♪ francine: carlos ghosn is the ultimate executive car guy. he started his career at nissan, then went on to climb the ranks. he holds one of the most powerful positions in the car industry, serving as chief executive and chairman of renault and renault-nissan-mitsubishi alliance. during his rise to the top, he earned some telling nicknames, after returning the company to profitability and rescuing nissan on the edge bankruptcy.

now, ghosn faces the next challenge, the auto industry and the future with electric cars. today on "leaders with lacqua," we meet carlos ghosn. why do we have so many car companies? carlos: it is getting diversified. the car industry started very local. you have the europeans in europe, the americans in the u.s., and japanese and japan, -- the japanese in japan, and now we are becoming global. that is one of the reasons for which we had so many in the beginning and you will have much less in the future. francine: at the moment we have 20 global car companies, 20 chinese companies, 20 makers of batteries. how will that change? carlos: you will see a consolidation in china. there are lots of rumors that china would like to regroup --panies into a view global into a few global champions. also, a consolidation of the global level, and the first one is the fact technology is coming

and there are a lot of bricks of technologies hitting the industry. in order to face this challenge, you need a lot of investments and small companies will have a hard time to follow. that is number one. second, this is a very competitive industry. you know that scale when it is a competitive industry plays an important role. these two factors will be driving consolidation. francine: you talk about technology, i also want to talk about regulation and driverless cars. if there is one technology you wish you had the secret to today, what would it be? carlos: one thing that is happening now is the fact that in the industry today the products and services around the products are taking the driver's seat. this was not the case 10 or 15 years ago where the processes, the globalation, expansion were the elements of success. now we are back to connected cars, autonomous cars, and all of this is made possible because

of the arrival of competitive sensors, more powerful, lower cost, artificial intelligence. there are a lot of technologies that make things possible. i think 15 years ago, we were dreaming about cars with the level of autonomy that we are able to do today, because the technology and components were not available. francine: has it gone faster than you thought? carlos: oh yeah. in a certain way we were imagining some of the functionality, but did not know how this would happen because of the components that were not ready. now it is coming faster. now that the components are here, it is going to go much faster than before. francine: how fast? carlos: i will tell you. you will own a car. a lot of people want to own a car and be able to drive when they decide to drive, but also to be driven when they decide not to drive. if you are in a traffic jam, a

highway or downtown, you don't want to drive, you want to do something else. you will be able to do that. if you are on the road and you want to drive and enjoy the scenery, you will be able to drive. this is absolutely, you will get this in all cars. besides this, the car without a driver, which is a completely different topic, which is mainly for commercial use. i bet you will still drive a car, but be much more in charge and you decide what you want to do. today, you just have your hands on the wheel and eyes on the road. that is it. that is all you can do. you will be able to do many other things. francine: when is that happening? i'm stuck in traffic and don't want to drive anymore. carlos: 2022. francine: that is starting where? first in the u.s., then europe? carlos: particularly in developed countries, mature markets. u.s., japan, china. the chinese are extremely eager for the technologies. being the largest market in the

world, i would say china, united states, japan, and europe. this is where it comes from. francine: the regulation will have to be sorted by 2022. carlos: the regulations will come quickly. i will tell you why. first, because we are maintaining and keeping them aware of the technology so it will not be a surprise. in many countries, people are already aware. second, because autonomous cars, cars without a driver, are very safe. we are not talking about the accidents that happen on prototypes. i'm not talking about that. today, countries know one of the major problems they want to get rid of is safety on the roads. there are still too many people killed or hurt on the roads. when you are going to put this autonomous system into the car, the car will be much safer, because if you are in danger, the car will take control by itself. you will not be able to drive at the faster speed than what is on the speed limit. if there is an obstacle and you

don't see it, the car will see it and stop. there will be a lot of mechanisms that will make the car safer. safety will be driving these technologies forward and making the regulators eager to have them available on the market. francine: there are morality questions. if i am driving and swerve left and there is a baby, then swerve right and there is 10 people, how will technology make a decision? the regulators have to basically decide -- carlos: it is true there are some extreme cases to be solved yet. by the way, it is not ready today. we still have four years to sort out this technology. but i can tell you, you have 1.4 million people dying on the roads every year on the planet, 1.4 million. we think with all this technology, we have the potential to reduce this number of casualties by at least 50%, if not 90%. so there is a massive numbers of lives at stake behind this technology. you may have some specific cases where you say, what is going to happen?

