday” solution.
They are taking short-term actions to benefit the environment today while creating conditions that will benefit the environment for years to come. We see in Oregon the kind of passion and vision that is evident in all the places that are eager for green mobility. It’s not just about using electricity as fuel – that has been done since the 1800s.
This is about reinventing mobility. It’s about stretching what we have always known about cars to allow for new ideas and practices. It’s about anticipating what future transportation needs will be.
It’s about taking actions to benefit our environment and our planet. Government has a role to play. Indeed, governments have a history of advancing major projects to serve a greater public good. In this country, the government was a major backer, at least initially, of railroads, interstate highways and the Internet. With the interstate system, the cars came first, and the infrastructure followed.
The same can apply to zero-emission vehicles. The auto industry has committed to action. Several global automakers have vehicles in development, and we are moving fast.
Public-private partnerships – such as the one the Alliance now has in Oregon and those will soon follow in other parts of America – show that progress is coming.
With the right infrastructure and the right economic conditions, we can navigate through this uncharted territory… to put sustainable mobility within our reach in the near future.
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