Nissan Future Mostly All-Electric

TOKYO – Ever since Nissan announced plans to pioneer in the infant electric-vehicle market, analysts have been skeptical about the auto maker’s forecast that EVs would claim a 10% share of total global demand in 2020.

Now, Mitsuhiko Yamashita, Nissan executive vice president-research and development, is clarifying and modifying the auto maker’s claim, explaining that the 10% is a target for Nissan, not the industry.

“We believe that if we aim for 10% we can accomplish 10%. It’s our commitment,” he says in an interview with WardsAuto.

Nissan and alliance-partner Renault are researching alternative-power sources including fuel cells, plug-ins and hybrid-electric vehicle technology, as well as improved batteries and transmissions.

But the Japanese auto maker’s main focus is on all-electric vehicles and the success of the Leaf.

From the car's December 2010 launch through the end of 2011, Leaf sales totaled more than 21,000 units. Although substantially below Nissan's first-year target of 50,000, the shortfall partly was due to the crippling effect of the massive earthquake and tsunami that struck northeastern Japan last March.

Yamashita, who has headed Nissan R&D since April 2005, readily admits the Leaf’s expensive lithium-ion battery remains the biggest obstacle in efforts to make the car less costly.

While not disclosing current costs, he speculates the battery’s price needs to fall to ¥15,000-¥20,000/kWh ($195-$260/kWh) before EVs can begin capturing market share from gasoline-powered cars if fuel prices stay at current levels.

A senior executive of Nissan’s battery supplier, Automotive Energy Supply, told Bloomberg News last year that the battery’s cost must drop to ¥28,500/kWh ($370/kWh) for the Leaf to be profitable.

The same executive told WardsAuto in 2010 that the supplier's 2015 target was about ¥25,000/kWh ($325/kWh), half of the estimated ¥50,000/kWh ($650/kWh) cost in 2011 or 2012.

Still, optimism prevails as Nissan, combined with Renault, is projecting cumulative EV sales of 1.5 million units by 2015. In addition to the Leaf, the auto maker reportedly plans to introduce as many as three new models, including a battery-powered NV200 van, along with Renault's lineup of at least four EV models.

Yamashita declines to comment on doubts by most industry analysts that Nissan is breaking even on Leaf sales. He insists the Leaf’s cost is “competitive,” but adds that “competitive” does not necessarily mean affordable.

“To be affordable,” he says, “we must be able to price the Leaf at a level consumers can afford even if governments were to stop offering incentives. So from that standpoint, we still need to reduce costs.”

Yamashita believes the main benefit from the alliance with Renault ultimately will be scale, the additional production volume that yields lower costs.

“If only Nissan were to sell EVs, volumes would be relatively small,” he says. But if both Nissan and Renault sell EVs, our volumes effectively double, bringing per-unit costs down. The same thing with components. If we can commonize them, we can lower supplier costs.”

And there are other benefits: “If Nissan can utilize Renault diesel engines, we don’t have to develop our own. If Renault uses (Automotive Energy Supply) lithium batteries, then it won’t have to develop its own battery. Essentially, we can eliminate duplication.”

Nissan and Renault hope to eliminate even more duplication through their 2010 tie-up with Germany’s Daimler.

“Daimler places more emphasis on the luxury-car segment,” Yamashita says. “Nissan is stronger in smaller cars. When we look more closely, Nissan has almost nothing in high-displacement diesel engines. Daimler has many. Daimler has a limited lineup of small engines.”

Nissan has said it will launch production of 4-cyl. engines for its Infiniti models and for Mercedes-Benz at its Decherd, TN, plant in 2014. Mercedes C-Class sedans will be assembled at the Mercedes-Benz U.S. International plant in Tuscaloosa, AL.

Nissan CEO Carlos Ghosn announced in October that the Japanese auto maker and Daimler would jointly develop a new fuel-cell vehicle by fiscal 2016 and eventually work together on EVs.

Nissan also announced in October that it had developed a new-generation fuel-cell stack that achieves power density of 2.5 kWh/L, 2.5 times more than the 2005 unit currently installed in the X-Trail small cross/utility vehicle. Even more important are claims that stack costs have been cut by nearly 85%.

Yamashita claims performance results of Nissan’s new stack are not limited to laboratories: “We have already developed a prototype, which can be put into a product very soon.” But he adds that Nissan is not shifting away from EVs to fuel-cell vehicles.

“In Nissan's definition of zero-emission electric vehicles, there are two power sources, batteries and fuel cells, which have different applications,” he says. “Battery EVs are better for smaller vehicles and shorter ranges. Fuel cells are better for longer range and heavier, more-spacious vehicles."

Yamashita takes exception to criticism that Nissan has not focused sufficiently on hybrid vehicles, especially when compared with rivals Toyota and Honda, which offer a combined 16 models.

He points out that Nissan’s hybrid system was developed for slightly heavier vehicles – namely, luxury sedans – and those where longer range is required, because “EVs are not suitable for these market segments but are better suited for A, B and lower-C segments.”

Consequently, Nissan so far has marketed only one HEV, the luxury Fuga hybrid sold overseas as the Infiniti M35h. Plans call for introducing a new front-wheel-drive hybrid in 2013 and plug-in hybrid in 2015. The auto maker apparently feels these are enough to meet near-term demand in that segment.

Whatever the chosen power source, Yamashita is convinced that global automotive markets will need more electrification in the future.

“If we look at 2020 fuel-emission targets by country, most will require at least a 30% improvement to meet them and we won’t be able to achieve those levels with conventional engines and hybrids alone,” he says.

“Note that a 30% improvement is roughly equivalent to the fuel-economy improvement of a conventional hybrid over an internal-combustion engine car, which means that without EVs, all cars sold in 2020 would have to be hybrids.”

Yamashita reports that continuously variable transmissions will be Nissan’s mainstay in the coming years, while 7-speed automatics will be limited to upscale cars. He does not rule out the possibility of increasing gears in the future since Nissan's latest CVT, due out on a North American model in 2012, will offer 10% improved fuel economy over the previous version.

Ghosn revealed late last year that Nissan plans to spend 70% of its research and advanced-engineering budget, or nearly ¥30 billion ($4 billion), on green technologies over the next five years.

Yamashita says that figure does not include ¥42 billion ($5.4 billion) spent jointly with Renault on R&D in the past five years.

Asked if Nissan was reviving its old “Gijitsu no Nissan” (“Technology Nissan”) concept, he replies that it is part of the auto maker’s heritage. “Without question, the accumulation of technology over many years is one of our assets and the direction of Nissan engineering today.”