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When the discussion turns to battery-powered cars, Renault-Nissan chief executive officer, Carlos Ghosn, is one outspoken, optimistic individual. In fact, it'd safe to say that Ghosn's bullish outlook for the electric vehicle (EV) segment is unmatched by any of his automotive peers. From claims of EVs accounting for ten percent of global sales in 2020 to promises that Renault-Nissan will have enough capacity to produce 500,000 electrics per year when demand, well, demands it, Ghosn never misses an opportunity to talk up the Alliance's electric dreams.

He's at it again. In an interview with Bloomberg Television last Wednesday, Ghosn reiterated some of his previous claims, but also dropped in something new. The bullish CEO opened with these words:
There are customers who want really zero emission cars. This segment is going to grow with time.
When asked about profiting from the sales of EVs, Ghosn offered this revelation:
When we will be reaching this level, overall product lineup will be profitable. This may happen within next three years.
The Nissan Leaf starts at $32,780 in the U.S. and it's hard to imagine that the automaker could profit at that price point, but Ghosn says it's true, so our doubts should be erased. Right?

[Source: Automotive News – sub. req.]


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  • 38 Comments
      • 4 Years Ago
      Carlos has vision.
      It will happen for sure.
      If not here, then in China.
      • 4 Years Ago
      No, I don't think they're making money off the Leaf today. But they could conceivable make money off it at that price once some of the material costs come down and the R&D is amortized.
        • 4 Years Ago
        If you listen to the actual interview, He states 500k per year is the profit point for the program as a whole (R&D, Marketing, and Manufacturing), without government incentives. At a vehicle basis, if you don't count the R&D, it is claimed to be profitable out of the gate. However, paying back the billions in development costs for the program will require scale.
      • 4 Years Ago
      it's interesting to see how the myth that EVs are very costly to make lives on without merit.
      even the lying automakers keep saying EVs are profitable right away yet Eric here with no technical or cost insight whatsoever fires off this nonsense:

      "The Nissan Leaf starts at $32,780 in the U.S. and it's hard to imagine that the automaker could profit at that price point, but Ghosn says it's true, so our doubts should be erased. Right?"

      where do they get it?? who is feeding these 'journalists' this info and why are they buying??

      Martin Eberhard comes on saying current commodity lithium is at 255$/kWh and ABG posted an article a few weeks prior saying lithium costs from 700-1200$/kWh, yet what Martin Eberhard said doesn't register. they don't pause and say wow we were wrong, we need to revise our stance, noooo no why would they do that...
      instead let's believe that the hugely inflated 33k price for the leaf must be a loss for nissan.. never mind nissan said the battery pack costs around 9k.

      sigh
        • 4 Years Ago
        I of course understand that
        • 4 Years Ago
        "I of course understand that"

        Clearly, you do not. If you did, you wouldn't be so confidently stating that they're selling at a massive profit. Let's look at the things you don't know in the equation:

        - Powertrain R&D Costs
        - Manufacturing costs
        - Marketing costs
        - Nissan's actual raw materials costs

        Again, unless you work for Nissan, you don't know what the Leaf costs to make. It could be $44k/unit, or it could be $15k/unit. You. Don't. Know.
        • 4 Years Ago
        Dan, a base Versa hatch starts at $13,520. A Versa similarly equipped to the Leaf costs around $19,000 not $9,995. That changes the $3k for options to $9k, which brings your estimate to around $29,000. Not that far from what Nissan is selling the Leaf for.
        • 4 Years Ago
        "instead let's believe that the hugely inflated 33k price for the leaf must be a loss for nissan.. never mind nissan said the battery pack costs around 9k."

        Dan when they say a loss they probably don't limit the analysis to a per unit basis - ie. sales price less unit cost = gross profit/loss.

        They would also factor in some direct mfg costs such as depreciation on specialised plant, R&D costs, amortisation of patents, a bit of overhead etc etc.

        You can easy make a loss (or a profit) on a product line it just depends on what costs you include - its called ABC (Activity Based Costing).

        It is for this reason that automakers will not make a profit immediately on a product line (unless it just a mid-model face lift) as they need to amortisation the R&D and other costs first before they turn a profit and this may take a few years.

