Renault-Nissan CEO: We Need To Offer Both “High Spec, Low Spec” Electric Cars In China

1 year ago by Mark Kane 29

President and Chief Executive Officer, Nissan Motor Co., Ltd.

President and Chief Executive Officer, Nissan Motor Co., Ltd.

Dongfeng-Nissan's Chinese Brand Venucia Looks Very....Chinese

Dongfeng-Nissan’s Chinese Brand Venucia

Nissan released the full transcript from a media round table session with Carlos Ghosn, CEO of Renault-Nissan Alliance, at 2016 Auto China (found in its entirety below)

As well, the Japanese company also presented its all-electric concept IDS with 60 kWh battery and autonomous drive capabilities for the first time in China at the show.

However, what really caught our attention, was one of the announcements from Nissan China was also the intent to also introduce a low spec, low price electric car for Chinese market, complementing its higher level (and slow selling) Venucia e30 offering. The Venucia e30 is technically just a rebadged/option de-contenedt Nissan LEAF.

Nissan will introduce its low spec EV together with Chinese partner Dongfeng.

Separately, Renault will launch the Freelance Electric in China – which would be classe more in line with Ghosn’s “high spec” category.

We Caught The Venucia e30s Worldwide Debut At Auto China in 2014...which is really like saying we saw a stripped down Nissan LEAF

We Caught The Venucia e30s Worldwide Debut At Auto China in 2014…which is really like saying we saw a stripped down Nissan LEAF

“Q1: [In Chinese – about electric cars]

Carlos Ghosn: Well I suppose by new energy vehicle you mean electric cars, okay, so let’s talk about electric cars. About electric cars today we have an offer which is what I call a high spec offer, high spec offer.

Nissan introduce it with the Venucia model and Renault will be introducing it with the Freelance Electric that will be introduced to the Chinese market following commitment made by Renault to introduce electric cars. This is what I call high spec which means high price with very good performance but today these models are not selling very well in China.

What are selling in China are lower spec models, more affordable price, so we are both from Renault and Nissan continue to develop high spec model by making it lower cost, more autonomy, more range, that’s one thing but also we are working very hard into introducing a low spec affordable electric cars and with this we are working with our friends from Donfeng because we think that in order to be a big player in the Chinese market we need both offers – high spec, low spec, higher price, lower price – because I believe that the support that the Chinese government is giving to electric cars is going to continue and it’s going to be stronger.”

Another Look At The e30 (Photo: InsideEVs From Auto China)

Another Look At The e30 (Photo: InsideEVs From Auto China)

The disappointing Venucia e30 sales, and the need to introduce a low spec, low price model were described broadly later:

Q6: [In Chinese – on market share of electric cars]

Ghosn: First let me assure you that I don’t forget any one of the questions please, keep that in mind. The first one is yes, we are disappointed. We are a promoter of electric cars, we are, we were the first one in 2006 to go the electric car has a future in this industry and we were the only one, the only one, okay. Nissan and Renault took the lead on electric cars in 2006, we announced it, we told you what we were going to do and we are moving with the electric car.

At that moment there is nobody coming with electric car, now everybody is coming with electric car, that’s fact. In Europe in 2015 Renault and Nissan had more than 50 percent market share of electric share. Good, the European market is growing and both Zoe and Leaf are leading, good, this is fair. In the United States we are moving ahead, we are facing some headwinds but we are coming with higher range cars because the range is an issue, there is competition coming from General Motors and from Tesla, good. In China we brought the car but we are not selling it and we’re not selling it because we are being told that it is too expensive and the range is maybe not as big as the consumer wants.

So what’s selling? We look at what are the electric cars that are selling in China and the electric cars that are selling are 25 percent lower POC price than the Venucia and with the range that is higher than the Venucia. So we have to be very clear, we need to lower the price and increase the range. We know how to do that, it is going to take a little bit of time but we know how to do it but at the same time what is really evolving are the cheap electric cars and this is where we have no offer and this is where we need to develop an offer.

