The global automotive industry, which is this week showcasing its latest products at the Geneva Motor Show, is beginning to prepare for the demise of the internal combustion engine.
Within a generation, the engine technologies that have fuelled generations of vehicles, underpinned the oil economy, transformed and shaped road transport, and that have been blamed for rising emissions and congestion, could become a thing of the past.
In market and industrial terms, this transformation is potentially as seismic as the dawning of the jet age in air travel, the birth of the smartphone, the growth of the streaming economy and the rise of artificial intelligence.
No wonder the world’s leading manufacturers are rushing headlong towards electrification. At this week’s Geneva show, everyone from supercar luxury brands to entry-level low-cost players will be showing off zero-emission models. Large amounts of advertising and marketing spend is being allocated to burnish the green credentials of companies that relatively recently were championing turbo-chargers, F1-style acceleration and efforts to improve petrol and diesel consumption.
There will be pure-electric battery models on show, plug-in hybrids, fuel-cell models and all manner of new energy vehicles. The greening of the car industry is now inexorable. At Renault-Nissan-Mitsubishi, the world’s largest automotive alliance of which we are a founding member, there are plans to launch 12 new zero-emission electric vehicles by the end of 2022.
As the world’s largest producer and seller of electric vehicles, we understand the opportunities and challenges created by the transformation sweeping the auto industry. On the one hand, a growing number of customers around the globe are looking for zero-emission cars with the range and the economic value to justify the switch from their traditional vehicles. On the other, regulators and city authorities are introducing fiscal disincentives and curbs on usage that make the internal combustion engine a costlier proposition.
So, there is a carrot and stick to the electric car market. The carrot is the ability to lead the market in providing mass-volume, affordable and reliable zero-emission cars. The stick is the costlier operating costs, higher taxes and eroding residual values of some traditionally-engined vehicles.
Driving appeal
No one will buy a car on the basis of disincentives, however. Every marketing effort and advertising campaign must emphasise the driving appeal of such vehicles as well as their environmental credentials.
No one doubts the potential demand for these cars, and the increasing marketing campaigns being put behind them. But the real challenge is how to make a success of this market-place. Many companies have staked a claim to being in the electric car industry, but few have set out the business case and the sort of volumes that can be achieved.
We know exactly how challenging it can be. Since introducing Leaf, we have sold more than 300,000 zero emission cars – building a new segment despite scepticism among some industry observers. Orders for the new Leaf have exceeded expectations. Since unveiling the new model, demand in the first two months of sales exceeded the entire prior year demand for the car.
We are confident in the outlook for electric vehicles because the supply-side economics of zero-emission cars are improving. Lower battery costs, improving range and reduced operating costs mean that within a few years we will see a turning point between sales of EVs and cars with internal combustion engines.
Getting this cost-equation right is vital, because electric vehicles must be for the masses, not just for premium customers who are less price sensitive than other demographics. In China, for example, the market appeal for so-called new energy vehicles is at a price point of $7000 to $8000 with a range of about a hundred kilometres. We cannot afford to ignore that segment of the market-place, which is why Nissan – and other manufacturers – are developing entry-level zero emission cars for China: a country where we hope to sell 1.4 million vehicles this year.
Power partnerships
No car company is going to achieve electrification in isolation. We must partner with power grid suppliers in areas such as vehicle-to-grid services, renewable energy generation and the provision of free electricity for electric vehicle owners.
At the other end of the scale, electric vehicle expertise is being applied to motorsport, with companies including Nissan participating in the Formula E championship – the first Japanese brand to do so – as part of an all-electric racing series that aims to prove that zero-emissions is not about compromising performance or the appeal of driving.
With Formula-E at one end of the spectrum and with a new Leaf being sold every 12 minutes across Europe at the other, electric car technologies are here to stay.
The automotive groups gathered at Geneva must prove that they can be an affordable, profitable and practical alternative to cars with internal combustion engines. This requires developing the right products, at the right pricing, supported by marketing campaigns that build consumer appeal.
Having helped create the mass-volume electric vehicle sector with the first Leaf, Nissan will be in the vanguard of this shift to new mobility products and services, which will also combine increasing levels of vehicle automation and connectivity. It will see the electrification wave spread to all corners of the industry, and within our own company from premium cars to light commercial vehicles and entry-level models.
For the car industry, the electric dream is therefore fast becoming a commercial and consumer reality.