Traders of the Caribbean

[Traderzz]

Nissan Says Aid to Ensure Electric Car Profitability (Update1)
Share | Email | Print | A A A

By Kae Inoue and Kiyori Ueno

July 28 (Bloomberg) -- Nissan Motor Co., Japan’s third- largest carmaker, said the financial support it has received from governments worldwide will ensure the profitability of its electric vehicle program.

“The speed of which you get returns depends upon mass production. The second thing that it relies upon is government incentives,” Andy Palmer, Nissan’s senior vice president of product planning, said in an interview yesterday. “That helps our cost of entry, helps our cash flow and will help the first and the second generation vehicles to exist.”

Development costs for an electric cars “significantly” exceed the $300 million to $500 million Nissan normally spends on a new model because of the expense of the batteries, Palmer said. The automaker is now preparing to produce about 350,000 electric vehicles a year globally.

“Without government aid, the business would be unrealistic,” said Yasuaki Iwamoto, an auto analyst at Okasan Securities Co. in Tokyo. “The support helps with the high cost of developing the batteries.”

Nissan aims to use a $1.6 billion U.S. loan to retool a Tennessee factory so battery-powered cars can be made on the same line that currently produces hybrids and other models. The automaker will also receive grants and loans from the U.K. and Portugal to build factories for lithium-ion batteries. The company hasn’t disclosed the amount of aid it will receive.

Nissan gained 1.5 percent to 625 yen as of the 11 a.m. trading break in Tokyo.

Nissan’s Capacity

Nissan will have capacity to produce 200,000 electric vehicles in the U.S., 100,000 in Europe and 50,000 in Japan, Palmer said. Nissan and partner Renault SA plan to offer electric vehicles in the U.S. and Japan starting in 2010 and globally in 2012.

The company will unveil the new electric car Aug. 2 in Yokohama at the opening of its new corporate headquarters. The small car is modified from the platform used for Nissan’s compact Tiida hatchback, sold in the U.S. as the Versa. The electric car will have a different exterior design. The car will seat as many as 5 people and travel as far as 100 miles (160 kilometers) on a full charge.

The car’s lithium-ion battery pack can be fully recharged at a 200-volt outlet in 8 hours, or in under 30 minutes from a so-called fast-charge station, Tetsuro Sasaki, senior manager of Nissan’s battery test group, said in an interview yesterday in Oppama, Japan.

Nissan, hurt by plunging demand for new cars, forecasts a loss of 170 billion yen ($1.7 billion) for the year ending March, as the worst U.S. auto market in almost three decades and a stronger yen erode overseas sales. It posted a loss of 233.7 billion yen a year earlier.

To contact the reporter on this story: Kae Inoue in Tokyo at [e-mail] Ueno in Tokyo at [e-mail]
Last Updated: July 27, 2009 23:10 EDT