NEW YORK – Carlos Ghosn, chairman and CEO of theSA- Motor Co. Ltd. Alliance, predicts electric vehicles will account for 10% of the vehicle market by 2020, but they won't be coming from startup firms.
“The public is not going to buy electric vehicles from small companies,” he says.
The Brazilian-born auto executive says consumers will not be willing to take a chance with new technology produced by untried vehicle manufacturers.
He declines to comment on whether this means the U.S. government is wasting the nearly $1 billion it has allocated toMotor Inc. and Automotive Inc. to foster their development of hybrids and EVs.
Earlier, Ghosn tells an audience at the Council on Foreign Relations here that interest is building in’s upcoming Leaf EV, which will make its U.S. debut next year. He is bullish on the prospects for the EV, revealing 25,000 potential buyers have raised their hands on the auto maker’s website.
Ghosn believes EVs will complement conventional vehicles, not displace them. While internal-combustion-engine cars fueled by natural gas are an option, they are not as neutral to the environment as EVs, which he says are more efficient than gasoline-powered cars on a well-to-wheels basis.
Diesel could be part of the solution, as well, he notes. But even though 60% of vehicles sold in Europe are diesel-powered, no diesels are sold in Japan and few in the U.S. It costs money to promote diesels, he says.
Ghosn foresees many newcomers entering the industry in the next decade, but he also insists there will be more consolidation among auto makers. “It's going to be different down the road,” he says. “There's not a lot of space for newcomers. New companies only come when there is a void.”
At the same time, he says the auto industry needs more scale and investment. That's something the specialized newcomers will have to cope with.
Nevertheless, traditional OEMs have much to learn from younger firms in China and India, Ghosn says. These same sentiments are echoed by Steven Rattner, former head of the U.S. Treasury’s Auto Task Force, a participant in the forum with Ghosn.
Rattner says auto makers in the two emerging markets not only enjoy the benefit of a lower wage workforce but also have a different mindset than those in the U.S., Europe and Japan.
“A $3,000 car is not about underpaying people,” Rattner says. “China and India is not just about cheaper products.” Indian auto makers have a frugal mindset that Japanese engineers can't comprehend. “We're going to miss competitiveness if we don't learn those new ways of doing things.”
Ghosn concedes low-cost products will migrate to countries with the best cost structures but predicts industry employment will be stable globally.
Future success for auto makers will not be determined solely on finding the lowest-wage countries to build vehicles. “Management wants to keep jobs in their countries,” Ghosn says. “They send jobs abroad only when there is no other way.”
At the same time, European governments, in particular, do not want to export jobs abroad.
However, government will be crucial in fostering the introduction of new alternate technology vehicles, he says. Israel, for instance, has promised financial assistance in introducing EVs there, which-Nissan plan to do.
“Many governments are ready to do it,” Ghosn says. Some European governments have proposed giving a €5,000 ($7,425) subsidy to buyers of EVs. The U.S. government has promised a $7,500 subsidy, and the state of California wants to up that amount.