Following are excerpts from the transcript of a CNBC interview by Julia Chatterley and Carlos Ghosn, CEO Renault-Nissan.
JC: I am joined by the Renault Nissan CEO Carlos Ghosn, so thank you so much for joining us. We were just hearing there about the emissions fails, 15,000 cars recalled, can you tell us what happened? Was this an innocent mistake?
CG: Well, you know, there is today just to put it clearly, there are three questions which are being asked. The first question is there any device which is considered as a cheating device. The answer is no, it's not only the company saying no, it's the government who checked the cars saying there is no cheating device. Then the second question is do we respond to the norms? And norms, you have standards, you have European standards, we're talking, let's remember, we're talking about particular cars which are diesel engines, Euro 6, the category NOx emissions. That's what we're talking about. And then the answer is yes, all the cars of Renault follow the standard on the norm, so there is no question about that. Now then you have a huge domain which is left. Why in the real driving experiences are the emissions much higher than what is standard? Well all carmakers have that, the question is how far they are from the norm. So what we are expecting here with the norm. That means just to make sure there is no confusion in the mind of the consumer, independently of the performance of every carmaker with every diesel engine, if real driving performance matters, let's define what is real driving performance, and let's put a norm so we avoid the confusion. There was one particular issue, only one particular issue on one specific car, which is being recalled, where there was what we call a calibration issue, which was recognised, and the car is going to be fixed.
JC: So there are going to be no further recalls?
CG: Well, you know, you usually recall for something which is outside the norms. If you are within the norms, there is no recall. What is left still, but this is for the whole industry, is let's define what we call real driving performance, in terms of emissions, let's make sure that we have accepted the rules and let's make sure that all the cars follow these rules. So for the moment there is not.
JC: So for the moment, but there is potential for further recalls?
CG: Well, you can't recall cars for norms which don't exist. You recall cars when you have customer dissatisfaction, which is something that is at the discretion of the carmakers, or when the cars do not correspond to the norms. So you have two kinds of recalls. Now, whenever the cars do not correspond to customer satisfaction, carmaker can recall whenever he wants, and we do it and we do it massively. Now, but this is one issue. Then the second issue is, do you have a problem with the norms, which mean, which are officially accepted norms by the European community, and in this case you don't have a choice, you have to recall the cars.
JC: So investors have overreacted?
CG: I'm not going to say about overreaction. I think there is a lot of confusion.
JC: Because they're concerned.
CG: No, there is a lot of confusion out there about cheating devices, following the norms, real driving performance, okay? We can't put everything in the same bag because it's absolutely not the same liability for carmakers.
JC: So it's a regulator problem, not a carmaker problem?
CG: No, I think everything that is a concern of the consumer is a problem for the carmakers, because at the end of the day, this is about trust, and we put a product on the market and we want this product to be really appreciated by the consumer. So whenever we see there is a concern about something particular, it becomes our problem, but this is a completely different problem, which is customer satisfaction. A customer being delighted about something, or, from the other side, not being able to fulfil what is expected from the laws and the regulations.
JC: 15 years, billions of dollars' investment in diesel technology, is Volkswagen, the concerns that you're now talking about, a dramatic game changer for diesel?
CG: I don't think so. I think diesel technology is being beaten up today, you know, for different reasons. Let's not forget that diesel technology is allowing Europe to move towards a very efficient level of CO2 emissions, which is behind global warming. What you're talking about here is something different, we're talking about NOx emissions. It's different categories, and I understand that for the consumer this is all confusing because this is very technical, but you have one issue which is CO2, which is related to global warming, and then you have another issue, which is all the particles which are emitted by specific technology that have to be below a certain level, okay? So we have to make sure that on every single aspect of motorisation, we have clear objectives, clear norms, and we are not mixing problems. Cheating devices is one thing, norms is something else, customer satisfaction and customer anxiety is something also different.
JC: Investor anxiety also an issue here, and that's going to complicate the French government's ability to sell off the 5% stake in the spring. Can we assume there's going to be a delay there?
CG: No, I think investor anxiety is about is there any liability to come for the carmaker. That's why investors, from time to time, react, because they are reacting on the news by saying, 'Oh my god, there is a big liability coming.' So when something like this happens they obviously think to the worst, and what is the worst? Cheating device. Eliminated. Second worst, you don't respond to the norm. Eliminated. Now the third thing is customer satisfaction, and here you have to define what is customer satisfaction, and I want to remind you that the European community has decided to normalise this area, for the moment, where there is no norm, and this is something that we are welcoming.
JC: But if the French government now are going to struggle to sell off their 5% stake, it's going to complicate the relationship with Nissan, surely?
CG: I don't think so. I think the French government has clearly committed to sell, and we have recognised that. The timing of the selling is their own decision. I have absolutely no doubt on the fact that this intention and this will and this commitment will be fulfilled.