        Remember they don't yet have the sales volume yet to cover the other costs - so what Carlos Ghosn is hinting at is sales volume will need to increase and probably reduction of costs and amortisation of capital costs over time in three years it will make a profit.

        As an accountant I certainly understand that if you focus simply on top line sales and gross profit but ignore overheads you will likely soon enough go broke.
        • 4 Years Ago
        I think a huge part of it comes down to the cost of the manufacturing line alone. I know that when we worked with one of the Chinese manufacturers, they were spending as "little" as $50M for a basic assembly line that could crank out ~50,000 cars a year. Of course that line was labor intensive as hell which made sense for them at the time, but their labor costs are going up.
        And their "quality check" was about 15 guys who scrambled around the car looking at things when it came off the line like a bunch of crazed monkeys and then one of them would get in the car and tear around the parking lot for a few minutes to see how the brakes work and then drive it through a high pressure sprinkler system to see if it leaked. Entertaining to watch, but it sure as hell didn't fill me with confidence that the cars were that well made.

        On the other hand, the Americans can spend over $1B on a line to produce ~100,000 cars a year and that has to be amortized...big time. And the labor over here is so expensive that it still has to be factored in even if there is a reduced number of employees.

        If you take a line that costs $1B+ to build out, then even at 100k cars per year, that is still over $3,000 per car over three years and that does not include the cost of labor or materials or R&D or SG&A, etc etc etc.

        If the batteries do cost $9,000 and the rest of the BOM is around $13,000 (numbers for a mustang last I heard...as an example) then you're looking at close to $25,000 just for batteries + the manufacturing line + the rest of the BOM. All the R&D, SG&A, etc etc etc must be taken as well before you factor in any profit.

        That $9,000 battery pack has to keep coming down and the volumes keep going up for the whole thing to make sense. Given all that, Ghosn's 500,000 volume numbers seem pretty reasonable.
        • 4 Years Ago
        Dave, a stang retails for over 22. a versa retails for 9995. (stang sold 66k in 2009)
        take out the ICE and its junk of the versa and that should pay for the electric motor and power electronics. add 9k for the battery pack, say 3k for the optional junk they put in the leaf to help justify the high price, add another 1000$ for a bit of profit margin and we are around 23k. selling it at 33k simply has to include a substantial profit per unit and 10k a piece can pay for quite a bit of setup.

        as I've said before they are just milking the early adopters because you are foolish enough to let them.. so many ignorant bureaucrats who can't wait to flatter themselves by buying Leafs with tax payer money. they sort of mean well and Nissan is greedily drinking that enthusiasm. as well as gov subs.
        and I expect the price to come down after that first wave has been milked.

        now I might advocate selling it cheaper to get much higher volume so have more to amortize over and while I welcome that, I can't fully get behind that because I don't believe in the heavy short range EV that the leaf is. it can cover a lot but the range limit will make people hold back, absent a workable fast charge network at key motorways. lighten it up and add a light 2 banger generator and it's an entirely different story.

        I will be right about the leaf price drop and cost and people will have forgotten and go on to attack me for something new that I am right about.
      • 4 Years Ago
      Hell yeah, go Ghosn.

      So refreshing to see a company that is actually serious about all this. You can tell - he only has positive things to say about EV's when in public. There is no backpedaling, the guy is genuinely into it.

      • 4 Years Ago
      How many Russian Wheat Disasters, and Pakistani Floods will it take for America to take seriously Global Warming?

      Will we wait for a US Wheat Belt Disaster?
      China oil supplies are tight, China telling citizens to Not Hoard Oil.

      Does anyone in the USA do Long Term Planning?

      This car will be a success if citizens ACT, because government won't.
        • 4 Years Ago
        Mike!!ekiM,

        The EV revolution is happening without the fear-based "global warming" campaign because there are A LOT BETTER reasons for electrification than AGW. Simply put, electrification of light duty vehicles will immediately cut our consumption of foreign oil that costs Americans $$450 BILLION EVERY YEAR! Domestic energy production and manufacturing of EVs revitalizes our economy and creates new JOBS.

