Ken Gratton•12 Feb 2013

NEWS

Renault ZOE for under $40k?

Renault boss confident there's a place in the Aussie market for a small EV at the right price

The announcement last week that Better Place would be closing down in Australia effectively sounded the death knell for the Renault Fluence ZE.

As a consequence, Renault Australia issued a statement the following day, clarifying that the introduction of the electric-powered Fluence was indefinitely on hold. The statement from Renault is reproduced, verbatim, at the bottom of this article.

But it's not the end of Renault's ambition to market a small electric vehicle in Australia, not by any means. According to Justin Hocevar, managing director of Renault Australia, the prospects of the smaller ZOE reaching the local market are looking very hopeful.

"I'm a big believer in Zoe; I think it's a fantastic car," Mr Hocevar told motoring.com.au late last week. "We had four units of them out in Australia for climate testing, going back over 12 months ago now. We had a good opportunity to drive the car very early on in the piece – and subsequently had the opportunity to drive it in Europe."

ZOE, which Mr Hocevar describes as a "ground-up, purpose-built EV", offers a range of up to 210km, according to the NEDC in Europe. That makes it a better solution for the daily commute than Mitsubishi's i-MiEV to use one example, but it's a very accomplished vehicle in other ways too, says the Renault chief.

"It comes together as a really beautiful package of technology, comfort, space and design. That technology is across more than just EV driveline and charging of battery, but also in terms of the human interface with the cabin, et cetera.

"Driveability, I think, is wonderful; it is a really nimble urban car, with great torque, acceleration and performance. You've got good range; I think that the range is more than enough to accommodate the vast majority of anybody's daily driving in urban environments. It will also include fast-charge capability that you would be able to use through a multitude of different infrastructure providers."

One of the bugbears of electric vehicles is the high purchase price. It was the hope of Renault and greenies around the country that the Fluence ZE might have circumvented that issue with leased batteries and battery swapping. With Better Place now defunct in Australia, ZOE represents Renault's next best opportunity to open up a new market niche that other car companies are yet to exploit properly. The new model, if and when it arrives, will slot into the light car segment, but priced significantly higher than conventional ICE rivals. However, Mr Hocevar says, the importer plans for the ZOE to be offered at "at a very good price point."

"It will certainly be at a premium versus other light segment cars, but because of its technology package and because of its specification – this is very early speculation, and I'm going to provide a very broad range – but I suspect that the vehicle on its own would probably come to the Australian market somewhere between the high twenties and potentially early thirties."

Those ballpark figures are based on the same business model Renault was planning to put in place for the Fluence ZE – leasing batteries separately from the car.

"We still think that there's an ability to provide the vehicle, and the battery hardware and utility packaging as two separate things," Mr Hocevar explained. "If that wasn't for everybody, if we were not successful in being able to achieve that, then you might see the battery packaged with the vehicle; in which case... you're talking about a total package that would be in the high thirties."

For the moment, the ZOE remains the subject of evaluation for the Australian market, but the business case for the car looks almost assured, with Renault taking local media to Europe for the Geneva motor show – and to drive the ZOE in its natural habitat. From what the Renault exec says, it seems like the ZOE is being fast-tracked for Australia because of the Better Place stumble, despite the federal government providing nothing in the way of solid incentives to encourage retail consumers to buy electric vehicles.

"Some of the dialogue we've had with head office over recent times, which let's say has been accelerated due to the change of strategy working with Better Place, has led to some very positive moves at a high level.

"Having said that, it is still a business case... for a market that still has really struggled to see any [sales] success – volumes of any significance, with any manufacturer – and it's also in a market that is really dragging its heels with regards to the implementation of incentives, tariffs or any other sort of initiatives that would encourage the commercialisation of the electric vehicle."

Price sensitivity is, naturally, why Renault would like the government to assist with subsidising the cost of producing and marketing electric vehicles. Renault is not the only company to think this way either, but it has been the only company so far to come up with a government-style solution in the absence of a real government solution – in Renault's case, a partnership with a private company. By spreading the cost of battery supply and power over a period of time, via Better Place, the Fluence ZE was to be a more affordable alternative than other electric vehicles currently on sale in Australia – including plug-in hybrids.

But Better Place failed to roll out the battery swap stations the Fluence ZE needed to be viable and for its business case to be sustainable. It was that scenario that prompted Renault to announce it was holding off the local introduction of the car temporarily. Better Place's announcement last week that it was upping stakes in Australia, served merely to change the Fluence ZE's market status from 'unavailable yet' to 'forget about it'.