JC: The technology obviously a huge part of what's happened with these emission devices. To what extent is technology a crucial element here-,
CG: It is.
JC: Of being ahead of the game in terms of the regulation?
CG: It is. It is ahead of game, it is a big element, except that when you're talking about technology, you should talk about technologies, because this is not only about diesel. This is also about electric cars. This is about hybrid. This is about gasoline engines. So here we are talking about one specific emission on one specific technology, but the market is not done only by diesel engine and the concern is not only about NOx. In the case of Renault, Renault has invested massively in electric cars. We are by far the most advanced in electric cars, zero emissions, and we have put a lot of effort to develop this technology. Besides that, we have made a lot of effort to develop the efficiency of gasoline engine with very good performance in terms of CO2. We also developed diesel engines. So when you talk about massive efforts, you also have to take into consideration the totality of the efforts that carmakers are doing, not on one specific emission, on one specific technology, but on the whole picture. You know, we, and every carmaker makes its own decision. We have decided particularly to put a lot of efforts on zero emissions and promote electric cars while still being competitive on diesel engines and being competitive on gasoline engines. Other carmakers have mad different choices, which is normal.
JC: You haven't mentioned autonomous technology, which is the buzzword here. You've said, 'Look, we're going to have the first autonomous car by 2020.' If I look at what the big tech players are saying, the likes of Tesla, they're saying, 'Look, we're going to have one by 2018.' Are you too slow?
CG: I don't think so. No, I think again, here, let's make sure that we don't make a confusion. You have the prototype care, we have today a prototype car that you can sit down in in Palo Alto, in the United States, autonomous driving in a city. We have it, okay? So it's the most complicated situation, so it's not a traffic jam, it's in a city, we have a car being tested today, with the agreement of the city, in Palo Alto. But it doesn't mean that tomorrow the consumer is going to have this car. Why? Because first the technology has to be reliable, number one. Second, you have to cut the cost of the technology so it can be affordable, and third you need the regulator to accept the fact that autonomous driven cars are on the road, which is going to take some time. That's why I am a little bit sceptical when a carmaker, no matter who it is, says, 'We're going to be able to sell cars autonomously driven before 2020, by 2018,' when the regulation is not ready and we know the technology is still in a prototype phase, you need to work on the reliability and you need to work on the cost. That's all. That's what I'm saying about, prototyping-,
JC: What's more important here though? Is it the technology, or is it the connectivity? Because you've highlighted issues here, it's not just about having an autonomous vehicle on the road, it's about one vehicle talking to another, about one vehicle talking to a cyclist on the road-,
CG: Yes.
JC: It's the connectivity, there's the ecosystem there for the car.
CG: Yes.
JC: So what's the more important, the more disruptive technology here actually? The autonomous car or the ecosystem that operates it, and the talking that all these elements have to do?
CG: You know, it's a whole. You can't say, 'I'm going to bring an autonomous car,' without the connectivity. I'm going to explain, you're going to understand very quickly, because if you have an autonomous driven car, that means you can drive a car with your hands off the wheel, your eyes off the road, okay? But if the car is not connected, there's nothing to be done. It's okay, I mean, you can drive the car okay, but you can do nothing.
JC: So is the power in the ecosystem?
CG: The connected car is very important. Why? Because then if you are in an autonomous car you can do something else. You can videoconference, you can send your email, you can send a report, you can consult your doctor, you can do a lot of things, so they go together. The connectivity allows you to do things in the car that you are not able to do today, and the autonomous drive is going to give you the disponibility, you're going to be more, not occupied only driving your car, but being able to do this. It's a whole. That's why we are advancing on the two technologies together, in order for the consumer to see the benefit of these technologies.
JC: What do you think of Uber? Of Lyft?
CG: I mean, it's a great company.
JC: Is it the death of the auto industry, though?
CG: Obviously, I mean, no. They are moving toward driverless cars, which is great. I don't think, personally-,
JC: Why would someone buy a car if they can get one in three or four minutes?
CG: Well if you think that you have a car only for mere cold transportation then, you know, you can take a bus, you can take a taxi, and Uber's going to develop the taxi system, etc., then yes, you're right, you don't need to buy a car, but a lot of people use a car for many other things, and with the connectivity coming, the car's going to become a kind of working space, it's going to become a living space, because if in the car you can connect, interface, videoconference, to drive, not to drive, it becomes your own space. You're going to have your own photos, your own email, your own music, you own calls, your own-, I think it becomes like your iPhone, something belonging to you. It's not something which is just for one functionality, it's multifunctional. That's why I think the mobile working or relaxing space that the car's going to be, because of the technology in four or five years, it's a completely different evolution from the driverless cars which is just for your transportation.
JC: So you can coexist. Sir, great to chat to you, the CEO of Renault Nissan there, Carlos Ghosn, guys I'll hand back to you.