Los Angeles, CA -- As the leaders of the Detroit three auto companies faced withering questioning in Washington DC because of their inability to articulate a coherent plan for putting a government hand out to work one foreign automaker was carefully unreeling his precise prescription for the future – a zero emissions, pure electric vehicle.
“This is about reinventing mobility,” said Carlos Ghosn, CEO of Renault and Nissan, in an address to an overflow crowd of auto journalists attending press preview days at the LA Auto Show on Wednesday. Like his counterparts in Detroit, he believes that it can only be accomplished with government support.
One big difference, he’s able to explain how this will work and why it must. Ghosn outlined his green car vision that stresses the need for public/private cooperation to create a brave new world of electric vehicles that will need a combination of charging stations, special parking, HOV lanes, advanced technology and tax incentives in order to thrive.
Citing the history of US investment in the railroads and the interstate highway system as precedents, he made the case that governments must finance this long term change in auto technology since “the industry is unable to finance itself today” because the banks can’t or won’t. “The US, Europe and Japan will have to do it if we’re serious about cleaner cars and becoming free from oil,” he said.
To make a difference and create “sustainable mobility,” will require building an enormous number of these. To just replace 10% of the current crop of the world’s cars with all electric vehicles means putting 70-million new zero emission cars on the road. “We will have to invest,” said Ghosn
He’s already enlisted Israel, Denmark, France, Portugal and the State of Tennessee (site Nissan's US headquarters). He announced that the State of Oregon has signed on as the newest partner to act as a test bed for a version of his all electric vehicle that will be ready to roll out there in limited quantities in 2010 and then head for mass production by 2012.
Company insiders claim this isn’t technology for technology's sake or a PR stunt designed to wow the crowd in environmentally conscious Los Angeles. They say Ghosn is sincere about this and he’s forcefully changing the company in order to implement his vision that 10% of the cars Nissan produces worldwide will be all electric by 2020. His belief that there will be a market for them is bolstered by a recent MIT study that predicts 10 million electric vehicles will be sold around the world by 2016 and that 5 million of these will be sold in the US.
In order to build its portion of these vehicles, Nissan has created its own battery company to power the new electric cars. Recognizing the need for constant improvement as critical to the success of these vehicles, it has decided not to sell the batteries, but rather to lease them to car buyers for $100 a month, and replace the batteries as improved versions become available. “You can come back for a new one and we will recycle the batteries. Consumer doesn’t have to worry,” that they’ve bought something that will become instantly obsolete.
Ghosn told the audience that he and his fellow car makers need to focus on more than just surviving the harsh realities of today’s slumping auto business and prepare for a big jump in sales in the future. He cited the following demographics to bolster his argument that the current decline will turn into staggering growth in just a few years. Today there are 6.7 billion people in the world, and 600 million vehicles. By the year 2050, the prediction is that there will be 9 billion people and 2.5 billion vehicles. Today, 50 out of 1000 Chinese have a vehicle, while 800 out of 1000 US citizens own a car. If the Chinese were to increase their vehicle ownership to any number approaching the levels in the US, the results would be dramatic. Ghosn said that the planet cannot sustain 2.5 billion gasoline-powered vehicles. Issues of pollution, congestion, and lack of resources would quickly become overwhelming.
Ghosn offered advice to his fellow automakers about how to survive and participate in the green powered turnaround. He said, they must avoid burning through their available cash, and must generate positive free cash flow.
He offered a frank assessment of the US automakers’ plight, saying the current situation could be a death blow to any company that can’t make it in the short term, and that in order to survive auto manufacturers must make choices about their core business and abandon the unnecessary. While recognizing that some long term plans may need to be shelved in favor of short term survival, he’s not ready to put his batteries on the shelf.
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