Sarwant Singh, Senior Partner, & Franck Leveque, Partner, in conversation with Carlos Ghosn, Chairman and CEO, Renault-Nissan Alliance at CES Show 2017 on the future of the Auto industry, Nissan’s key announcements and his expectations on 2017.
Sarwant Singh: What are the key mega trends that you believe will impact the future of the automotive industry?
Carlos Ghosn: There are three mega trends that I believe will have a huge impact on the car of the future
- First is zero emission. We will see lot of regulations around vehicle emissions, and therefore we will see growth in electric cars, hybrids, and fuel cells. By 2030, more than 25 percent of cars are going to be electric particularly in urban areas.
- The second major mega trend will be autonomous/driverless cars; autonomous means you are in the car and you are driving, you will decide when you want to drive and how you want to drive. This is huge because it will make driving much more pleasant, safe and it is going to empower you. When you get into the car today you need your full attention on the road, with autonomous vehicles you have freedom to do what you want in the car. In particular, there is a strong case for driverless cars in commercial applications with logistic companies, retailers, taxi and transport operators, having a strong business case for it
- The third mega trend is connected cars and services. By 2025, every car will be connected globally. Connected services will provide shared services like shared mobility (car sharing, ride sharing).
So in summary, zero emissions, autonomous/driverless cars and connectivity of the car and services, will be key mega trends driving the car of the future.
Sarwant Singh: One of the trends we see is the advent of cognitive era, we see Artificial Intelligence (AI) entering our cars. What role do you believe AI will play in cars in future?
Carlos Ghosn: There is no way we are going to have autonomous/driverless cars without AI, it’s impossible; there is no connectivity without AI. AI is base for all of these possibilities, However AI will not completely solve all the issues. In the case of autonomous driving, there will be situations where no matter how developed we are in AI, humans will need to intervene. For example, if the car finds itself in front of a situation where everything is forbidden, the car will need human intervention to progress. So, artificial intelligence is an enabler, but I don’t think AI is going to completely substitute the human mind.
Sarwant Singh: There were a lot of announcements at CES 2017 in regards to IoT Platforms. Hyundai spoke about launching IoT platforms in partnership with Cisco, VW is launching two platforms, one for cars and one for trucks. Another big trend we’ve seen is the talk of digital assistants in cars. We understand you are going to make a major announcement today at CES, could you please provide some insights about these two trends?
Carlos Ghosn: We’re moving from a car which was device for transportation, to a car which has become a mobile space for working or leisure. Just like the telephone was a communication device in the past has now, thanks to a Smart phone, become a multi-purpose device; the car is going through the same process. Without any doubt, we are going to see more and more partnerships and developments in IoT platforms and digital assistant technologies. We have announced partnerships with Microsoft as our partner for these.
From what we can see today, we have to be modest, because we can only predict what is coming in maybe the next 5 to 10 years. What comes after that is so much dependent on our partners, our computing power development, chip makers, cameras or sensors. It’s very difficult to predict how things will evolve after 10 years, so we need to limit ourselves to Level 4 autonomous technologies in the next 5 to 10 years.
Franck Leveque: We see a lot of growth in new mobility solutions like e hailing, car sharing and others. How do you see this development changing the fundamentals of the automotive industry?
Carlos Ghosn: You know a lot of people are saying either or, it is not either or. We are going to have traditional customers who own a car even if they use it 5 or 10 percent of the time, even though they have 4 X 4 in the city, even if they have a gas guzzler driving at 50mph. I mean a car is very subjective, emotional and irrational buy. On top of this you are going to have a lot development i.e. by not removing car ownership, but on top of car ownership, which are shared services and driverless cars. I don’t think this is going to substitute, it’s only going to add to it, and it may impact somehow the resale of used cars, buying the 3rd car or using Uber.
Frankly, you are not going to see the collapse of cars in the future. Today, we sell 90 million cars a year; 2016 was a record year and we are all forecasting another one in 2017, 1 to 2 percent higher. Maybe it is going to slow down a little bit, but on top of this you are going to have an explosion of new demand.
Sarwant Singh: Thanks to Uber my journey from work to home has halved in cost in London. Tomorrow if I take the driver out of the taxi, this could further halve. With the cost of mobility reducing so much, could mobility become a commodity in the future?
Carlos Ghosn: I don’t think it’s going to be a question that all the cars are going to be without a driver. There are going to be some cases, in some parts of the city, at some specific times, where you will have that. So technology should be seen as an addition and not substitution. At the end of the day, the car industry is always going to be associated because we make the cars and we put the technology in the cars. So again, I don’t think the car is going to become a commodity as technology is going to develop and you are going to have driverless cars only certain conditions.
Sarwant Singh: We are living increasingly in a heterogeneous society which is divided by income, ethnicity, gender, age, language, cultural traditions etc. What does this mean to the car industry? How do we personalize and customize the cars for such a diverse society?
Carlos Ghosn: Obviously this means that we have to continue to diversify our product offering taking into consideration the specificity and the diversity of our customer. For example, in India we are putting on the market a very modern car which we are selling for $4000. If it works in India we know it will work in many emerging markets like Russia, China, Brazil and Africa. We as carmakers know that we have diverse customers, we know that women and men are not interested in the same car or features, older people are not interested in the same features as younger people. We know that Chinese do not select the same cars as the Japanese; so this is our core business, how can we be efficient while at the same time respond to so many different customer requirements, priorities and price points. At the end of the day we are a carmaker, we are an architect, we assemble the car, we assemble parts, we assemble technologies, and we assemble knowledge and bring the product and services around it. We are constantly thinking about the best way to assemble this knowledge and thinking about the best product we can bring to a future diverse community.
Sarwant Singh: What are your expectations from the car industry in 2017?
Carlos Ghosn: I think it’s going to be a great year, challenging obviously, but a good year. I am predicting 1 to 2 percent growth in 2017, and some potential surprises. In my 1 to 2 percent, I consider Russia, Brazil and Japan stable at a very low-level, with China showing moderate growth rate of 5 percent, and the US with a little better stability.
1 to 2 percent after a record year is not bad.
Sarwant Singh: What is your outlook on Electric Vehicles?
Carlos Ghosn: I expect EVs market to continue to grow. In 2016, the market grew by about 50 percent, and the growth was in new markets. The US market was not the only one which demonstrated growth, the China market doubled last year and it may continue that way in 2017.