Carlos Ghosn has never been shy with his pronouncements. The CEO of Nissan, who came to Japan via the carmaker's purchase of French auto company Renault, has always been an outspoken and voluble leader. However, his latest prognostication, according to Bloomberg News, that 10 percent of all cars sold globally will be electric vehicles by the year 2020, sounds extremely ambitious.
The math behind this assertion came from an M.I.T. study that pegged the number of electric cars on the road at 10 million by 2016, including 5 million inside the U.S. Ghosn made his 10 percent prediction at a press conference on August 1 in Yokohama, while unveiling the new Nissan Leaf electric vehicle. The car got solid reviews from auto bloggers and mainstream media automotive reporters. But the Leaf faces huge hurdles before it can go mass market -- much like other electric vehicles.
To start with, the Leaf's battery system will cost $10,000. True, Nissan's new lithium-ion battery allows for a 100-mile range per charge, a significant improvement over comparable batteries. But the cost will force Nissan to lease the batteries to buyers, adding an additional monthly charge to their car bill. And $10,000 is a lot of money to be swallowed by a lease -- over three years, that could theoretically jack payments by $250-$350 per month.
Then there is the range problem. Americans like long distances. Even if they rarely drive them, the idea to most U.S. drivers that their vehicle could chug to a halt after only 100 miles, with no easy way to recharge the batteries, is likely to spook more than a few potential customers. Yes, the Leaf's range should be sufficient for the needs of almost three-quarters of all U.S. drivers. But using this as a reason to buy the Leaf assumes rational behavior -- and running out of juice is something that people don't think about rationally because, in their minds, it's a safety issue.
Finally, there is the problem of the competition. In particular, I'm referring to hybrid vehicles. They are getting much, much better. At present, hybrids represent roughly 1.6 percent of the U.S. total market. Toyota, GM, Ford and Honda are all stepping on the gas, introducing more hybrid models at lower prices. The new Toyota Prius, for example, came in with comparable or better features than its predecessor -- and a considerably lower price.
Gas-electric hybrids need batteries, too. But because they use both forms of power generation, hybrid vehicles do not require the same number of batteries or the same aggregate amount of battery capacity as all-electric vehicles. Then there is the range factor. Hybrids have ranges that are comparable to or better than standard gas-powered vehicles. And hybrids can run on gas and can also fill up at gas stations, providing more than enough of a boost to get the car moving and to recharge the batteries.
Many auto consultants and industry experts are puzzled at Nissan's 10 percent assertion. Automotive research firm CSM says that the global market share for electric vehicles in five years will more likely tally less than one percent. That's quite a difference.