So I don’t want you to have the impression that we have a car and it’s okay, we said we are not selling it and it’s a problem.  No, we need to follow the market, not only the market follows us but we need to follow the market so our strategy in China is going to be first adapt our product to the market needs but at the same time come with other products that is really selling today in China. So I cannot tell you I am happy with the sales of Venucia electric, I’m not but at the same time that’s not sufficient, what is important is what are the root causes, why are we not selling this car, what should we do in order to sell this car and what are the Chinese consumers buying in terms of electric cars?

I am convinced that China will be a very large electric car market, not hybrid, electric because the Chinese government has been very clear in supporting zero emissions and putting a lot of incentives behind electric cars. So we have a very clear signal from the Chinese government that they want electric cars and they want the development of electric cars so we are going to follow and we are going to contribute.”

Locally Made, Venucia e30/Morning Wind Went On Sale In China In September of 2014

Locally Made, Venucia e30/Morning Wind Went On Sale In China In September of 2014

Q13: Nori from Reuters. Follow up questions on the EV market here, one, do you feel a little bit vindicated by this whole China push, the growth that’s happening here? There is a lot of demand for EV it seems like and this is going to … You said that you are going to focus, start developing low spec affordable EVs but at the same cars like Leaf and I guess you call it Venucia over here, that’s going to also probably be propped up by this demand. I just want to know how you see sales, can you talk about the market here? Last year I think was like 300,000 units, what do you see happening here and when is this low spec EV coming?

Ghosn: As a business person I cannot be satisfied or vindicated because people are following a concept, we need sales and profit to make sure that the concept is right. For the moment in China we have neither sales nor profit on electric cars which still have a big interrogation mark about what we’re doing, okay. Now when we look at the 300,000 cars, EVs sold in China, some of them are profitable, others are not. Most of them are sold to fleet or administration, not so many to private consumers or to individuals so we have to be extremely careful about who is buying these cars, what is the economic balance of this, before we establish our strategy.

Today the Venucia is not selling and it’s not selling because it’s not a good electric car, it’s because it’s too expensive, it’s clear, a clear signal. So we need to work on this, that’s number one. We have this technology, it’s present in China, we need to reduce the costs, we’re working on it but at the same time we know there is another demand popping up which is a very cheap EV but low spec, which is a completely different car. So we need also to compete in this segment which, by the way, low spec EV is not only a speciality of the Chinese market, we think that there is a market for this low spec EV globally and particularly in emerging markets.

We think that a low spec EV developed in China can interest India, can interest many other developing markets. That’s why we are paying attention to this, this is not something specific to China, this is something which can become part of a global demand. So yes, we are vindicated in the term that we have seen EV and EV is coming but at the same time we are a little bit frustrated because for the moment we are not seeing the return on this, particularly in the Chinese market, because we’re not selling too many units.”

An interesting comment was made was about lithium-ion battery suppliers.

Despite the fact that Nissan itself is a battery manufacturer (together with NEC), operating the joint-venture AESC, Carlos Ghosn isn’t ashamed to say that the Alliance is also buying some batteries from LG Chem – “Because we think LG Chemical has the best performance.

“Q4: [In Chinese – on selection of suppliers]

Next Generation IDS/LEAF 60 kWh Battery - Cells In This Case Made By LG Chem

Next Generation IDS/LEAF 60 kWh Battery – Cells In This Case Made By LG Chem

Ghosn: It is difficult to answer your question because first we need to make sure that on these technologies, like autonomous cars, connected cars, zero or low emission cars, the objective is to come as soon as possible to the market in the most efficient way. So we don’t select suppliers by nationality, we don’t. We select the suppliers who can give us what we need.

For example on batteries we are working with LG Chemical, we are buying some batteries from LG Chemical, LG Chemical is a Korean company, it’s not Japanese, it’s not French, etc.

Why are we working with LG Chemical? Because we think LG Chemical has the best performance. So I don’t want you to think that we select suppliers by citizenship, we select the supplier first in function of their ability to deliver what we want and their ability to partner with us. So obviously the ability to partner with you usually means some kind of cultural proximity.

Two Japanese companies are going to be partnering more easy than a Japanese company and a non-Japanese company, two European companies are going to be partnering more easily than a European company and a non-European company but at the same time you have to have some kind of cultural proximity for the long term relationship but then you look also at the performance of each company and you make decisions. So from time to time we are going to choose a Japanese company, from time to time we are going to choose a French company, from time to time we are going to choose a Korean company or from time to time we are going to choose a Chinese company, okay. So decisions are made one by one but what prevails is ultimately the performance of our offer onto the market.

