Sunday, January 30, 2005

Nissan CEO Ghosn not sold on hybrid vehicles

By John Porretto / AP Auto Writer

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NEW ORLEANS -- Nissan Motor Co. is preparing to build its first gas-electric hybrid car for the U.S. market next year, but chief executive Carlos Ghosn says he's not sold on the business case for the vehicle.

Ghosn, who spoke Saturday at the National Automobile Dealers Association convention, said the upcoming hybrid Altima sedan should be profitable but not nearly to the extent of the traditional Altima model.

In a speech to 4,200 car dealers and other industry professionals, Ghosn noted that of the 16.9 million vehicles sold in the United States in 2004, roughly 88,000 were hybrids.

Hybrids draw power from two energy sources, typically a gas or diesel engine combined with an electric motor. Demand has grown worldwide because of concerns about the dangers of global warming, decreasing natural fuel supplies and the rising cost of those fuels.

"They make a nice story, but they're not a good business story yet because the value is lower than their cost," Ghosn said. "The same is true for fuel cells. The cost to build one fuel cell car is about $800,000.

"Do the math and you figure out we'll have to reduce the cost of that car by 95 percent to gain widespread marketplace acceptance."

Still, Ghosn said Nissan continues to invest in a variety of technologies, including hybrids, fuel cells and cleaner-burning diesels.

Many automakers and analysts have said gas-electric engines are a transitional technology that eventually will be replaced by hydrogen-powered fuel cells that emit exhaust containing nothing more toxic than pure water.

However, experts say the nation is at least a decade or two away from that, since the infrastructure needed to fuel up with hydrogen is virtually nonexistent.

Toyota Motor Co.p., Honda Motor Co. and Ford Motor Co. already sell advanced hybrid vehicles in the United States. Ford, which introduced the first hybrid sport utility vehicle last year, announced earlier this month it's expanding its hybrid lineup by four vehicles over the next three years.

The Altima scheduled for introduction next year will use some hybrid technology licensed from larger rival Toyota, whose Prius was the world's first commercially mass-produced hybrid car.

Speaking to automotive journalists after his presentation, Ghosn said part of the reason for building the hybrid Altima was the potential for much stricter vehicle emissions standards in California and other states.

California regulators in September adopted what would be the world's toughest emissions standards to cut greenhouse gases, although some automakers are challenging the regulations in court.

Ghosn said Nissan, which was on the brink of collapse in 1999, has learned its lessons about investing in technology for the sake of technology and added the automaker would be "cautious" when it selects hybrid models beyond the Altima.

"Nissan is a profit-driven company," he said. "If volume growth is antagonistic to profit, we don't want to go there. We don't want to build or sell cars that don't make a profit."

Nissan says a diverse vehicle lineup will help it continue to increase sales this year, though not at the phenomenal pace the company grew last year. Nissan's U.S. sales rose 23.7 percent in 2004, even though the market was flat and the company's incentives were half those of many competitors.

It now controls 5.8 percent of the U.S. market, up from 4.8 percent in 2003, according to Autodata.

------ On the Net: Nissan Motor Co., http://www.nissanusa.com