Nissan Feels 2025 will Reverse the Fortunes of Electric Cars

Electric cars are seen now more as a novelty than as a viable option for travel as their initial cost is a lot more than that of mass market petrol or diesel cars. This scenario is expected to continue till the middle of the next decade, according to one of the most senior executives in Nissan, Executive Vice-President Daniele Schillaci. Schillaci said in an interview he gave to the Financial Times that by 2025, advancements in technology will make it possible for manufacturers to price electric cars at rates that are comparable to their petrol powered counterparts. This will end the need for subsidies for those who use electric or hybrid vehicles.

Schillaci said, “That will be a turning point for the customer.” Nissan, as part of a global alliance that also comprises Renault and Mitsubishi, is the world’s largest manufacturer of electric cars and has sold over 500,000 Leaf cars since the model was launched in 2010.

Many other leading car manufacturers including Jaguar Land Rover and BMW which are known more for their luxury and performance oriented vehicles are investing sizeable amounts in electric vehicles as emission norms across the globe become increasingly strict.

Volkswagen has set itself the goal of selling at least 3 million electric or hybrid cars on an annual basis by 2025, while Ford has committed to investing USD 11 billion in the development of electric car technology. The Renault-Nissan-Mitsubishi alliance has grand plans to launch 12 new electric models by 2022.

In spite of such ambitious goals, electric cars still account for less than 1 per cent of global car sales, with the main barrier being their high sticker price. While the petrol-powered Nissan Micra costs only GBP 12,000, the electric Leaf model has a base price of GBP 22,000.

It is expected that the high base prices will drop with technological advances in the field of battery technology. Many companies including Toyota are investigating the viability of solid state batteries. Another factor that needs to be taken into account is that battery powered vehicles are cheaper to run and maintain, as electricity is cheaper when compared to petrol and they also have very few parts when compared to their internal combustion engine powered counterparts.

For example, a Chevrolet Bolt, the electric car made by General Motors has only 35 moving parts when compared to 167 in a Volkswagen Golf. Electric cars have a simpler design than conventional cars.
Analysts at UBS have projected that the total cost of owning an electric car, inclusive of charging costs and maintenance, will become less than that of conventional cars as early as this year in Europe. Nevertheless, it will still be difficult to promote the sale of electric cars without generous subsidies and incentives from the government. For example, the country having the highest number of electric cars is Norway, which offers generous subsidies. In Denmark, the sale of electric cars fell by 60 per cent in the three months after government subsidies were removed.

As more consumers switch to electric cars, governments are slowly discontinuing subsidy schemes. For example, the government in the United States is planning to stop payouts to manufacturers of electric cars once they sell 200,000 electric vehicles. The Chinese government has set a timeline for winding down its subsidy program. According to Schillaci, the ability to buy electric cars without the need for subsidies would be the “turning point globally”.