Nissan Motor is bravely -- or foolishly or naively -- arguing that taxpayers must subsidize the shift to all-electric cars.
Mark McDade, Nissan Canada's electric vehicle (EV) project manager, says that without government help on a range of fronts, the electric-battery car is not going to be accepted into the marketplace any time soon here in Canada, nor anywhere else in the world.
These might simply be interesting musings if Nissan were not so serious about selling electric cars, about making EVs a big business. But the fact is, Nissan CEO Carlos Ghosn is the first to say his company is making a very large industrial bet on EVs. Along with its alliance partner Renault of France, the two companies have spent some US$5 billion on EV and battery developing during the past decade.
Both companies hope to leapfrog rival car companies that have devoted mountains of research and development dollars on gasoline electric hybrids and diesels. The proof of the strategy will come 18 months from now when the Leaf goes on sale, followed by several Renault EVs. In the meantime, the Nissan and Renault are feverishly working to create a market for them in Canada and the rest of the world.
But there's a problem. Consumers, say McDade and others at Nissan right up to CEO Ghosn, simply will not buy EVs unless they are cheap and convenient -- as cheap and convenient as a comparable gasoline or diesel car. But until electric cars are built and sold on a mass scale -- in the millions world wide -- they have no hope of being the cheap and convenient equal of the 100-year-old internal combustion (IC) engine car.
This is where tax incentives, levies, subsidies, and consumer bonuses enter the picture. Nissan argues that they level the playing field for electrics. Politicians courting the "green" vote, or preying on fears of energy security and supply -- or both -- are increasingly saying they agree. And they're willing to put your money where their mouths are by spending taxpayer money to pump-prime the production of affordable, reliable and safe EVs.
The "green" issue is powerful in Canada, but we don't worry about energy security in the same way as China, the United States, France and others. Outside of Canada, the switch to electric is more about reducing dependence on imported oil from unstable regimes. Thus, China, the U.S. and France have all pledged to spend up to US$15 billion to support EVs in the marketplace.
In Canada, our federal government has been as silent on EV subsidies as it has on meaningful energy policy overall. So the provinces have moved into the void.
In the summer, Ontario's government said it plans to offer rebates of up to $10,000 to purchasers of electric vehicles starting next year. Other provinces will soon jump on the incentive bandwagon.
Look for British Columbia to be next. Here's why: Nissan just announced that the Leaf EV will first go on sale in British Columbia in 2011, then the rest of Canada and the world in 2012. By the time the first Leaf is sold, B.C. is certain to have EV subsidies in effect.
Beyond that, McDade says B.C.'s government, the City of Vancouver and B.C. Hydro, the province's giant public utility, have been all-hands-on-deck in support of EVs in other ways. B.C., he says, has created the right environment for Nissan to land the Leaf.
McDade says pro-EV policies and regulations in B.C. are an early template for creating the ideal EV market. For instance, in Vancouver, all new homes must have a 220-volt outlet in the garage for recharging an electric car. New townhouse and apartment construction must also include EV recharging outlets for 20 per cent of the available parking stalls.
But B.C. and Vancouver's governments, along with B.C. Hydro, are doing even more than that; they plan to buy the Leaf and put it to use as a standard fleet vehicle. In short, if you are wondering who the first Leaf buyer will be, the answer is the B.C. taxpayer.
If everyday consumers wish to buy, that's a good thing and no Nissan dealer will turn down a sale. But Nissan Canada's initial plan is to sell the Leaf into government and utility fleets right across Canada. That will ensure a baseline of sales support from the outset.
Interestingly enough, subsidizing electric cars does not sit well at all with Nissan's key Japanese rivals. Both Honda Canada and Toyota Canada, each with active EV and gasoline-electric hybrid programs of their own, have said they oppose the Ontario subsidy program.
"We don't want government deciding winners and losers," Jerry Chenkin, executive vice-president of Honda Canada Inc. said after Ontario Premier Dalton McGuinty announced the rebate program and goal of remaking the vehicle fleet in the province so that one of every 20 vehicles on the road is a plug-in hybrid or battery-powered car or truck.
"This announcement of a $10,000 rebate is creating winners and losers on products that aren't available yet and [on which] nobody knows the real time line," Chenkin said.
Even Toyota Canada Inc., which this year plans to bring a plug-in hybrid to this country for testing, has been critical of Ontario's EV subsidies. Toyota's position is simple: new technologies must succeed as a result of consumer demand alone.
Honda and Toyota's opposition in Canada is a bit rich, given that both have benefitted mightily from EV and hybrid subsidy programs in their home market of Japan. Honda's new Insight and Toyota's new Prius can thank subsidies for helping them become hits in Japan.
In any case, Ghosn, McDade and the rest at Nissan apparently do not expect governments to bribe consumers to buy EVs -- at least not forever. They argue that subsidies are only a temporary piece of a bigger plan to move the mass market out of gasoline and diesel cars and into electrics.
Given the scope and the cost of Nissan's wholesale EV push, it surely is fair to say the company is either brave, foolish or na�ve to go down this road with such zeal.