        Less demand for foreign oil means less military defense of unstable oil nations and a vastly improved national security profile. Bottom line is global warming has had zero influence on electrification of transport - ECONOMY, JOBS and SECURITY has.

        While some still pay lip service to the tired global warming campaign, every automaker knows why they are moving swiftly to manufacture PHEVs, EVs - there is real money to be made. And sustainable energy happens to be good for the planet.
        • 4 Years Ago
        Why they hate the NYTimes:
        Climate Change is Here, Now.

        http://www.nytimes.com/2010/11/28/opinion/28hedin.html
        • 4 Years Ago
        "This is about cars. Electric cars will not solve global warming. "

        Sure they will. Thy don't use gasoline.

        The other thing that so many people are missing is not that it is simply expensive and a waste of money to buy overseas oil, but it will soon be impossible to do so. China and Russia are now moving away from the US dollar as reserve status. This is an important milestone because once the US dollar is no longer used as the global reserve currency it will sharply fall to zero, zilch. This means that the USA won't even be able to buy oil externally. It's only source will be a few offshore rigs, and Alberta. So the US will likely invade Canada if Canada doesn't keep the pipes flowing south for free after the US currency collapse. This arrangement will be made politically possible in the US by the media fabrication of a bunch of extremist Canadian terrorists who must be controlled via military intervention for the security of the USA.
        • 4 Years Ago
        If it takes 7KwHours to refine one gallon of gas, and possibly 3 gallons of gas from pump to pump, then EV's and global warming are linked. But, it's primarily 7 Billion People, growing into 9 Billion in the next 25-30 years, many or most in China and India that's the source of the problem. Will we even have oil in 20 years? If we don't have oil we don't have Synthetic Nitrogen, which means a drastic drop in crop yield. No matter what angle you start with converting to EV's has got to be a start.

        Capitalism has never learned from Malthus or Ricardo. Global Warming is a symptom that we have reached the carrying capacity of the planet.
        • 4 Years Ago
        RA: Standing ovation!!

        Mike: take that to another forum. This is about cars. Electric cars will not solve global warming.
        • 4 Years Ago
        RA & Met +++

        So many other reasons than GW to move away from oil.
        • 4 Years Ago
        • 4 Years Ago
        Climate Change isn't going to be some kind of free ride:

        http://www.huffingtonpost.com/2010/11/19/invasive-species-world_n_782231.html#s179934
      • 4 Years Ago
      Global warming is a scientific fact (global average temperatures have increased in the last 50-150 years), one that's best explained by the theory of anthropogenic global warming that's based on the basic physics of the greenhouse effect; and it's also the prediction of every climate model that temperatures will continue to rise over the next century as greenhouse gas concentrations continue to rise. Calling it a "religion" is a cheap way to avoid confronting the stark unyielding reality of that scientific consensus.

      For every study and scientist that suggests that there is possible evidence of human caused global warming I can refer you to others with the exact opposite view and will suggest otherwise.

      Why were they reporting 35 years ago that another ice age was iminent? Scientific research, "consensus," even including a suggestion that ash could perhaps be spread on the poles to help slow it.

      Again, for every study, sky-is-falling conference, scientific "consensus" and link, I can give just as many in return that debates the relevance of man made contributions and gives contrary evidence.

      I'm not saying that global warming doesn't occur or isn't. I'm saying it's way too early to determine with any degree of accuracy whether man made machinery contributes to this change and if it's of any significance at all.

      And it's naive to even think that there isn't a bias factor concerning these "studies" as many have an agenda of their own including funding sources.

      This earth has survived meteor strikes, volcanos, earthquakes, cataclysmic events for 4.5 billion years and automobiles (which are 99%+ clean and 100 times cleaner than 20 years ago) are somehow going to cause such a dramatic change in climate as to cause calamities of these proportions? Absurd.

      This issue is far more complicated and debateable than the Chicken Little alarmists have suggested.
        • 4 Years Ago
        The "ice age was eminent" was from Time Magazine, not Science or Scientific American. Journalists don't get their facts right, look at Fox Lies!
      • 4 Years Ago
      "For every study and scientist that suggests that there is possible evidence of human caused global warming I can refer you to others with the exact opposite view and will suggest otherwise."