i agree with you. we have to solve them them, but -- we have to solve them, but when you compare this to the number of casualties on the road, there is no hesitation that we should move as fast as we can. francine: 2022, but i'm still driving. if i am in traffic and decide not to drive, i can do that. what is the next step? when will i have a car where i am not a driver at all? francine: this -- carlos: this is not a next step, this will be in parallel. in 2022, you will have a car without a driver, but it will not be yours. the car without a driver by definition will be used by taxi companies, uber, federal express, dhl, pizza delivery, commercial vehicles. it will be more for commercial use. for a very simple reason, today it is the most expensive cost when it comes to commercial use is the driver, so if you can get rid of the driver, the technology lets you get rid of the driver, obviously you will reduce the costs, which will be to the benefit of the consumer who will have to pay less for transporting of goods. this goes with the development

of sales on internet and delivery to the house. you can see all these technologies are combining to make the life of people much easier and cheaper. francine: will it be global car companies that actually work on both sides, or technology companies that will do the second one? carlos: we can't predict who will be competing against who, but i can tell you today car companies have a huge advantage because as you know making a car is not an easy task. it is a very highly regulated industry. it is intensive in capital. it is very heavy in employment. it is low margin. the barriers to enter the car industry are very high. on top of this, even if the car is going to be autonomous and connected, it first has to be a car. it needs to respond to safety, to emissions, etc. francine: coming up, roadblocks to growth. we talk trade and what

protectionism means to the car industry. more with carlos ghosn next. ♪

francine: rising trade tensions and protectionism have scared many businesses, especially the car industry. some of the biggest automakers have warned a trade war would raise costs for basic materials. so how does a car executive like carlos ghosn plan to weather the possible storm? how did the supply chain change for carmakers in the last 10 years? carlos: it has become more global. in a car, you have thousands of parts, hundreds of technologies. we don't develop everything. we need lots of people to make parts, develop technology for us. we need people to assemble the cars. we have people working in china, russia, japan. united states, mexico, etc.

it becomes more and more global. it is becoming more global because consumers are more and more demanding. globalization is hard on companies because in every market now you are competing against the best in class. the easiest markets are the markets with closed doors. why? life is easier without competition. and life is much easier for companies without best in class competition. when you have a closed door, you have a limited number of competitors. you make more money, usually. there is less competition, but who pays the price of this? the consumer. that is why i think when we're talking about globalization, we need to consider the fact that globalization is more demanding on companies, and that is why companies usually don't like it, but they don't have a choice. they need to compete with the best in class, which demands from them a lot of efforts in terms of competitiveness, even also in terms of innovation. francine: do you believe we are

becoming less global? carlos: i don't think so. globalization has been going for so many years. different steps. you have stop and go. you have two steps back, five steps forward, one step sideways. human life and human history is not linear. so i am expecting that from time to time we will have bumps and problems and obstacles and resistance here and there. at the end of the day, everything, there is more of it, i'm talking about long-term trends. francine: if there were to be a big trade war, how difficult is it to change the supply chains? how nimble are car companies? carlos: car companies are fast like that. they will do it, if needed. i don't believe, we don't know how to compete. no. i'm going to tell you, those who will pay the price are the consumers. that's it. that is what will happen.

