Electric Cars Face Challenging Market In Brazil

Brazil market not as ready as U.S, Japan, Europe for electric-vehicle push, Nissan CEO Ghosn says

Ghosn: No clear initiative to support adoption of electrics by Brazil government

Brazil's oil fields, high use of ethanol also seen as key factors

RIO DE JANEIRO -(Dow Jones)- The future of the automotive industry is likely in electric vehicles, but the technology faces a challenging market in Brazil, the chief executive of Japan's Nissan Motor Co. Ltd. (7201.TO) said Thursday.

Carlos Ghosn, who also serves as chairman and chief executive of France's Renault SA (RNO.FR), cited Brazil's recently discovered oil fields, heavy use of biofuels and a lack of government support.

"We are pioneers in electric cars," Ghosn said during an announcement of Nissan's first factory in Brazil. "When the Brazilian government wants, when the Brazilian government is ready, we will instantly bring this technology to Brazil."

Nissan, which produces the popular Leaf electric car, doesn't view Brazil as a good candidate for early market tests of electric vehicles. The pressure to adopt the new technology isn't as strong in Brazil, which is currently rushing to develop offshore oil fields that could transform the country into one of the leading crude producers and exporters. In addition, the country is the world's largest producer of sugar-cane ethanol, with more than 80% of new cars able to run on the clean-burning biofuel.

"The attractiveness of Brazil as a market for electric cars will depend on the will of the Brazilian government to support the consumer in order to buy electric cars," Ghosn told Dow Jones Newswires in an exclusive interview earlier this week. "As long as there is no clear initiative by the government to support development of electric cars in the country, I don't think it's going to happen."

There are some signs that Brazil's government is waking up to the need for incentives to foster growth of so-called "green vehicles." Local press reports said that President Dilma Rousseff's administration was discussing plans that could allow Brazil to be at the forefront of electric-car adoption, including the end of a 25% industrial production tax on electric and hybrid vehicles.

Rio de Janeiro Governor Sergio Cabral also hailed the future of electric vehicles during Thursday's ceremony to unveil Nissan's $1.5 billion plant, which is expected to produce 200,000 vehicles per year. Rio de Janeiro wants to offer incentives to ensure that electric cars are produced in the state, said Cabral.

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Electric car sales appear to slow despite government grants

15 electric vehicle grants issued in last three months, fewer than half number issued in quarter before Sales of electric cars have all but stalled, despite government grants to encourage an electric revolution to cut emissions from burning petrol and diesel.

Figures from the Department for Transport show that only 215 electric vehicle grants were issued in the last three months, fewer than half the 465 issued in the previous quarter.

The figures were obtained by the research charity the RAC Foundation, which said the latest sales take the total number of battery-powered cars in the UK to just over 2,500, out of a fleet of more than 28m vehicles – a long way short of the 1.7m electric vehicles set as a target for the end of the decade by the government's Committee on Climate Change.

Andrew Fulbrook of market research firm IHS Automotive said that despite generous government grants of £5,000 for each electric car and van, the cost of new electric vehicles was still too high at £20,000-25,000, the choice too narrow, and the spread of charging points too slow to overcome "range anxiety" by drivers worried they will run out of battery power before they get home.

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Tesla's next act: Cheaper electric cars...and a profit?

Tesla Motors can design cool-looking electric cars. Now it has to show the world that it can steer its finances just as well.

CEO Elon Musk said this week that Telsa's iconic Roadster electric sports car will no longer be on sale in the U.S. within a few months, marking a turning point for the company which helped catalyze an industry-wide technology shift to electric propulsion.

The move will cut off Tesla's main revenue source and start a transition to a new product--the Model S electric sedan. Whereas Tesla has still sold fewer than 2,000 Roadsters, the Model S will be made entirely by Tesla at a whole different scale of production in its new factory. That means still-unprofitable Tesla enters a period where it has little room for error as it takes on big changes in how it does business and its underlying product.

"Tesla's real challenge now is on the operational side. They need to switch to an operational model that actually makes them profitable and brings the cash flow to sustain them," said Oliver Hazimeh, the head of the e-Mobility practice at management consulting firm PRTM. "The question is how do they get the scale to make money on this car."

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