Autonomous Nissan LEAF prototype

Autonomous Nissan LEAF prototype

Now on autonomous drive you are going to see every kind of configuration, you know the Germany company collides together to buy Here which is an affiliate of Nokia. Okay, fine, does it mean we’re going to join? We don’t know but we are considering the offer from Here, we are considering the offer from Mobileye, we are considering other offers and we are going to continue to have as much as possible the choice.

What is important is not so much how comfortable you feel with the supplier, it is how effective you think the supplier is going to be into delivering this performance because I can tell you that on autonomous drive, on connectivity and on electric cars, the competition is going to be very tough so you cannot be complacent or select people only because you’re comfortable with them or because they speak the same language as you. You are going to have to select on function, their ability to deliver the performance that you want.”

The low and high spec EVs will each be built on the two different platforms.

Ghosn also stressed the importance of cyber security in relation to ‘smart’features, as well as the quality and the reliability of the data being utilized.

Q5: [In Chinese – on EV platforms and smart vehicles]

Ghosn: Well first I don’t think we’re going to … Let’s start with the EV platform. High spec EV very probably will be one platform but I don’t think high spec EV and low spec EV are going to be common platforms so answering your question, no, there are going to be two platforms, high spec and low spec, that’s for sure but we still have to build one high spec EV and one low spec EV, that’s the intent. For the moment we’re not there.

Now for the first question which was smart vehicles, the question was what? Ah yes, yes, but we have to be very careful because with the development of smart vehicles you can understand that there is a lot of traps on quality. So we have first traps on quality so we have to be very sure that with the short cycle you don’t fall into this trap number one and second, with the development of the smart vehicle you have a lot of problems about cyber security appearing that we need to solve.

So yes, we are going to have to move faster but at the same time we want to make sure that we’re not falling into any traps or in terms of quality or in terms of security of the data and security of the users. So this is a complicated problem and if you tell me, do we need to move faster? Yes, we need to move faster but at the same time we have to be very careful by moving faster that we don’t compromise anything about cyber security or anything about the quality and the reliability of the data.”

Ghosn From Detroit In January: No, I can't talk about the next gen LEAF. What is this huge picture behind me? Nothing.

Ghosn From Detroit In January: No, I can’t talk about the next gen LEAF. What is this huge picture behind me? Nothing.

On the next generation Nissan LEAF, Carlos Ghosn clearly explained what we have been saying all alone…that he can’t tell us yet because of the current LEAF, but that Nissan and Renault will be ready to met future market challenges.

Q8: [In Chinese – on launching new cars]

Ghosn: First obviously we have many products coming but we we’re not ready to talk about them because what we want today is to sell the products we have. If we start talking about the products coming in the future somehow it always handicaps the sales of today. Tesla has not this problem because they launched Tesla Model 3 which is a completely new car so even though they announce it today and it will be selling one year and a half down the road, it is not replacing any existing product so there is no impact on that, okay.

We have to be more careful because today we are selling electric cars and even though we want to continue to promote these cars I don’t want you to think these are the only cars we are going to be launching on the market. There is going to be a lot of innovation coming from Nissan and Renault and we are intending to compete against all the other car makers on electric cars. So I don’t want you to think that what you are seeing today is everything you are going to see from us, we are watching competition, we are measuring what they will be coming with and we will be more than happy to show you the capability in terms of electric cars coming from both Nissan and Renault.”

About the incentives-driven electric car demand in China:

Q10: Hello, Hans Dremel from Automotive News. I’d like you to talk a little bit about the split personality that we see in the China market here. That being at the show here we saw a lot of car makers talk about two things, SUVs and NEVs and they are almost at the opposite extremes of the market, kind of cancelling out the intentions of the other. Which of these two ways will win? The NEVs are being spurred by these government incentives, the SUVs are being spurred by actual market demand for people who want it, which of these is a safer bet long term?

