Tag Archives: Nissan

The juice of electric cars

In spite of the deep crisis in the automotive industry, several large carmakers are taking a gamble on a technology that has not yet proved it can win over consumers – electric cars.

hybrid-thumb.jpgNational and local governments globally, including the US, the UK, Japan and Australia, are abetting this drive into the unknown with generous subsidies and tax breaks for zero- and low-emission vehicles due to launch over the coming three years.

Carlos Ghosn, chief executive of the RenaultNissan alliance, which has the biggest plans for battery-powered cars, this month unveiled in Yokohama the all-electric Nissan Leaf.

Mr Ghosn dismissed the notion – voiced by many analysts and some competing carmakers – that the limited driving range of electric cars, their higher price and need to recharge regularly will limit them to niche markets. “We see this as a mass market car,” he said. Nissan wants to sell 200,000 Leafs globally by 2012.

In keeping with Mr Ghosn’s bullish view, Renault will next month unveil in Frankfurt a range of several all-electric cars aimed at “different kinds of uses and consumers”, according to the company.

Rival Japanese carmaker Mitsubishi last month began taking orders for the i-MiEV, a car that can drive 160km (100 miles) on a single electric charge. This is enough for most commutes, and the same range Nissan and Renault are promising for their vehicles. It will go on sale to commercial buyers from this year and consumers from next April.

Daimler this year will begin production of a second-generation electric version of its Smart Fortwo minicar. The model will be equipped with lithium-ion batteries supplied by Tesla, the private California-based electric car company in which Daimler bought just under a 10 per cent stake for €50m ($70.7m) in May.

Tesla itself began selling electric roadsters in the US last year and in June opened the first of four planned European dealerships in London.

Mr Ghosn said at the launch of the Leaf that he thought pure electric vehicles could account for 10 per cent of all new car purchases by 2020. PwC, in a recent report, estimated that the market could account for 2-5 per cent of total output of light vehicles by that year. However, many analysts are sceptical that the optimistic forecasts will pan out, given the limited driving ranges and high initial price.

“The technology isn’t there yet with the batteries to do more than 100 miles reliably and if you turn on the air conditioning or heating, it’s less than that,” says Al Bedwell, an automotive technology analyst with JD Power. “It’s a limited market.

Toyota, Nissan’s local rival and the global industry’s biggest producer, has said that electric cars are best suited for short distance urban commuting and delivery vehicles. In January the company unveiled the FT-EV, a small electric car it wants to mass-produce by about 2012.

However, Toyota spends more time speaking about its hybrids, including a plug-in car due to launch this year that can top up its battery via an electric outlet, but still have recourse to a petrol engine.

Thomas Weber, Daimler’s head of research and development, recently acknowledged that large-scale zero-emission driving at affordable prices “won’t become a reality overnight”. The company plans to produce about 1,000 of its electric Smart cars this year.

Nissan's new electronic vehicle, the Leaf

Mitsubishi, the first volume carmaker to launch an electric model, says that it would sell only about 1,400 to fleet customers this year – mainly corporations and local authorities – but hopes to sell 30,000 annually by 2013.

If hybrid cars are any indication, many consumers will baulk at electric cars’ high initial price.

Global sales of hybrid cars are rising, but still account for less than 1 per cent of light vehicle sales, in part because of the premium they command over comparable conventional cars – up to $5,000 in the case of the Toyota Prius.

In the US, the biggest market for hybrids, their sales have dropped further than the industry average during the downturn.

Meanwhile, PWC estimates that all-electric cars will cost $7,000-$20,000 more than comparable conventional cars.

To defray some of the cost to early adopters, Britain is one of several governments that will offer their buyers tax breaks, worth up to £5,000 ($8,225) from 2011. US buyers of plug-in cars – such as General Motors’ Chevrolet Volt, launching next year – will benefit from a tax break worth $7,500.

Toyota Prius

In Japan, Mitsubishi’s tiny i-MiEV will have a list price of more than $48,000, or about three times the price of its petrol version. However, the company points out that national and regional subsidies will defray the cost of the car there and in Europe.

Nissan and Renault plan to reduce the cost to consumers further by decoupling the cost of the battery from the car under a leasing scheme, allowing them to sell the vehicles at a price comparable to similar conventional cars. In marketing electric cars, the companies also plan to tout lower running costs.

In Israel, the two carmakers are joining forces with Better Place, a US company building a nationwide recharging network for electric cars, including battery-swap stations where motorists can exchange their depleted batteries. The project has the blessing of Israel’s government, which has enacted generous tax incentives for electric cars.

Mr Ghosn’s decision to position Nissan as a frontrunner in electric cars has landed the company much-needed government financing, too. Britain and Portugal are giving the company loans and grants of undisclosed size to build new plants to make lithium-ion batteries for cars announced in July.

Honda Insight

Britain, which is trying to position itself as a hub for low-carbon technologies, is also expected to provide financial sweeteners to lure Nissan to make electric cars at its plant in Sunderland, north-east England.

In the US, Nissan recently became the first non-US carmaker to qualify for a Department of Energy grant for clean-car technology. It will use the $1.6bn low-interest loan to retool its plant in Smyrna, Tennessee, to make electric cars from 2012.

The missing – and still incalculable – piece of the equation now is the number of customers that will buy its cars.

Extracted from The Financial Times Limited 2009.

1 Comment

Posted by on August 20, 2009 in Uncategorized


Tags: , , ,