By Nikki Gordon-Bloomfield
Bringing a new car to market costs a lot of money — around $1-2 billion per platform on a new volume vehicle.
As any auto industry insider will tell you, it isn’t just money either — it’s about years of planning, development and testing before a car is ready to make the transition from computer renderings to the dealer’s lot.
For most automakers, building a new model involves looking back on years of experience developing engines, tweaking chassis and perfecting drivetrains — but what does it cost to develop an entirely new range of cars from scratch?
That’s a question we’ve all wondered for some time. According to Nissan/Renault CEO Carlos Ghosn, the answer is a lot.
$5.6 billion.
That makes U.S. billionaire Warren Buffet’s investment of $230 million for 10 percent of Chinese battery firm and automaker BYD look like chicken feed.
It’s also a little more than the $5 billion line of credit General Motors was given last year in order to keep its cash-flow happy and give it adequate working capital, or the equivalent of launching three entirely new vehicle lines simultaneously.
With so much money already invested, has the Renault-Nissan alliance reached a point where it can enjoy the financial benefits of its investment?
Not quite yet.
“We have already invested EUR4 billion [$5.6 bn], and we will be above that as we have development still to do,” Ghosn told Dow Jones Newswires earlier this week.
Spread out between both Nissan and its alliance partner Renault, the $5.6 billion spent so far has been invested in everything from drivetrain technology and electric car research through to purpose-built battery plants, and the development of an entire range of electric vehicles.
While some industry analysts argue that electric car adoption doesn’t seem to be happening as quickly as predicted, Ghosn stands by his claim that electric vehicles will be 10 percent of his firm’s total production by 2020.
This piece, originally written by Nikki Gordon-Bloomfield, was originally posted at Greencarreports.com, an editorial partner of TPM.
