March 18, 2013 / 4:38 PM / 6 years ago

China will save the electric car, predicts Renault chief

PARIS/BEIJING (Reuters) - China will save the electric car, Renault-Nissan boss Carlos Ghosn predicts - and with it the vision of battery-powered motoring on which he has staked his credibility.

Carlos Ghosn, Chairman and Chief Executive Officer of French carmaker Renault, speaks next to a Renault Zoe preview electric car during a news conference to present the company's 2010 annual results and their business plan "Drive the change" in Boulogne-Billancourt near Paris February 10, 2011. REUTERS/Benoit Tessier/Files

Ghosn, who has ploughed a bigger share of his companies’ cash into the technology than any other mass-market carmaker, struck a determinedly optimistic note as he released Renault’s (RENA.PA) Zoe into a European market notable for its scarcity of electric car chargers and customers.

Industry investments will be sustained by Chinese plans to build production capacity for two million electric cars and plug-in hybrids by 2020, Ghosn said in an interview coinciding with the first Zoe deliveries to European consumers last week.

“This isn’t speculation,” Ghosn insisted. “China’s decisions are among the most audacious that have been taken by any government.”

Despite generous subsidies, U.S. and European sales of electric cars remain far below expectations three years since the introduction of the Nissan Leaf. That leaves China as a last redoubt for many believers, despite mounting scepticism about Beijing’s target.

The installation of charging networks is also flagging. Many of Europe’s estimated 20,000 public chargers are concentrated in Germany. This forced Renault to resort to giving away costly equipment in France, which still has only about 4,000 public chargers.

Renault has introduced three electric models since 2011 and sold 16,000 of the vehicles last year. Nissan, its 43.4 percent-owned Japanese affiliate, sold 26,973 Leafs - 20 percent below target.


Speaking at a Zoe test-drive event in Cascais, Portugal, Ghosn gave no objectives for sales or production in Flins, west of Paris, where the French carmaker has invested in capacity to assemble 150,000 of the vehicles annually.

“We don’t share them,” Ghosn said. “We don’t want to give the impression if these targets are not (met) that there is something wrong with our strategy.”

The Renault-Nissan chief has also backed down from an earlier forecast of a 10 percent market share for electric cars by 2020. He now says the goal is to beat the adoption rate of hybrids such as Toyota’s Prius, which have taken 15 years to claim about 2 percent of global sales.

But electric cars must catch on much faster, some industry-watchers say, or risk failing completely.

“The electric vehicle experiment is at a critical point,” said Barclays Capital analyst Michael Tyndall.

“It needs so many things to align - manufacturers developing vehicles, companies providing charging infrastructure, battery makers investing and consumers accepting the cars at such a rate that everyone in the food chain can make a return.”

That’s where China comes in, Ghosn says.

Nissan plans to introduce an electric car with Chinese partner Dongfeng in 2015 and Renault aims to start local production of a battery model at about the same time.

“China has 16 of the 20 most polluted cities in the world,” Ghosn said. “They will set the rules so that the consumer buys - that’s how it’s going to happen.”

China and its state-controlled companies are still showing strong interest in electric cars. Dongfeng is bidding for a stake in Fisker, a troubled electric supercar maker. Wanxiang Group is paying up to $465 million (360 million euros) for bankrupt battery maker A123 Systems, while BYD is launching an electric car with Daimler (DAIGn.DE) this year.


Forecasting house IHS Automotive, however, sees Chinese output of only 234,000 pure-electric cars in 2020.

Meanwhile, influential critics “want the industry to shift towards more realistic solutions”, said Yale Zhang, of Shanghai consultant Automotive Foresight.

The authorities appear to be heeding that message. Ordinary Chinese-made hybrids achieve 20 percent fuel savings and are “ready for nationwide promotion”, Industry Minister Miao Wei told a March 8 session of the National People’s Congress.

General Motors (GM.N), BMW (BMWG.DE), Volkswagen (VOWG_p.DE) and Ford (F.N) are among others to have launched electric cars with an eye on China and tightening emissions rules in Europe and the United States, though automakers are increasingly scaling back plans for pure electric vehicles.

More than 2 billion euros of Renault-Nissan’s 4 billion euro investment in electric cars has been accounted for in previous years’ accounts, Ghosn said.

“The important point is that more than half of the electric-car entry ticket has already been paid,” he told Reuters.

The problem is that sales volumes are still lagging far behind conventional vehicles.

The zippy Zoe is priced at 20,700 euros, before a 7,000 euro French subsidy that brings it into line with its petrol equivalent, the Renault Clio. But that does not include the battery - rented for 79 euros a month - and a wall-mounted home charger at 850 euros or more.

Renault has taken about 2,000 orders in six months leading up to the Zoe’s first deliveries, but Ghosn remains sanguine about its medium-term sales potential.

“I don’t think we’re ever going to find ourselves in a situation where we can’t respond to demand,” he said.

Additional reporting by Hui Li in Beijing; Editing by David Goodman

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