Nissan's Ghosn says electric vehicles will be 10% of new cars sold in 2020
Think your friends would be interested? Share this story!
In a wide ranging keynote speech yesterday at the NY International Auto Show, Nissan/Renault CEO Carlos Ghosn remained bullish on the future prospects of Nissan, the Nissan Leaf, and electric mobility in general. Ghosn's bullishness comes amid news of slumping Nissan Leaf sales in recent months, but he reminded us that the stars are lined up for the success of electric cars in the coming years, and to not judge the Leaf success by month-to-month sales figures but to look at the long term trends.
When Ghosn took over as Nissan's CEO in the late 90's, that company was in the throes of a near death experience, and in the years since Nissan has recovered and is growing stronger each year. During yesterday's keynote Ghosn boasted of remaining confident that Nissan will make up 8% of global car sales with a few years, and to achieve a 10% U.S. market share in the near term. Today Nissan accounts for 6.4% of global car sales. Speaking about the Nissan Leaf, he remains confident in his forecast that by 2020 electric cars will be 10% of car sales, in the markets where they are available, and that between Nissan and Renault there will be 1.5 million zero emission cars sold worldwide by 2016. A key factoid in the keynote address was that Nissan showed sales growth in every year since he took over, even the tough years where the global economy was heading downward. Are these predictions the idle boasting of an over-confident CEO? His attitude is that of a confident man who knows precisely the path he is leading the Nissan/Renault alliance, he is stating facts of what will happen, rather than plausible predictions of likely results.
He first spoke of examples where Nissan is listening to and supplying the things desired by the customer base. Remaining focused on delivering what the customers want would seem to reinforce Ghosn's prediction of Nissan's continued growth. The trick is of course to properly interpret what the customers want compared to the future conditions in which Nissan/Renault will be selling cars.
An example of listening to customers is the major advances in connected car technology, called NissanConnect, also announced at the NY Auto show. According to Ghosn, the customers want their cars to enhance 24-by-7 connectivity to modern information age stuff like Google searches and music streaming from Internet services. The NissanConnect features debuting in the Nissan Altima includes technology resulting from collaborations with Google, Pandora and others, to offer breakthroughs in communications capabilities such as hands-free text messaging.
Ghosn also says the voice of the customer is to want not only a lowered carbon footprint, but to mitigate rising gasoline prices. The Nissan Leaf and other electric vehicles being produced by the Nissan-Renault alliance are addressing both of these concerns.
The Nissan-Renault alliance is standing by the Zero Emissions vehicles vision, and is continuing to target a goal of cumulative sales of 1.5 million zero emissions vehicles, worldwide, by 2016. Achieving this goal will mean, for Nissan's new car sales, a 20% reduction in Nissan's carbon foot-print and 35% improvement in overall fuel economy. This fits both the customers desire for lower carbon footprint and lower fuel costs, but fits government regulatory movements in the U.S. and around the world for less emissions and higher fuel economy.
Worldwide Nissan has sold 27,000 units of the Nissan Leaf, with 11,000 in the U.S., and Renault sells several electric cars in Europe and elsewhere. Even though these figures are weak compared to gasoline car sales, it does makes the Leaf the best selling electric vehicle in history. What some describe as the "weak" Leaf sales volume, does not say to Ghosn the Leaf is a flop, but instead that the Leaf has a bright future.
At this sales volume the Nissan-Renault alliance seems unlikely to make the 1.5 million cumulative sales goal. The key, according to Ghosn, is starting what he called "local production". Nissan's home base is in Japan, and to them the U.S. is foreign territory, and the Nissan Leaf factory being built in Smyrna Tennessee is "local production". In part Nissan Leaf sales have been held back, held in restraint, because of a combination of factors including last years earthquake and tsunami, as well as the weakening of the Yen versus the Dollar. Nissan is planning to start local production of the Leaf not only in Tennessee, but in England, to enable mass production of the Nissan Leaf in both the U.S. and Europe.
According to Ghosn, Leaf sales will see a major boost from higher production volume. Of course for sales to increase, even with higher production figures there has to be customers wanting to buy the cars. For this Ghosn pointed to rising oil and gasoline prices, and stated that because of the economic recovery these prices are likely to continue rising. To understand this we have to review some recent history.
In 2007-8 oil prices rose quite a bit with many people angry about gasoline prices. That concern and anger rose and rose all through 2008, until the financial crisis hit in September 2008. One side effect of that financial system collapse and economic slowdown was a drastic drop in gasoline prices. Gasoline and oil prices have slowly risen in tune with the recovery in economic activity the last couple years. The economic collapse slowed economic activity, fewer products were manufactured and shipped around the world, meaning fewer trucks and airplanes and ships were moving stuff and people, meaning in turn lower fuel demand. As economic activity picks up again the demand for fuel will rise as the trucks and airplanes and ships start moving stuff and people around again.
Rising demand for gasoline means higher prices and we've seen in history that every time gasoline prices go up, the customers look for alternatives. Nissan plans to be there with the Nissan Leaf, the Renault Fluence, the Nissan e-NV200, the Renault Twizy, and other electric cars, all providing the solution to high gasoline prices.
Ghosn's strategy, then, is to take a strong market position in where he sees the auto market going. The future conditions in which Nissan/Renault will be selling cars will not only require lower emissions and higher fuel economy, but economic conditions of higher gasoline prices will favor alternatives to gasoline. Electric cars have lower fuel and maintenance costs than gasoline cars, which will be a big advantage if, as expected, gasoline prices continue to rise. Where Toyota is sticking to that companies hybrid vehicle technology advantage, Nissan hopes to leapfrog that whole scene with a jump direct to zero emissions electric cars.