Ghosn: Well first you can have SUVs, which are EVs at the same time, just saying but we are not there, we’re not there. SUV is a market driven sales, we are seeing the surge of SUVs and crossovers in China, we’re seeing it in the United States, in Europe, everywhere crossovers and SUVs are contributing to the growth of the industry, okay. In our opinion this is a trend which is going to continue, particularly because the offer on crossover and SUV is becoming more and more competitive and more and more diversified which is going to stimulate this trend, so this is a market driven trend and car makers are going to continue to feed into this trend. That’s number one.

EVs for the moment are mainly supported by governments. Why are they supported by governments? Because the consumer is not ready to jump into EV as long as he sees the price is at best equivalent, he doesn’t see infrastructure so most of the consumers say okay, I like the EV, it’s very interesting but where am I going to charge the car and how long is it going to take to charge the car? Third, he is waiting for some kind of incentive coming from the government in order to jump in and incentive is not only about money, it is also about infrastructure. So without any doubt, EVs development are going to be driven by regulation, without any doubt. But hey, let me remind you of another market that was driven by regulation and by incentive – it was diesels in Europe. How come that Europe has more than 50 percent of its market in diesel when the United States has zero percent or Japan has zero percent? They are the same car makers by the way, they are the same car makers in the United States, in Europe and in Japan, same technology, same car maker, 50 percent of the European car market is diesel, zero percent practically of Japan and zero percent of the United States. Same car maker, what’s the difference? Regulation, incentives, willingness of the government to weigh on one particular technology to the detriment of the other and I can tell you that on EVs government are going to have a lot of influence on the development of the EVs.

So what I want to say is yes, you’re right, SUV is mainly market driven, consumer driven. EVs are going to be heavily supported by government at the beginning but wait a second, when costs are going to go down, batteries are becoming more efficient and infrastructure is going to be stronger, we are going to see a surge of EV. Where is this surge? Well we’ve seen it in the orders, the huge orders that Tesla has been having. It looks like when you cross the 300 kilometres range and you go below $35,000 price and you have a sleek design, you start to be extremely interesting for the consumer but it has to have from the beginning strong support from the government.

Hans Dremel: And will that government support continue amidst the concern about subsidy abuse, especially by the local EV makers here?

Ghosn: I think frankly … I think personally yes, the support will continue because today the main preoccupation is about emissions and the main preoccupation is about CO2 and the main preoccupation is about global warming and if you want a radical solution to that you are going to have to support zero emissions.”

Nissan at Auto China 2016: Full Press Conference

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29 responses to "Renault-Nissan CEO: We Need To Offer Both “High Spec, Low Spec” Electric Cars In China"

  1. evcarnut says:

    Who Cares about China..we live in “NA” What are they building for North America! That is My Question!

    1. offib says:

      Who wouldn’t care about China? There are other places in the world other than the US. If you want to make money, it’s more useful to see a product all round the world, especially in markets that are larger than the US.

      1. Rob Stark says:

        There are no “markets” larger than the US.

        There is one market that is larger and only in terms of units not in dollars/euros/yen/yuan.

        But this site is not only consumer oriented.It is not Car and Driver for electric cars.

        It reports on the global environmental impact of the auto industry and on the global auto industry itself.

        In that sense China is crucial. Laos less so.

        1. Martin Winlow says:

          Yes of course you are right because the US is the greatest and the best as ever… USA! USA!…

          Only actually you are wrong… http://www.oica.net/category/sales-statistics/ … shows that actually China sells by far the most cars in the world at 21m Vs the US’ paltry 12m. Even Europe beats the US.

          1. David Cary says:

            But you see, he was just saying there is the world and that is the market. So what was interpreted as USA is the biggest and best was actually a statement that there is a single market – the world. But I see your interpretation and I agreed on first read. But then I thought, no way does Stark not know that China is a larger market.

            While it is true that some folks think US is the only market that matters, it is also true that non Americans think that all Americans are blind to the rest of the world.

            1. David Cary says:

              Forget it I was wrong. But he has a point either way.

              Certainly when they are talking specific cars for a specific market, that will not be available to US or Europe, then it isn’t relevant to someone living in US or Europe. Still important in the grand scheme of things.

              Since it has been brought up, what is the China and India insideevs.com traffic. I’m going to guess it is single digits percentage.

              Micro cars for developing nations are important for sure. But if someone is coming here to see what will be available in developed countries – that micro car info isn’t helpful. And I realize micro car wasn’t used but can you imagine a low spec car when the Leaf is consider high spec? And I’m a Leaf owner….

