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Renault-Nissan not worried about Apple and Google

Green tech: Renault-Nissan Alliance chairman and CEO Carlos Ghosn believes tech companies including Google and Apple will not build their own cars as the profit margins are too slim.

Autonomous cars will first come from manufacturers, not tech companies: Ghosn

12 Jun 2017

DISRUPTION from the tech industry is not a concern for the Renault-Nissan Alliance, according to company chairman and CEO Carlos Ghosn, who said the automotive sector is not profitable enough for the likes of Apple and Google.

Mr Ghosn, who was speaking at a special presentation on the future of the auto industry in Sydney, said he believed technology companies and start-ups would not encroach into the automotive sector due to high costs and low return.

“That’s why we have companies like Apple, Google, Uber all interested into the car business, not because they want to become a car manufacturer, but they want to have a piece in the transformation of the product with a lot of economical impacts.

“Uber is asking us to develop cars for them, for the robo-taxi for the future because their vision is not – they don’t want to become a car-maker,” he said.

“They don’t want to become a car-maker because business people usually, when they want to move to another industry, they usually move up. This means they move from an industry with a certain level of profitability to an industry with a higher level of profitability.

“The case of Renault-Nissan-Mitsubishi, we have 480,000 people, we invest every year $15 billion and we have, when we are very good, we make seven to eight per cent margin.

“You look at the margin of Google or you look at the margin of Apple, these guys don’t take anything below 40 per cent margin. So why do you want to go into a business when you’re doing already 40 per cent margin? You’re going to go compete for an eight per cent margin? It doesn’t fly… It doesn’t make sense, no matter how excited you are about technology.” Tech giants including Google and Apple have long been developing their own self-driving vehicle technology, with rumours also indicating the companies could release their own stand-alone models to compete against the traditional car manufacturers.

However, Mr Ghosn said the companies are only interested in the technology and the role they can play in revolutionising a vehicle from a transport solution to a “personal mobile space”.

“The transformation of the car from a just transportation device to a personal mobile space where you can transport yourself and work is going to a very, very important transformation of the product,” he said.

“That’s why we have companies like Apple, Google, Uber all interested into the car business, not because they want to become a car manufacturer, but they want to have a piece in the transformation of the product with a lot of economical impact.” Mr Ghosn said he believed the push for autonomous technologies and self-driving cars would come from within the automotive industry by car-makers themselves because they are open and willing to embrace change.

“Today with autonomous cars, with all the innovation coming from tech companies, we’re looking very seriously at it and we are adapting the technology and we are partnering with the tech company to make this happen,” he said.

“That’s why I don’t buy the theory that breakthroughs are going to come from outside the industry because industry is open and because we know that the risk for us is not to be open to the transformation of our industry and if we want to be relevant into the future, we need to be very open.” Mr Ghosn used the example of the electric vehicle (EV) to prove his point, with many in the early 2000s predicting the first mass-market emissions-free vehicle would come from the likes of General Electric or Microsoft.

However, it was Nissan and its Leaf which was the first to arrive in 2010, followed by the Renault Zoe soon after.

“Usually, breakthroughs come from outside your industry when you have very arrogant positioning,” Mr Ghosn said. “Everything on the perimeter of your industry you’ve just neglected, you don’t pay attention, you’re going to say it’ s not going to ever happen. That’s not our case.”

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