2005 NADA: Nissan Chief Ghosn Says Hybrids Still Cost Too Much to Produce

Jan. 29, 2005; Bloomberg reported that Nissan Motor Co. Chief Executive Officer Carlos Ghosn said gasoline-electric hybrid vehicles are ``not a good business story yet'' because they still cost too much to produce.

Nissan, Japan's second-largest automaker, will begin selling a gasoline-electric version of its Altima next year in the U.S. Toyota Motor Corp., Honda Motor Co. and Ford Motor Co. already sell hybrid vehicles, powered by both a gasoline engine and an electric motor.

Nissan is selling the Altima hybrid because of pressure from regulators in California, the largest U.S. car market, to cut pollution, said Ghosn.

``The profitability on the Altima hybrid will be much lower from the normal Altima,'' he said at a press conference today at the National Automobile Dealers Association convention in New Orleans. ``We're still working on the cost.''

Toyota was the first automaker to market hybrids with the Prius car in 1997. The company sold 53,991 Prius cars in the U.S. last year and expects to sell 100,000 this year. Ford became the first U.S. automaker with the hybrid version of its Escape sport- utility vehicle last year and this month announced plans to make hybrid versions of other models between 2005 and 2008.

Some Toyota Technology

Toyota has said the Prius has been profitable since late 2001. Toyota, unlike Ford, excludes research-and-development expenses when calculating hybrid-vehicle profitability, saying the cost is for a range of vehicles, not a single model.

Gasoline-electric hybrids run on their electric motors at low speeds, helping to improve fuel mileage. A hybrid's electric- battery pack is recharged when the vehicle's brakes are applied.

Nissan is licensing some Toyota technology for the Altima hybrid while it develops its own hybrid system. Nissan ``will be cautious certainly'' about selling additional hybrid vehicles, Ghosn said.

Ghosn, 50, also said Nissan expects to sell 1 million cars and trucks in the U.S. this year. Nissan's U.S. sales rose 24 percent in 2004 to 985,989 cars and light truck and its share of the U.S. market increased 1 percentage point to 5.8 percent.

Nissan has vehicle-assembly plants in Tennessee and Mississippi that produced the Altima, Titan large pickup truck and other models.

If U.S. sales reach about 1.25 million annually ``we'd have to seriously look at an expansion,'' Ghosn said.