While the executives of GM, Ford and Chrysler are pleading their cases for loans to Congress, let's look at the sobering yet optimistic remarks from the CEO and President of Renault and Nissan Carlos Ghosn at the Los Angeles Auto Show a month ago. This is advice the troubled automakers should listen to - if it's not too late.
Ghosn confessed that "the usual rules of business are up in the air... and we're in uncharted territory" with Nissan's "short term objectives to avoid burning cash and maintain a position of cashflow". Ghosn forecasts that we could have "2 to 3 more years of nobody knows." Ghosn said that consolidation takes place in times like this and admitted that two years ago Nissan had discussions with General Motors that "reached no conclusion". Ghosn said there's "no alliance without a mutual appetite - alliance is like marriage and can't start where one is excited and the other is skeptical".
Ghosn did give us reasons to hope saying that, "cars have no substitute, in 10 to 15 years people will be driving cars... owning a car is a statement of freedom". Doing some population growth math, Ghosn told us "there are 6.7 billion people in the world now and by 2050 there will be over 9 billion" which means with "600 million vehicles worldwide today and an annual selling rate of 70 million, in 2050 we'll be up to 2.5 billion vehicles."
Then Ghosn gave us the scary math saying that the growing markets of "China and India have fewer than 50 vehicles per 1,000 vs. 800 per 1,000 in the U.S.... If China catches up to the U.S. we'll need 2 planets... If the rest of the world catches up we'll need 11 planets." That seems like a rosy picture so maybe GM better reconsider cutting back on brands.
And now the electrifying comments....
Ghosn convinced us that Nissan is serious about electric vehicles and said "Nissan has a zero emission 5 year plan" and they've been working on the lithium-ion battery since 1992. He said there are hurdles to overcome, "where to find charging stations, is it affordable? We need a big picture and it's not the same for every country."
Nissan's newest partner is the state of Oregon where their 1st electric vehicles will be introduced in late 2010 with a $5000 credit. Oregon will change its fleet profiles and Portland GE is developing network of charging stations. More of Ghosn scary math shows that "of the 70 million cars sold, only 50,000 were electric last year." If that number increases to 10% or 7 million vehicles it means a big investment for 7 million batteries. Ghosn says the customer will buy the car and lease the batteries so they can be easily changed as technology advances and the old batteries can be recycled for new ones.
Ghosn citied an MIT study that says by 2016 there will be 10 million electric cars, 5 million in the U.S. while Nissan's more conservative estimate says by 2020, 10% of the world car market will electric though Ghosn cautioned that tax breaks, special privliges and lower cost of ownership is needed to get people into an electric car. Ghosn says, "trips to gas stations could be a thing of the past."
"In our case we would love an alliance with a North American partner, we have to wait till the storm is gone and normal business resumes". Until then, "we make small cars for Chrysler and they make pick-ups for Nissan".
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