With a start-up company like Better Place, there was always some risk the company would fold up its tent and slink off into the night. How much did Renault recognise it was taking on some degree of risk, with a company like Better Place – here and abroad? According to Mr Hocevar, there was simply no real alternative.

"As far as battery switch is concerned, Better Place [was] the only partner that we had been looking to work with, both internationally and locally; certainly having entered both international and local agreements – so not so much of an issue there.

"Mind you, because our EV portfolio doesn't rely entirely on battery switch technology – in fact many other vehicles are simply charged [by]... more common means – therefore we'd always maintained market dialogue with other charge structure providers, power utility organisations and even financiers... in-house or otherwise."

Given the close association between Renault and Better Place, it would have been in the best interests of both companies to have the Fluence ZE succeed in the local market. That raises the question... exactly how close was that association in Australia? Did Better Place contribute some funding to the ADR approval of the Fluence ZE, for instance? Mr Hocevar says no.

"We covered all that; let's say that was just one of the commercial risk/opportunities that we would have to incur, to work towards a commercialisation of the vehicle [for] that agreement with Better Place.

"But that's not something we're particularly concerned about; it wasn't a huge investment."

Since the Fluence ZE can be recharged from a standard 10-Amp power outlet, which is almost universally installed in garages around the nation, it seemed surprising that Renault's introduction of the EV to the local market was stalled by Better Place's financial problems. Why was Better Place's involvement in the marketing of the Fluence ZE so critical?

"Here's the thing," Mr Hocever replied, "a lot of early studies show that most people – just a little bit like their mobile phone – they go home at night and charge their battery in their car. That's sufficient time [for] just conventional slow charge... the next day they've got full charge – and more than enough range to accommodate their daily driving.

"That seems to be an acceptable practice for a small part of the market – particularly early adopters. But I think that for, let's say, prospective fleet customers and the broader retail community, they still hang onto this desire for flexibility... to be able to say: 'What if I need to go further than that range in any given day? What's my solution?'

The solution for Renault's customers lay with Better Place.

"Better Place provided us with an easy concept for business partners to grasp when it came to the separation of the battery, and therefore the financing of the battery.

"I think that that confidence and comfort in the early days of people adopting electric vehicles was something quite powerful."

It was also something of an illusion, as it turns out.

"That battery-switch technology is very expensive infrastructure, and it does require a critical mass of vehicles out there using it, in order for it to be cost-effective. That's where Better Place's [business] model in Australia has proven to be a big challenge.

"They have rolled out that infrastructure in other markets – let's say geographically more condensed markets [like] Denmark and Israel. They are growing their business there, but that is a different proposition of ratio of infrastructure to people and geography."

It's ironic that in Australia, where range anxiety is something more than just a mild neurosis, the population is spread too thin to make the Better Place battery swap business case viable.

So without Better Place's support, the Fluence ZE looks increasingly unlikely for Australian consumers in the short term, but it's not out of the picture yet. Renault could supply the batteries directly, through parts and accessories, with the finance arm handling the leasing arrangements – for a second-generation Fluence ZE that is anticipated to offer more recharging options.

"I believe that the next-generation Fluence ZE, should it go to production – and at this stage I don't see any reason why it wouldn't – would probably incorporate some of the newer technologies that we've seen in other electric vehicles, both within our product portfolio and other manufacturers'."

That would make battery swapping academic, and Renault Australia can supply its own batteries and hardware for the EV. Plus, Mr Hocevar says, the importer is already discussing with Renault Financial Services leasing batteries through the finance company.

"We're going to continue the dialogue that we've been having with our own in-house finance arm – the public name being Renault Financial Services, but essentially underwritten by Nissan Financial Services."

Of course, battery swapping, fast-charging and lease arrangements might cease to be a problem, should battery technology improve in leaps and bounds in the years to come; the problem of range goes away if one battery charge could deliver a 400km range. Mr Hocevar is optimistic that change for the better will happen.

"I think that we're going to see this constant trajectory of improvement in battery range, battery charge and battery cost reduction. I think that's inevitable.

Statement from Renault Australia

Renault Australia has postponed the launch of the Fluence Z.E. until further notice.

This decision is inevitably linked to the decision of our infrastructure partner, Better Place, to announce an orderly wind-down of its operations in Australia.

Renault Australia believes in the future of electric vehicles. It will continue working towards the introduction of Renault brand EV models in the future, such as the innovative, purpose-built ZOE.

spoke with motoring.com.au today to explain what impact the Better Place decision has had on Renault's EV plans in the local market.

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Renault ZOE for under $40k?

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