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Nissan EV Program Draws Global Gov't Support

July 28, 2009

TOKYO, JAPAN --- Nissan Motor Co. said it is confident that the financial support the company has received from governments worldwide will ensure the profitability of its electric vehicle program. 

"The speed of which you get returns depends upon mass production. The second thing that it relies upon is government incentives," Andy Palmer, Nissan's senior vice president of product planning, told Bloomberg in an interview this week. "That helps our cost of entry, helps our cash flow and will help the first- and the second-generation vehicles to exist." 

Development costs for electric cars "significantly" exceed the $300 million to $500 million Nissan normally spends on a new model because of the expense of the batteries, Palmer said. The automaker is now preparing to produce about 350,000 electric vehicles a year globally. 

"Without government aid, the business would be unrealistic," Yasuaki Iwamoto, an auto analyst at Okasan Securities Co. in Tokyo, told Bloomberg. "The support helps with the high cost of developing the batteries." 

Nissan plans to use a $1.6 billion U.S. loan to retool a Tennessee factory so battery-powered cars can be made there. Nissan will also receive grants and loans from the U.K. and Portugal to build factories for lithium-ion batteries. The company hasn't disclosed the amount of aid it will receive. 

Nissan will have capacity to produce 200,000 electric vehicles in the U.S., 100,000 in Europe and 50,000 in Japan, Palmer said. 

Nissan and partner Renault SA hope to offer electric vehicles in the U.S. and Japan starting in 2010 and globally in 2012. 

The company is scheduled to unveil the new electric car Aug. 2 in Yokohama at the opening of Nissan's new corporate headquarters. The car is modified from the platform used for Nissan's compact Tiida hatchback, sold in the U.S. as the Versa. The electric car will seat as many as five people and travel as far as 100 miles (160 kilometers) on a full charge. 

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