francine: will they realize? carlos: i don't know. they will realize when the price goes up. you can say consumers will pay the price, but as long as the price is low, nobody will react. but the day the price starts to go up, they will say, oh, what is happening? barriers, you raise costs, and at the end of the day costs will be passed to consumers, and that is what will happen. francine: talking about batteries in electric cars, how much progress will we make in five years? carlos: already i can tell you the first batteries we installed, we were the pioneers for the mass market for electric cars. we note the cost of the battery for the last 10 years. it is going very fast. for the next four to five years, what you can expect is a reduction of between 25% to 35% of the cost of batteries. using the present technology, obviously if there is a breakthrough on technology, you can go faster than that, so i'm

expecting this to go down fast. francine: is tesla your biggest threat in that sector? carlos: no. tesla is an ally. i will tell you why it is an ally. tesla started with premium cars. it decided to go with premium cars. we wanted to address the core of the market, so we went with cars like leaf, like commercial vehicles. we have day will. -- so we addressed the light commercial vehicle and the heart of the market. so when we start to go to this, we start at the heart of the market, the mass market. tesla started with the premium cars. we are allies in a certain way. we wanted to make the idea of electric cars buried -- electric cars very possible, that people consider electric cars is normal cars. now thanks to everything we have done, yes, the electric cars the car of the future. the same people who 10 years ago said this will not work, etc.

we are glad of this competition. it will be brutal in all the sectors, but we have the advantage of 10 years of experience. francine: do remember 10 years ago and meeting or did someone come to you with figures and say, this is the future, and that is when it clicked? carlos: no, we said this will work and we had plenty of skepticism. francine: why didn't you think it's not going to work? carlos: frankly i didn't see any outcome for the car industry. i did not know if it was going to happen 10 years down the road, 20 years down the road. i didn't know, but i knew it was going to happen because there was no way the car industry was going to continue to develop without bringing a solution to the emission problems. and i remind you also that there was a tendency to be less dependent on oil when oil was more than $100 a barrel. less dependency on oil and the

emission problem, climate change problem, made it practically impossible to imagine the development of the car industry without zero emission cars. francine: up next, full speed ahead. carlos ghosn earned a place in the automotive hall of fame with his turnaround, but what kind of leadership does it take to affect real change? ♪

francine: carlos ghosn knows a thing or two about leadership. he ran three struggling companies and drove them to highly touted turnarounds. due to his success at nissan, he had a comic book made in his honor in japan and nabbed a place in the automotive hall of fame. in a 2011 survey, he topped barack obama in a poll of what celebrities you would want to run japan. carlos ghosn is still with us. what does it mean being a leader in 2018?

carlos: i am going to give you a classic answer. the leader is the guy in charge of the company. that's it. it is very simple. there is always one person people look at and say, he is in charge. he has around him a team, a board, but there is always one person in charge of the company. and he is the leader. francine: are you a different leader now than 20 years ago? are you more focused on sustainability, not only what the company will become, but just doing better in this world? carlos: without any doubt because by definition, a leader is in charge of the company. who feels in charge of the company. when you are in charge of the company, you are preoccupied about the present and the future of the company. so you have an image of the present, which are the goals that you have immediately on which you want to deliver, but also you have an image and build an image about what you want to prepare your company for. and this changed. obviously 20 years ago, i was not preparing the company for what i am preparing for today.

the way i am looking at the future today is the front from the way i was looking at the future 20 years ago. a lot of things have changed. my image of the task is very different when i look back to what i was preparing the company for a few years ago. francine: do employees and do clients expect the leader now with a set of values and a set of morals, that they didn't 20 years ago? carlos: in general, leaders are particularly important in times of crisis. it was 20 years ago, and it is today. in a certain way when everything is going well, you have a leader who you know who it is and don't care about because things are going well and you don't really need a particular direction. when you have a situational crisis, a crisis can be generated by outside events, it can be created by inside events. i lived through nissan in crisis in 1999 where i had to revive the company.

this was a crisis coming from inside. at the same time, when you had the financial crisis in 2008, all companies were in crisis. and people look at their leader and say, what is he going to decide? this is where you pray to have a good leader, because you know the future of your organization and your own future depends on how fast he is going to react. is he going to see things clearly and take the right decision? i would associate leadership with crisis. in a certain way, there is less demand, less attention when things are going on, more complacency, but much more demandtion and much more when you are in a situation when you are afraid and worried about what may happen. francine: you are the fixer ceo. you come in and turn around the company. is there a theme for your restructuring? did you start from the same base, or was it different every time? carlos: it was different. fixing nissan was different from what is being done today with mitsubishi or what has been done for many years for renault.

