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Economic war over electric cars.

Summary: High powered drama in the corporate world as three senior Renault execs are accused of industrial espionage. Iman Kurdi of Arab News explains why this really can be called an economic war.

Three senior executives at Renault, the French car manufacturer, have been suspended on charges of industrial espionage.

You might not think it much of a story, neither did I at first, but consider this: Eric Besson, France's industry minister, has called it an act of "economic war"!

Economic war? It made me chuckle. Besson is an attention-seeking politician, his choice of words seemed deliberately colorful, an exaggeration designed to get him the spotlight. But then I read up. The leaked information concerns technology Renault has been developing for electric cars. Renault is staking its future on electric cars, predicting that by 2020 they will account for 10 percent of the global market. In turn, the automotive industry is a key sector of the French economy, and one that employs more than a 100,000 people. Consequently the stakes are pretty high. What is more, this morning it was revealed that the French secret service suspects that Chinese elements are behind the espionage. Suddenly Besson's "war" did not seem so inappropriate a word, and economic war not such a meaningless concept.

At the Paris motor show last October, electric cars were all the rage. Jaguar showed off their C-X75, an electric supercar that had even non-environmentally-minded enthusiasts salivating. The Jag was only an experimental vehicle, but plenty of production vehicles were also on show. Some were small city cars much like the futuristic looking Kia Pop or the distincly odd-looking Peugeot Bb1; others were more racy like the Tesla roadsters and some were electric versions of petrol models we already know -- like Volvo's electric C30 or the Mercedes Benz A-class E-cell.

But the company that had the most electric models on show was Renault. It stole the show with its fantastic DeZir concept car, a sexy two-door coupe with scissor doors and a top speed of 112 mph. Its Japanese arm Nissan showed the Townpod, a somewhat more practical vehicle, as well as versions of the recently commercialized Nissan Leaf. Renault also showed new versions of its Twizy, a mad-looking two-seater city car and the Fluence ZE, an electric version of its Fluence sedan as well as the Zoe Z.E., a vehicle the size of a Clio.

Renault plans to launch onto the mass market no less than four cars in the next two years: The Fluence, the Twizy, the Zoe and an electric version of its Kangoo compact utility car. Nissan is launching another four including the Leaf launched in December. Renault Nissan are already the biggest producers of electric cars in terms of volume and are clearly staking their future on claiming the lion's share of what they see as the future of motoring.

From the point of view of my home region, the attraction is hard to see. Who would want to drive an electric car in the home of oil? In any case, a region with long driving distances, high temperatures and big families is the exact opposite of a suitable market for electric cars. But in crowded European or American cities, they make more sense. In cluttered city centers, the demand is for small cars that are easy to park, that are driven short distances and that are cheap to run. Electric cars fit that bill nicely, but only when they are heavily subsidised by the state, and they are. In the US, buyers can obtain a subsidy of up to $7,500 for the purchase of an electric vehicle. In Britain, there is a similar subsidy of 5,000 pounds. Even with those subsidies electric vehicles remain relatively expensive, but still, it is not hard to see the realization of Carlos Ghosn's prediction that by 2020 one in ten cars being driven will be an electric car -- so long as the technology to make them more competitive follows through. The main two issues that have held up electric cars so far are the cost and the range. With petrol you fill up and drive hundreds of miles. When you run out, you stop at a station and fill up. Within minutes you are back on the road. With electric cars not only is the range limited (up to 64 kms for a GM volt or 160 kms for a Nissan Leaf) but it takes up to eight hours to recharge the battery.

Renault have invested an estimated four billion euros in electric car technology. They are gambling that they can both produce batteries that run longer and more efficiently and that they can drastically bring down the cost per kilowatt hour of battery capacity, eventually bringing it down to the crucial $200 mark that would reportedly make them as competitive as petrol cars. With that in mind, you can easily see why major leaks to their competitors about battery technology could be catastrophic for the company.

But are electric cars really the modern elixir to cure all automotive ills? For a start, are they as green as they are marketed? I am not so sure. Yes, an electric car may have zero emissions, but what about the generation of the electricity needed to power the car? Are they any better than hybrids or cars run on alternative fuels or very efficient petrol cars? Probably so, but their green credentials are possibly a little overstated. The market for electric cars is being created as much by political will as by commercial demand. Let's call it capitalizing on an opportunity. If you can create a market segment of 10 percent of global car sales, you are creating a great opportunity for economic development for a country that can produce the technological know-how to become that market's leader.

Renault have invested the most, closely followed by China, where the government has put in place a programme to develop electric cars bringing together 16 state-owned auto manufacturers with an earmarked investment of $15 billion over ten years.

So now the French secret service is investigating a case of industrial espionage and pointing the finger, at least in their initial response, to China. Given the stakes involved is it any wonder Besson has called it economic war? We live in interesting times, as the Chinese saying goes.

- Arab News

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Date:Jan 9, 2011
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