Ghosn's Gamble: The Nissan Leaf Can "Prevent the World from Exploding"

If Carlos Ghosn's gamble pays off, he will go down in history alongside Henry Ford as a person who revolutionized personal transportation.

Ghosn, CEO of the partner companies Renault and Nissan, has bet the farm that all-electric vehicles are the future. Nissan's Leaf, an all-electric family car, is rolling out in auto markets worldwide. Ghosn is betting that the Leaf will establish a beachhead from which the century-long incumbency of the fossil fueled internal combustion engine can at last be toppled – before rocketing demand for cars in very large countries leads to rocketing demand for billions of cars guzzling carbon-based fuels, a fast ticket to a climate change dystopia.

There is no point in hoping that millions of Chinese, Indians, and others entering the middle class will settle for getting around on the bus. We didn't and they won't either.

As Ghosn put it in 2008: "Nothing can stop the car being the most coveted product that comes with development, and more efficient conventional engines are not the answer. We must have zero-emission vehicles. Nothing else will prevent the world from exploding."

There is nothing new about electric cars, of course. Electric drive has been around since Theodore Roosevelt was locking horns with robber barons. Antique car buffs will recall the 1902 Wood's Electric Phaeton, which had a range of 18 miles, a top speed of 14 miles per hour, and a showroom price of $2,000.

The 2010 Nissan Leaf is a wee bit more advanced – a range of 100 miles, a top speed of 90 mph, and a showroom price in the United States of $32,780. Federal tax credits will push the net cost down to around $25,000. Californians can take state tax credits that will further shave the cost down to around $20,000. (Several other states have similar incentives.)

A top selling point is that the Leaf is a "normal" car. It's not a goofy-looking concept car that only EV hobbyists or geeky first adopters could love. Test drivers told Reuters that the Leaf handles like an ordinary driver would expect an ordinary car to handle.

What about "range anxiety," which has been the bane of electric vehicles? Nissan has pursued a parallel strategy of improving the lithium-ion battery and persuading governments to subsidize installation of charging infrastructure. The idea was to make sure that the chickens and the eggs came along in tandem.

Many potholes remain before the EV has a shot at muscling aside the internal combustion engine. Toyota is betting that the plug-in hybrid, combining an internal combustion engine with a battery that can be topped up at home, will be more acceptable to consumers worried about running out of juice on a lonely highway 30 miles from hell and gone.

Other competitors loom – ordinary hybrids, biofuels, coal-to-liquids, and perhaps, years from now, the long-hyped fuel cell. And the oil industry with its vast investment in global infrastructure will not go gently into the good night.

More potholes – Nissan can't count on the subsidies bridge extending indefinitely, not when cash-strapped governments face bond markets roiling from debt crises in Ireland and in Europe's olive belt. The Renault-Nissan alliance's predictions that costs will fall with economies of scale must be on the mark.

And if electric vehicles take off, the electric utility industry must be prepared to handle the extra loads. All kinds of issues come up – adequacy of home service panels and utility transformers; the need for smart meters and monitoring systems enabling utilities and their customers to manage their loads – not a trivial issue when adding an EV to an all-electric home; persuading customers to sign up for demand-response programs that delay EV charging into low-demand periods during the wee hours.

Imagine the impact on the EV market if too many customers blow out their circuits charging EVs during early summer evenings when the air conditioner is running, the dishwasher is churning, the water heater is heating, and the plasma TV is blaring.

What could go wrong? Plenty. What could go right? Plenty also. The stakes are global. Ghosn's gamble will be fascinating to watch.