        2. Terawatt says:

          While China is still number two in revenue terms it’s been the most important market for a while already. This is simply because there are still very few cars there compared to the size of the population and that population is huge. So everyone knows the place where you can make or lose most profit over the next half century is China, not the west.

    2. Terawatt says:

      Everyone who gives a shit about emissions and the energy crises?

      It’s only the world’s biggest car market – today and for several decades to come, in all likelihood.

    3. wavelet says:

      “We”? This is a global site. Only about half the web traffic here is from the US, and less than half of the articles deal with specifically US subjects.

      Or are you just speaking for yourself and your worms?

  2. marco loglio says:

    ridicolous that only now mr Ghosn discover that people want EV with long range, affordable cost and good design. He said they can do, so why they are not doing now or why they did not do before. They cannot call themself leader of the EV worlds when they cheated the consumer selling cars with very poor specification at an exorbitant price.

    1. Someone out there says:

      When the LEAF was launched in 2011 it was a good car at a competitive price (for an EV) at the time. Unfortunately time has passed the LEAF by and it is no longer that attractive and once the Bolt and the 3 launches it will be obsolete. The real problem with Nissan is that they took too long to update it, they should have launched the 30 kWh pack much earlier and now they need to come out with a significantly improved version soon.

      1. Anon says:

        They were too busy making new ICE SUVs.

        Nissan talks out of both sides of their mouth.

      2. Pushmi-Pullyu says:

        “Someone out there” said:

        “When the LEAF was launched in 2011 it was a good car at a competitive price (for an EV) at the time… The real problem with Nissan is that they took too long to update it…”

        Well said, sir.

        When my family bought its first VCR in 1980, we paid $1200 for it. It was a top-loading, heavy, bulky machine, with slow-moving electro-mechanical controls and limited functionality, and a wired remote control.

        But we certainly didn’t think were “cheated” by getting a machine “with very poor specification at an exorbitant price”. That early commercial VCR was an example of the “early adopter” stage of the tech… just like the Leaf in 2010.

        As you say, the problem with the Leaf isn’t that it was early adopter tech in 2010. The problem is that it was still virtually unchanged in 2015, five years later! …and the 2016 upgrade is a less-than-halfway measure.

    2. Terawatt says:

      Nissan began work on the LEAF in 2006. Since the technology was very expensive, especially the battery cells, they made a car they could start selling in the West that was supposed to head to China and make back the billions Nissan spent making the platform, production lines, and early cars (sold at a substantial loss).

      Unfortunately for all of us, volume didn’t ramp up as fast as Nissan has expected and prices didn’t come down as fast. And it turns out lower quality but longer range cars from BYD came out of left field to ruin the plan.

      Maybe if Nissan took the kind of beer the company risks that Tesla is doing they could have got it to work. You know, set the price low to get the volume needed to lower the cost – which is basically what Tesla does with Model 3. But realistically, no incumbent could have done it – their shareholders aren’t risk seekers like Tesla’s investors, and would have put a stop to any gambling.

      1. Pushmi-Pullyu says:

        I think you’re giving Nissan insufficient credit. A company spokesman said, not long after the Leaf first went on sale, that they planned to make an overall profit on the model only in the third year of production. Usually, auto makers start making a profit in the second year of a model. So Nissan was certainly taking a loss on the Leaf for a longer period than auto makers usually expect.

        And please note that Tesla has only achieved its low, low price for the Model ≡ by building an enormous Gigafactory to lower battery prices by 30%… or more. Even Tesla couldn’t have planned to put the Model ≡ into production until they could substantially bring battery prices down, even more than they’ve been dropping in the general market.

        It would have been literally impossible for Nissan to have sold the Leaf for a substantially lower price back in 2010, with battery prices what they were back then, without taking a ruinous loss. Let’s remember that at that time, Tesla was selling only the high-priced two-seat Roadster sports car.

  3. Michael says:

    I find it a little tough to look at the Leaf after seeing eGolfs, 500e’s, gen 2 Volts, Kia Souls, and other better looking offerings on the road.

    1. Martin Winlow says:

      Fortunate, indeed, then that Life is not all about what you see on the outside, then.

