Nissan: Electric cars could shed government aid in four years

Nissan Motor and alliance partner Renault could market electric vehicles without government incentives within four years as global sales reach 500,000 to 1 million vehicles per year, executives said on Wednesday.

Nissan, which is introducing a mass-market Leaf electric car later this year, needs government incentives to spark initial demand but understands those incentives will not be permanent, Nissan-Renault Chief Executive Carlos Ghosn said.

"You need to jump-start electric cars at a certain level so that we can get scale, and the scale will allow us to reduce costs," Ghosn told reporters after a groundbreaking at a plant in Tennessee that will produce the Leaf and its battery.

"We think that scale for us is between 500,000 and 1 million cars a year," he said. "When you get between 500,000 and 1 million cars per year, we don't need government support."

Nissan-Renault could have as many as eight electric vehicles between them within a few years, allowing the companies to reach the scale that would make the government incentives unnecessary, executives said.

"We believe we will need two to four years of incentives and supports to reach the level of volume that will free up the cost reductions that we need to implement," said Carlos Tavares, Nissan's chief of the Americas.

Tavares expects the cost of batteries used in the Leaf and other electric vehicles to come down sharply within four years for Nissan and Renault.

Nissan broke ground on a $1.7 billion project to expand its assembly plant in Smyrna and build an adjacent lithium-ion battery plant that will be one of the biggest in North America. The facilities are expected to create 1,300 jobs.

Tavares said Nissan has an edge in battery development by being first in the industry to introduce a mass-market electric vehicle in late 2010 in Japan, the United States, and Europe.

The first Leaf vehicles and their lithium-ion batteries are being built in Japan.

When it is fully functioning, the Smyrna plant will be able to produce 150,000 Leaf electric cars per year. The new battery plant will have the capacity to produce 200,000 battery packs.

Nissan has not said yet whether the additional battery capacity would be used for a different electric vehicle within the Nissan or Renault family. Nissan has said it would be open to selling the batteries to other automakers.

The Nissan plant investment was supported with $1.4 billion of U.S. Energy Department loans.

Nissan started taking orders for the Leaf in April. It had about 13,000 fully refundable orders in the United States as of Tuesday and 6,000 in Japan.

"We have enough capacity to start the mass marketing of electric cars, but if we see when December comes that the hand-raising and pre-orderings transform fully to sales, we are going to have to make a decision about adding additional capacity," Ghosn said.