because when you fix a company, this is what i called the difference between turnaround and revival. a turnaround is a situation where you are fixing the problem on the short-term. after two or three years, the company is going well, but maybe four or five years down the road, it comes back to trouble. this is what i call a turnaround. a revival is 15 years down the road, the company is still doing well. what you want is to make sure that the measure you are taking are measures that not only are going to be impacting the short-term, but also be good for the long-term. francine: how do you succeed at this? carlos: you are not sure you are going to succeed. but you want to make sure you are conscious of the fact that success is not short-term future. success is something that will be measured with time. nissan has been revived because 19 years after the revival plan, nissan is still going well. i consider renault is doing well because after the financial

crisis, for the last 10 years, renault has been moving up in terms of growth and profit. i consider mitsubishi is doing well not only because the turnaround is quick, but because we are planting the seeds to make sure three years, four years, five years down the road, the company will continue to grow. if you have this mentality that i don't go for the quick fix, the short-term. obviously you have to solve the short-term, but at the same time you keep your sights on the longer-term and plant your seeds on the longer-term, and no matter the cost of the seeds on the shorter term. francine: have you ever had a bad day in the office? carlos: sure. francine: how did you get over it? carlos: i am used to it. when you are in charge of many companies, you are happy when there is only one crisis. you usually have many of them. but you get used to it. you get prepared for it. you learn how to detach. not being indifferent or passive, but active and detached

because you know you cannot take everything apart. -- you cannot take everything to heart all the time. it is a kind of training. it is a training by doing. francine: if you were to start a car company from scratch, what would it look like? carlos: it would look like an electric car. obviously this product is connected. and i would not try to invest by myself. i would try to maybe buy something, because the assets in the car industry are cheap. i would have the software engineers i need. struggling, transform it. this would be the best way for success. it doesn't have to be in a market like the united states either. you can go to india, china, or some of these countries. i think you can start company to become global anywhere in the world. francine: i know you are very passionate about diversity. have you always been passionate about it? does it make good business sense, or is it good human being sense? carlos: i had the privilege to

have been born and educated in two countries where diversity is a fact. diversity is transcending weakness in both countries. i was born in brazil. this is a country of diversity. diversity transcended the weakness. so i have lived with diversity during my first 16 years, which obviously had a lot of impact on me. i connect with people. i like culture. i like history. i like diversity. but at the same time, i measure how fragile it can be if it is not managed well. but at the same time, if it is managed well and you don't go against the identity of people, and their own culture, how are powerful -- how powerful it can be. i will give you one example on one particular product and technology we have developed, which is due to this diversity, i asked my engineers, we need -- when the nano was developed in

india, i said i'm going to do the $3000 car. a lot of skepticism. i said, this is a great idea. i said it publicly. he did the nano. i said we will compete against the nano. when i turned to my engineers and said we would do this, they left and said, it will never work. i say, ok, the french and japanese are incapable of doing a car for $3000. we were developing a technical center in india. in india, everybody considered that this was very feasible. i said for us to be successful, i had to take french and japanese engineers and marry them with indian engineers. and tell them, now you will did -- you will do the car at $3000. this car exists and is being sold in india, latin america, and will be sold in many other markets. this was due only to the diversity of cultures and knowledge coming from french, japanese, and indian engineers. the indians by themselves i don't think would have been able to do the car, but the french and japanese did not even think

it was possible. it is by just using diversity that it was made possible. francine: carlos ghosn, thank you so much. carlos: thank you. ♪

caroline: coming up on "bloomberg best," the stories that shaped the week in business around the world. trump gets a new deal on nafta. >> modernizing the treaty to recognize the new economy we have today is the most important aspect. caroline: britain's tories are still fractured over brexit. amazon announces a wage hike for its workforce. a new jobs report suggest the u.s. economy may be cooling. >> this suggests we are pretty close to full employment. caroline: how fast should the fed move along its tightening path? >> i don't think it's a rush. we don't have to rush the process.