      How you can even mention a FIAT EV in the same sentence as the LEAF almost makes me choke. There is absolutely no comparison between the 2 other than FIAT’s engineers have done a good job of electrifying the stock petrol car. Beyond that Fiat’s management have made it painfully clear they have no interest whatsoever in EVs beyond Compliance and as a result they will almost certainly go under. VW are almost as bad.

  4. William says:

    Carlos, more range (200mi.) on the Leaf by 2018, might be too late for it to compete effectively with the likes of the Bolt and Model 3. The next 18 months will be sink or swim time in conceding market share in the EV segment. This North American market is not going let you lead from behind as the Leaf has gone 5 years now without a real refresh. Lost opportunity in the making for Nissan.

    1. Martin Winlow says:

      Except, of course, GM have made it clear they don’t intend selling the Bolt in Europe and probably other potentially large markets for the same daft reasons. There is little financial point in refreshing at this time given the likely big changes the car will see when the 200 mile version arrives in a year or so. If it were selling as many units as the Fiesta then maybe.

      1. Terawatt says:

        How do you manage to get EVERYTHING wrong ALL the time?!? I’m impressed!

        The Bolt is coming to European markets as an Opel. It’s called Ampera-e here, and besides the stupid name is the same car. This was expected from the get-go and officially confirmed by GM back in February, a month after the announcement of the Bolt going into production. Opel Norway told me it’s coming in spring 2017.

        1. Mr. M says:

          Wow, yeah 5000 units/year of Ampera-e. That will shurely crush Eurpean Leaf. Not.

    2. Terawatt says:

      It isn’t actually clear that the next generation won’t come earlier than 2018. For all we know it could arrive late this year or sometime in the first half of 2017. It could also be later, but if the Ampera-e arrives on schedule they shouldn’t expect to sell any EVs in Europe until they introduce the new LEAF. At the very least they’d have to lower the price very significantly.

      1. Pushmi-Pullyu says:

        The Volt/Ampera didn’t sell in Europe because it was priced about twice what it was in the U.S./Canada market. Will GM similarly sabotage sales of the Bolt/Ampera-e in Europe?

        Only time will tell. In any event, GM won’t be producing the Bolt in large numbers, so Nissan won’t have to try very hard to update the Leaf to outsell the Bolt worldwide, or in Europe.

        And Nissan has its own battery factories, which I’ve read were only running at about 1/3 capacity even when the Leaf was still selling well. So Nissan has plenty of potential to ramp up production; potential which GM doesn’t, even if they wanted to… which they don’t.

  5. Marshal G says:

    I’m disappointed with his belief that only government support will cause buyers to go electric. As in cash incentives and government built infrastructure. While these are nice to have, if he truly were a leader he’d lay out his vision for the alliance to make EV’s mainstream by driving down prices and building out a usable long distance charge network.

  6. SparkEV says:

    It’s not just China that need high/low spec EV. Even in US, many people could use low spec EV while having a large gasser that’s not available in EV form (ie, trucks, 12 seater vans, etc). Benchmark for low spec is SparkEV at post subsidy price in CA (about $15K), DCFC, decent performance, 4 or more seats.

    1. Pushmi-Pullyu says:

      A test market or “compliance car” like the
      Spark certainly isn’t any “benchmark”. Or at least, it’s no indicator of how low the price can currently go in the USA for a street legal, highway-capable, four-wheeled EV on which the company can actually make a profit.

      I don’t know why you’re so adamant in refusing to recognize that GM sells the Spark EV at a loss, Sparky, but refusing to recognize reality does not actually change reality.

      1. SparkEV says:

        Time and again, I don’t know why you insist GM loses even more money in Canada and Mexico by selling at lower price than in CA where they get CARB credits.

        And why is SparkEV so magical to you? It’s pretty much SparkGas, not many “custom” changes like Leaf. Tell me, what is it about SparkEV that would make it so expensive?

        1. Mr. M says:

          IGBT, electric motor, battery, battery framing, development cost.

          1. DangerHV says:

            Minus engine, exhaust, fuel tank, emission controls,… The list goes on and on. Yes, GM is making a profit on the Spark EV. They just don’t make the margins that they do on SUV’s and the likes. Imo