Feb. 22 (Bloomberg) -- Bhutan is set to show Carlos Ghosn whether electric cars can contribute to the good life.
Nissan Motor Co.’s chief executive officer introduced the electric Leaf car to the Himalayan kingdom of 700,000 people, which measures progress by the gross national happiness index. While the model has failed to meet sales forecasts in other markets, Bhutan holds promise since it exports 72 percent of its electricity and must import gasoline and diesel.
Armed with state support and favorable policies, success in turning Bhutan’s fleet may boost confidence in the prospects of electric vehicles. Failure to develop the small Himalayan kingdom into an EV showcase would be a setback to Ghosn, whose vision of a world where one in 10 cars sold are electric by the end of the decade is looking increasingly remote.
“It’s just kind of a publicity stunt,” said Edwin Merner, president of Atlantis Investment Research Corp., which manages about $3 billion in assets. “Not many people are buying the car so they have to try even the smallest countries in the world.”
As part of its pledge to support Bhutan’s plans to electrify its fleet, Nissan will supply quick chargers and Leaf cars for the government fleet and as taxis, according to a statement by the Yokohama, Japan-based automaker yesterday. The country will study exempting EVs from taxes and allow them to earn carbon credits as it seeks to replace conventional cars to cut the costs of importing fuel.
For Bhutan, adopting EVs will allow it to better utilize electricity generated by its 27 hydroelectric power plants.
Actual sales for Nissan will be limited given Bhutan’s 700,000 population, with most living in rural areas. There are a total of 44,678 light vehicles in the whole of the country.
“This is a very initial step,” Ghosn told reporters in a briefing in Thimphu yesterday, before a power blackout. “We obviously want to sell a lot of Leafs, but it’s still early to talk about how many.”
Then there’s the price tag: at its starting U.S. advertised price of $28,800, the Leaf is more than 12 times Bhutan’s per capita income, according to World Bank data.
Nissan presented two Nissan Leaf cars to Bhutan yesterday on the birthday of King Jigme Khesar Namgyal Wangchuck, according to the statement.
In 2009, Ghosn pointed to Denmark, Israel and Portugal as markets populated by consumers concerned about the environment, and with infrastructure that could be adapted to the needs of electric motoring. They’re also small enough to suit the restricted driving range of all-electric vehicles.
The number of EVs sold in Denmark increased by 9 units to 505 vehicles last year, accounting for 0.3 percent of overall sales, according to Bloomberg New Energy Finance estimates. Nissan declined to provide breakdowns for Leaf sales in Denmark.
Still, the Leaf remains the world’s best-selling electric car, with cumulative sales topping 100,000 as of January. Last year, deliveries increased 76 percent to 47,547 units, after the company cut prices and extended the battery range.
In downtown Thimphu, the capital city, Bhutanese like Ngawang Rinchen and Jigme are more concerned about the price tag than the environmental benefits of EVs.
The majority of vehicles plying the two-lane highway linking Paro, where its only international airport is located, to Thimphu, are cars made by Maruti Suzuki India Ltd., Hyundai Motor Co. and Mahindra & Mahindra Ltd.
“Only highly-paid people can afford a car,” said Rinchen, 23, sitting on a bench in Thimphu’s clock tower square, dressed in the traditional long tunic with stockings that is the national dress. “First I want to support my family, then myself and then the government.”
For Jigme, 34, who goes by one name and runs a travel agency that organizes treks for tourists, the price tag matters more than the technology.
“Will the electric cars be cheap?” asked Jigme, while sunning himself in Thimphu. “If not, then it won’t make a difference.”
--Editors: Chua Kong Ho, Young-Sam Cho