At last week’s LCV 2009 expo, we caught up with Andy Palmer, a senior vice president at the Nissan Motor Company in Japan. A Briton, Palmer is the man in charge of the firm's low-carbon vehicle programme globally, across its Nissan and Infiniti brands.
BusinessGreen.com: Nissan has stated that it intends to be at the forefront of electric car development, and recently unveiled the Nissan Leaf, a pure electric car slated for mass production in 2010. What has it cost to get to this point?
Andy Palmer: We're not putting numbers on what we're spending on the Leaf, but my division is new and we have a big budget.
In any given year we will launch eight to 12 new vehicles around the world. Developing a new model typically costs $300m (£183m) to $500m. Electric vehicles are currently above that upper number, per model. It's new technology, the scales of economy are not so big, so they carry a premium. But we expect that premium to drop as we go forward.
What does that high cost of development mean for the price of the car itself?
We can't carry over the premium directly to the customer. In terms of selling cost, the car will cost the same as a well-specified C-segment car [such as the Ford Focus]. It's actually slightly bigger than a C-segment car, but in that order.
In Europe, the Leaf will be sold without the battery, which we will lease separately. In the US, the lease will cover the car plus the battery. The battery costs $10,000 per car – that's why you lease rather than sell.
Leasing the battery will be cheaper than filling up with gas each week. We are trying to remove all the barriers to entry.
We have two new models, in addition to the Leaf, going through development now. They're both really sexy and different. Not in the same segment as the Leaf.
Are you talking about sports cars, such as the Tesla Roadster?
We're not doing a sports derivative, but that's not impossible. They will be mainstream cars. Our intention is not to position zero emissions as a niche.
Given the high development costs and the plan to keep purchase prices reasonable, will Nissan lose money on its first generation of EVs?
We expect all three to break even when we reach mass scale.
We have to get beyond the treehuggers. If we can meet all the buyers' criteria for a new car, and also be zero emissions – then that's what seals the deal. That is why we're doing the C-segment first.
[With partner Renault] we have the capacity to build 200,000 EV batteries in the US, 100,000 in Europe and 50,000 in Japan, per annum. That gives you some idea of what we mean by mass scale.
Given that it's a new sector, your projections must have lots of uncertainty. Nissan's electric car plan must be a huge gamble.
It's not a gamble. We have lots of advanced orders, and ultimately, there is no alternative.
We have positioned our economic models around an oil price of $80 per barrel. But look what happened to US consumer behaviour when the price hit $140 [in mid 2008]. When the price goes up, the economics of EVs get better.
We will start mainly with fleets, where there is the option to better control and monitor the situation. Governments in particular are very keen to show their green credentials.
Because of the high upfront cost, government funding has been essential for me to say we won't lose money – especially in the current credit crisis. Mostly that help has been low-interest loans, for example to build the new battery plant in Sunderland.
Will the Leaf be built at Nissan's Sunderland car plant?
Sunderland is competing for the car with other Nissan factories. Sunderland has an advantage because of the battery factory, but it still has to compete to get the contract.
Given the current lack of charging infrastructure, a range-extended electric vehicle (REEV) seems to make sense – such as the upcoming Chevrolet Volt, which uses a conventional engine to generate power onboard when the batteries run down. Has Nissan ruled out REEVs?
To build a bridge, you need pylons on both sides of the river. With internal combustion engines, such as clean diesels, we are pushing the limits on one side. On the other side you have hydrogen and batteries. Bridging strategies such as hybrid, plug-in hybrid and range-extended vehicles – we think they are important and we will build them. We will launch an Infiniti hybrid next year. But we want to lead on the other side of the water, in zero emissions.
What do you say to critics who argue that electric cars are not zero-emissions vehicles, that they just transfer the CO2 output to power stations?
That's complete bullshit. In France, the Leaf will have seven per cent of the carbon footprint of a conventional car, because they use nuclear power. [Palmer also points to Nissan figures showing the Leaf will emit 41 per cent of the well-to-wheel CO2 emissions of its conventional siblings on a global average, with the UK at 37 per cent, France at seven per cent, the US at 46 per cent, China at 68 per cent and India at 76 per cent.]
The bulk of the effort to reduce global warming will need to come from the power-generation sector – we would like a cleaner grid.
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