Raw Japan

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Nissan’s hybrid conundrum

August 13, 2009

NISSAN/ELECTRIC CARIf Carlos Ghosn were a politician, pundits might be accusing him of flip-flopping right about now.

After spending the last few years playing up the merits of zero-emission electric vehicles and knocking down the hybrid hype, the CEO of Nissan Motor appears to be back-pedalling, ever so slightly, on that stance.

The reason? Hybrids have become just too popular to ignore.

The trouble started when the Nikkei, Japan’s premier business daily, reported last month that Nissan was aiming to develop a hybrid system for small and mid-sized mass-market cars, with plans to roll one out in Japan in 2011.

If true, that would signal a change in course for Nissan, which has only announced plans so far to mount its in-house-developed hybrid system on high-end, rear-wheel-drive vehicles. The company declined to confirm or deny the report.

But investors took it as good news, sending Nissan’s shares up 2.5 percent that day. After all, Toyota’s Prius and Honda’s Insight hybrid cars alone accounted for 13 percent of domestic sales in July, excluding the unique 660cc minivehicle segment. As long as the government’s generous incentives last, hybrids appear to be a sure winner.

The problem is, Nissan is loath to publicise that it’s taking that road. That’s probably because, coming a full 13 to 14 years after Toyota launched its first Prius, it’s questionable how competitive Nissan’s hybrid vehicles could be. The company would rather keep the attention squarely focused on its electric car business, which it expects to lead the industry in the zero-emission field when sales of the first model, christened the Leaf, start next year.

Still, I felt it was crucial to get Nissan’s intention on this issue cleared up, and seized the opportunity at a press conference Ghosn held after unveiling the Leaf last week.

NISSAN/ELECTRIC CAR

Predictably, Ghosn, a master communicator, sought to dodge the question, launching at one point into a mystifying monologue likening electric cars to non-smokers and hybrids to “low” smokers.

At the culmination of about half a dozen follow-up questions, Ghosn had stated that: 1) hybrids make up less than 2 percent of global car sales; 2) Two percent is not worth Nissan’s investments in the technology; 3) Nissan still needs to improve combustion engine cars, including using hybrid technology, because he predicts electric cars will make up (only) 10 percent of global car sales around 2020.

Notwithstanding the contradictory statements and the heavy beating around the bush, Ghosn did ultimately confirm that yes, Nissan would likely spread the hybrid offering to bigger-volume models.

To his credit, he did so artfully without stealing the limelight from the main attraction of the day, the Leaf electric car. Flip-flopping aside, that’s a feat that would put many Japanese politicians to shame.

Photo credits: REUTERS/Toru Hanai

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