Renault-Nissan will be developing an affordable electric vehicle (EV) for China as the Franco-Japanese alliance’s current offering, the Nissan Leaf, is proving to be too expensive for Chinese buyers, according to a Tuesday report from Automotive News China.
In 2015, Nissan China sold just 1,273 units of the Venucia e30, a local version of the Leaf, the report said. The car has a starting price at 242,800 yuan ($36,900).
"We envisaged much more [sales of the e30] than that," Renault-Nissan CEO Carlos Ghosn told reporters at the opening of Renault's plant in Wuhan, Hubei Province, in the past week. "We know price is a handicap. For me the solution will be a very cheap electric car."
Ghosn declined to comment on the size of the new EV or whether it will be made available to markets outside China.
China's demand for new-energy vehicles, which include EVs and plug-in hybrids, has rapidly risen over the past few years. In 2015, sales of such vehicles reached 379,000 units, according to China Daily citing government data.
The announcement comes after Renault said it will sell its own Fluence EV in 2017 under a Chinese brand name. The vehicle will be assembled at Renault's plant in Wuhan using kits imported from the company's facilities in Korea.
Renault expects to sell just a few thousand Fluence EVs a year, Thierry Bollore, the company's chief competitive officer, told Automotive News China. The car will be badged with an unused brand name from Dongfeng, Renault-Nissan's domestic partner in China.
China's EV market has been shored up by substantial government subsidies, with Beijing envisaging five million electric vehicles and plug-in hybrids plying the country's roads by 2020.
Ghosn said that despite the incentives, a huge chunk of EV sales in China are cheap models made by local brands with price tags ranging from 30,000 to 50,000 yuan ($4,600 to $7,000). The country's bestselling electric car for 2015, the Kandi EV city car, sold 16,376 units at a price tag of 41,517 yuan ($6,317), according to the China Association of Automobile Manufacturers (CAAM)
"The government is saying we want more electric cars. The public is saying, 'Yes, but we want them cheap,'" Ghosn said.
Ghosn added that Renault-Nissan would start development of an affordable electric car provided that automakers must figure out what the public wants.
"We need to work out what are the best compromises between acceptable performance and lowest price possible," he said.
Hu Xindong, the head of the Dongfeng-Renault joint venture, said the EV market in China is "passive," and driven mainly by government incentives rather than choice. He cited the example of China's two biggest cities, Shanghai and Beijing, where residents can obtain a license plate and permission to own a car for free if they buy an electric vehicle.