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Sunday, November 15, 2009

Nissan Leaf will compete on price

Nissan Motor Co Ltd will keep the price of its upcoming battery-powered Leaf competitive with similar-sized cars and expects to make money on the vehicle despite the cost of its launch, Chief Executive Carlos Ghosn on Friday.

The five-passenger hatchback, which is being designed to have an all-electric range of 100 miles, would cost only 1 to 2 percent more than traditional combustion engine vehicles in its class, he said.

"On the pricing of the vehicle it is too early to say, but there will be no surprise," Ghosn said. "We know it will be the key to the mass market."

Nissan has not disclosed pricing on the Leaf, but has said it expects the car to be the first affordable, mass-market electric car when it goes on sale in the United States, Japan and Europe by the end of 2010.

Nissan has bet heavily on electric cars and expects that by 2020, 10 percent of the world car market will be for electric vehicles. It has announced a series of partnerships with utilities and government agencies to advance technology where it believes it has a chance of seizing market leadership.

The automaker said on Friday that it would cooperate with Houston-based Reliant Energy, a subsidiary of NRG Energy Inc in developing a charging infrastructure for electric cars at homes and near office buildings.

Ghosn, who was speaking to reporters at an event outside Dodger Stadium to kick off a U.S. marketing tour for the Leaf, said Nissan would roll out the car slowly in the U.S. market to get more feedback from consumers.

The Leaf is designed to draw power from a battery-pack developed with Japan's NEC Corp that Nissan has said can be recharged overnight on a 220-volt connection.

Nissan has taken $1.6 billion in low-cost loans from the U.S. Department of Energy to revamp a plant in Smyrna, Tennessee to make the Leaf. The first models in the U.S. market will be imported from Japan.

Nissan's rivals have pushed competing battery-powered technologies. Toyota Motor Corp dominates the market for traditional hybrids and has floated plans for a broader range of vehicles under the Prius name.

Others, such as General Motors Co and Fisker Automotive, are banking on plug-in designs that rely on batteries for short drives but also include a gasoline-powered generator to recharge the battery on longer trips.


Ghosn, who also leads Nissan's controlling partner Renault SA, said the key to bringing down the cost of producing electric cars would be to spread development costs across up to eight vehicles for the two companies.

"We think this technology is a technology we control, but we need scale. And that is why today we are building an overall capacity between Renault and Nissan of 500,000 cars and batteries a year that we are installing between the United States, Europe and Japan," Ghosn told reporters.

"Hopefully, we are going to move upward. Because it is not about one car, it is about four cars for Nissan and four cars for Renault."

Leasing the car's batteries is a way to bring down the upfront cost, analysts say, and Ghosn said he preferred to lease batteries because Nissan can have control over replacement as technology improves.

But while Nissan plans to lease batteries on a global scale, executives said that they are still studying whether to do so in the U.S. market.

Ghosn said the Leaf would be profitable for Nissan. By contrast, GM has said it does not expect to make money on the first sales of its plug-in Volt, expected to be priced near $40,00O when it launches in late 2010.

"We will make money out of the Leaf," Ghosn said. "We have to make money, because if we don't make money the technology is condemned."

He added: "Everything we are doing today -- and that is one of the reasons we are negotiating with the government -- is to make sure this technology can continue to develop. We have a reasonable return on our investments and continue to develop the technology. And the consumer has to pay a reasonable price."

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