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Monday, September 21, 2015

Electric Cars: Renault's the Leader, not Tesla!

by Mike Smitka
During the GERPISA auto conference in Paris in June I stayed in a hotel with a row of electric vehicles parked out front. The "Bluecar" wasn't fancy, but they were used: at times all slots were full, at others none were parked there. I don't know whether the company involved, Autolib', is doing well. But the point is that in parts of Europe a sizable part of the population sees electric cars, day-in and day-out. In Norway, they're 17% of the cars on the road, despite the challenge that batteries face in a low ambient temperature environment.
Within the electric car market the clear leader is the Renault-Nissan alliance, not Tesla. On a worldwide basis they now have over 250,000 vehicles on the road. What is most interesting are the components of Renault's business model.
First, Renault is launching multiple vehicles. Their best seller is the ZOE, made on the same assembly line as the Clio. In other words, they are not needing to design a whole new vehicle, and are gradually leveraging their multiple platforms. (They also have the Kangoo light commercial van.) With this experience in hand they are now ready to launch additional electric vehicles in short order, of course subject to demand.

Kangoo, Paris June 2015
Second, while they sell the vehicle, they lease the battery pack, at a price that is a function of the amount of recharging. That lowers the ZOE's out-the-door price to a level that is higher than the Clio, but not prohibitive. Furthermore, it means that purchasers need not worry about their vehicle quickly becoming obsolete, because Renault designed the battery packs to be both modular and easily replaced. Renault will re-use the overall pack and recycle the individual battery units. At the end of your battery lease, you just lease a new one, and in the process benefit from intervening technology upgrades without need for a new car.
I test drove both the ZOE and the Kangoo on Paris streets, as well as the Twizy quadricycle. I'm not sure what market the latter is targeting, but it doesn't get classed as a car so taxes, drivers licenses and all that are marks in its favor. The version I drove, however, did not have windows and was otherwise ... odd.
ZOE, Paris, June 2015
The ZOE and the Kangoo, however, were proper vehicles, with a refined ride and a refined interior. Other than being slightly quieter than their sister gasoline- and diesel-engine counterparts, you're not really aware of a difference. Yes, there's range anxiety. But a couple of the staff with whom we met use the ZOE as their primary commute. With rapid charging stations more and more common around Paris in particular and France in general, that's less of an issue than it might seem. While a full charge take an amount of time unacceptable for someone running errands that stretch its range, getting to 60% charge doesn't take long, particularly if the comparison is an American running into the gas station convenience store to pick up a soda and a snack. You might need to make more stops than otherwise on a drive to the beach, but time charging is not prohibitive. (You can apparently contract to use the Autolib' slots, which gives you a great parking spot as part of the deal.)
Now with today's low petroleum prices, full battery electric cars aren't cost competitive. Battery prices however keep falling, and since even Saudi Arabia uses secondary recovery methods to extract petroleum, gas prices (diesel in France!) won't stay low indefinitely. Furthermore, even today, charging off-peak in France is no more expensive than running a car on diesel. So with a charging network that is improving daily, the key (as it always has been) is the up-front cost of batteries.
When that time comes, it will be Nissan and Renault that will change the industry, not Tesla. Their vehicles will be at a price point solidly in the mass market, they will be able to offer an array of vehicles, they will have a dense global network of dealers (and hence repair shops) that will be able to handle trade-ins and finance, and manufacturing capacity won't be an issue, because the alliance is making sure that its BEVs can be mixed with existing "conventional" vehicles on existing assembly lines at normal line speed.
To reiterate, at that point Tesla won't even be in the game.
[I have pages of notes from my June 2015 test drive and associated meetings with Renault executives, and may insert the specifics for vehicle purchase and battery lease. As a start, however, I believe the qualitative case is sufficient to make my point.]


Twizy, Paris, June 2015
Twizy test drive, Paris, June 2015