      The problem is that none of those which I have ever seen have any scientific credibility. They are usually politically motivated jokes. And I don't buy the argument that the scientific community is keeping dissidents out of the journals. If you can direct me to a legitimate scientific study supporting you assertions, I'm all over it as always.

      "Why were they reporting 35 years ago that another ice age was iminent?"

      Because back then scientists were starting to put together the puzzle of how long term climate fluctuations work, and they were discovering that Milankovitch cycles are the main drivers of this. These are long term wobbles in the Earth's orbit. According to the current Milankovitch wobble, we should be entering a gradual cooling pahse. That is what led to the alarm over global cooling 40 years ago. Since then, scientists have had access to the polar ice sheet historical data and have learned of the 100% correlation and positive feedback relationship between CO2 and temperature. It now seems undeniable that our very rapid increase in GHG concentrations is going to grossly outweight the cooling impacts from orbital fluctuiations.

      "And it's naive to even think that there isn't a bias factor concerning these "studies" as many have an agenda of their own including funding sources."

      I'm not in the club of climate scientists so I can't speak for their bias, but I am going to go out on a limb and suggest that there might just be a tiny bit of a funding bias from the oil industry too.... you know, that $2000 a year everyone spends on fossil fuels, which would dry up when people transition over to renewable energy sources?

      "I'm not saying that global warming doesn't occur or isn't. I'm saying it's way too early to determine with any degree of accuracy whether man made machinery contributes to this change and if it's of any significance at all."

      It's convenient how people rely on this argument when science is saying something they take issue with politically, but then they'll happily accept every other scientific discovery which benefits them. Are you willing to give up medication when you need it? How about your computer? Did you get laser eye surgery? Do you believe in the validity of DNA testing? Do you believe that when you push the pedal down in your car, it goes vroom vroom and moves? Those are all scientific innovations that I would guess you accept quite readily.

      "This issue is far more complicated and debateable than the Chicken Little alarmists have suggested."

      It really isn't.

      http://en.wikipedia.org/wiki/File:Co2-temperature-plot.svg

      (And don't criticize Wikipedia as a source -- all the AGW deniers agree with this graph)
      • 4 Years Ago
      The BS meter goes BOOM.

      Just because Nissan's school of EV's doesn't turn a profit now doesn't mean it's impossible for anyone else... even at or below this price point.

      They're the greedy numskulls that insisted on proprietary tech development, low production numbers and an odd new vehicle design. Well duh, of course it'll be tough to turn a profit under those conditions!
      • 4 Years Ago
      Yes, this is quite reasonable. GM is presumably selling Volts at cost and Nissan is selling LEAFs at a loss. Nissan can afford to take a loss to get market share, GM cannot. In 3 years, battery costs will have come down a lot, both through better design and high volume production. High volume production alone can make dramatic reductions is cost.
        • 4 Years Ago
        No- GM is selling Volts at manufacturing cost. This works out to a loss because it does not include 1B+ in development costs, many millions in marketing costs, etc. Since GM outsources the most expensive components, economies of scale will not benefit them as much. However, their projected scale of 1/10th on Nissan/Renault will not get them much scale efficiencies anyway.

        Nissan sells LEAFs at a price point that they start paying back development costs. At 500,000 per year, Nissan pays off the development costs and makes a profit for the overall program. As Nissan/Renault design and build all major components in-house, they get to take all of the rewards scale brings them. And 500,000 is without government incentives (mentioned in the original interview).

        Carlos Ghosn has a long record of making money and breaking projections, so there is little doubt that his financial projections are pretty close to conservative.
      • 4 Years Ago
      Carlos Ghosn has a vision but he obviously did some number crunching as well. He knows exactly when EVs will become profitable for them and, unlike VW/Audi is serious about succeeding.

      Also, Nissan/Renault doesn't mind sharing its EV technology with others such as Daimler. As Tesla has shown, sharing EV platforms can accelerate the development of new models.

