Yokohama: Nissan Motor Co priced its battery-powered Leaf hatchback at more than twice the cost of a similarly sized gasoline car, counting on government subsidies to drive demand for the emissions-free vehicles.
Nissan is banking on electric cars to help it close the gap on rivals such as Toyota Motor Co, which has won over fuel-conscious customers with its gasoline-electric hybrid Prius.
But with a starting price of ¥3.76 million ($40,640), the Leaf will be still be out of reach for many drivers in Japan.
The five-passenger Leaf is designed to provide a range of 160 km (100 miles). Nissan has developed the battery pack for the Leaf with NEC Corp so that it can be plugged in at home and recharged overnight on a 220-volt connection.
“I’m interested (in the Leaf), but the initial cost is still high, even with subsidies,” said Kiyotaka Shimizu, a 43 year-old cram school teacher.
“I’m afraid the technology is not mature. I would choose hybrid cars at this stage,” Shimizu said as he looked around a Nissan showroom at its headquarters in Yokohama, south of Tokyo.
While skeptics abound, almost all major automakers are working on developing battery-run cars for use mainly in urban areas, to meet stricter emissions and mileage regulations being introduced around the world.
Carlos Ghosn, the chief executive of Nissan and French partner Renault, has said he expects 10 percent of the world’s auto market will be electric vehicles by 2020, a ratio at the top of industry projections.
While well above the price of Toyota’s top selling Prius gasoline-electric hybrid, the Leaf will be about 1 million yen ($10,800) cheaper than Mitsubishi Motors Corp’s i-MiEV electric car.
“The most important point for our cars is zero emissions,” Toshiyuki Shiga, chief operating officer of Nissan, said at a news conference. “Hybrid vehicles still consume gasoline. I want to fully push this sales point.”
Nissan, Japan’s third-biggest automaker, said it aims to sell 6,000 Leaf cars, its first mass-volume all-electric model, in Japan for the year ending in March 2011. The company will start taking orders for the model in April in Japan, with the first delivery expected in December.
After accounting for Japanese government subsidies, Nissan said the net cost to consumers to buy a new Leaf would be near ¥2.99 million ($32,320).
Japanese government subsidies on low emission vehicles, introduced to encourage sales during the financial crisis, are scheduled to run through to the year ending March 2011.
By contrast, Toyota’s Prius hybrid, now in its third generation, has a base model starting price at just over ¥2 million ($22,195) in Japan, before government subsidies.
The Leaf’s price also marks a premium over established, combustion engine-powered small sedans like the Honda Civic and Toyota Corolla. Analysts said that reflects the cost of developing and producing the Leaf’s lithium-ion battery pack.
“Everyone would think it is expensive. Of course there are some people who are willing to buy, but generally speaking, it needs to be below ¥2 million for consumers in general to buy,” said Koji Endo, auto analyst at Advanced Research Japan.
Although Nissan once considered leasing the expensive batteries to lower the initial cost for consumers in Japan, it has given up on the idea due to the regulations related with car inspections.
Despite the initial price tag, Nissan said drivers would be able to save some money over the long run. It estimates that owners would pay ¥86,000 ($930) in electricity costs over six years, compared with ¥670,000 ($7,200) at the pump for a traditional gasoline-powered car.
Nissan was set to announce US pricing for the Leaf later on Tuesday, with analysts expecting a US price of somewhere between $25,000 and $30,000.
A $7,500 tax credit is available for US consumers who buy electric vehicles like the Leaf and the upcoming Chevy Volt plug-in hybrid from General Motors Co.
After trailing rivals Toyota Motor and Honda Motor in the hybrid field, Japan’s No.3 automaker has bet heavily on pure electric vehicles.
The automaker has also announced a series of partnerships with utilities and government agencies in the United States and Europe, where it believes it has a chance of seizing market leadership.
Shares of Nissan gained 2.3% to ¥801, while the benchmark Nikkei average rose 1%.