      I'm holding out for Model S, but otherwise would go Leaf too.
        • 4 Years Ago
        There's no date for the Infinity EV yet. Plus, we have yet to see the final design. Model S will be available worldwide (at Tesla dealerships) in 2013. Hopefully, things won't be pushed back to 2015 or something...
        • 4 Years Ago
        how about that nice Infinity EV? there is nothing wrong with flirting around, is there?
        • 4 Years Ago
        Fingers crossed.
      • 4 Years Ago
      How many Russian Wheat Disasters, and Pakistani Floods will it take for America to take seriously Global Warming?

      LOL. And I'm sure you have scientific studies to link to that verify this.

      This just in: Floods, famines and crop failures have been going on for thousands of years. I might add that the majority of the time there were no internal combustion engines on earth.

      Global warming evangelicals. All that's missing is the pamphlet and drawings that show "Death! Destruction! Floods! Wheat Disasters!" Good grief, the religion of global warming...
        • 4 Years Ago
        Here you go,
        * http://www.guardian.co.uk/environment/2009/sep/06/global-warming-natural-disasters-conference
        * http://www.enn.com/climate/article/37640

        Duh, obviously there have been natural disasters in the past, and you can never point to a single event and say "Definitely caused by global warming". However, there's good evidence that the pace and severity of "natural" disasters has increased in recent decades and sound scientific basis for believing they will continue increasing due to global warming. What do YOU think will happen as glaciers recede and average temperatures increase?

        From that second article:

        'While climate change cannot be linked to any individual weather event, it is widely accepted that warmer temperatures associated with climate change cause more extreme weather.

        The Intergovernmental Panel on Climate Change stated in its 2007 assessment that "various extreme events are very likely to change in magnitude and/or frequency and location with global warming." Predicted changes include extended periods of hot days and nights, and greater precipitation in higher latitudes. More intense tropical cyclones caused by warmer sea surfaces, while debated within the scientific community, are likely.'

        Global warming is a scientific fact (global average temperatures have increased in the last 50-150 years), one that's best explained by the theory of anthropogenic global warming that's based on the basic physics of the greenhouse effect; and it's also the prediction of every climate model that temperatures will continue to rise over the next century as greenhouse gas concentrations continue to rise. Calling it a "religion" is a cheap way to avoid confronting the stark unyielding reality of that scientific consensus.
        • 4 Years Ago
        I believe global warming DOES exist, but he takes it so far over the top that it becomes self-parody.

        Indeed, it does sound like the words of a religious nutjob, just on a different topic..
        • 4 Years Ago
        "Global warming evangelicals. All that's missing is the pamphlet and drawings that show "Death! Destruction! Floods! Wheat Disasters!" Good grief, the religion of global warming..."

        Yes, climate has been changing all throughout the earth's history. The problem is that humanity has multiplied like bacteria in a petri dish to fill pretty much every available niche on the planet. And we have even gone beyond this and overextended ourselves by relying on depleting reserves of fossil fuels and freshwater to boot. This means that ANY climate change, be it warming or cooling, is going to have serious negative consequences, and this will only get worse in the future as our unstoppable global growth steams on towards the brick wall.

        And there is very substantial evidence supporting the concerns over global warming. CO2 and temperature are virtually 100% correlated over the last million years.
        • 4 Years Ago
        My view is we need to give the earth the benefit of the doubt that climate change is Real.

        Cause if we are are wrong no big deal we may have wasted some money and some time on it - but we will have likely have a better world anyway ie. less smog in major cities etc, energy independence etc.

        But if we end up being right and do nothing then the results could be disasterous.
      • 4 Years Ago
      I see BEVs as creating at least two positives: cleaning up local smog and eliminating the need to buy foreign oil. Not many Americans seem to have arguments over these two issues.

      If GHG is cleaned up by driving BEVs then that might be another positive. If coal plants decide to clean up their stacks and find a way to contain their mountains of toxic ash or switch over to NatGas, that's a good thing and lowers pollution of all kinds. If the government supports solar and renewable energy generation, that great for the country.

      I'm pleased that Carlos Ghosn brought Nissan back to the status of a major auto company with excellent products and I respect his decision to move forward with solutions that pave the way for others to follow with mass produced BEVs.
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