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Nissan CEO Says Hybrid Cars Make No Sense

February 1, 2005

NEW ORLEANS — The head of Nissan Motor Co., breaking ranks with some of his leading rivals, said on Jan. 29 that building fuel-efficient hybrid vehicles makes little sense in today's world because of their high costs, according to Reuters. “They make a nice story, but they're not a good business story yet because the value is lower than their costs,” said Nissan Chief Executive Carlos Ghosn. Nissan will, in fact, start manufacturing a gas-electric hybrid version of its Altima sedan for the U.S. market in 2006. But Ghosn said the model was only intended to help Japan's second-largest automaker comply with strict fuel economy and emissions standards in states like California, not because he expects it to be a money-maker. Nissan will license some technology for the hybrid Altima from Toyota Motor Corp., which is the world leader in hybrid production along with Honda Motor Co. Ltd. The hybrids made by Toyota and Honda are in high demand, but production levels are still relatively small. Toyota plans to nearly double production of its hybrid Prius car for the U.S. market this year, with production totaling some 100,000 vehicles. Ford Motor Co. is alone among U.S. automakers in producing mass-market hybrid models; Ford recently announced plans to introduce four new models between this year and 2008. Ghosn's comments came in an address to the National Automobile Dealers Association, which opened its annual convention in New Orleans on Saturday. In his speech, he noted that only about 88,000 of the 16.9 million light vehicles sold in the United States last year were hybrids, adding that they are still considered "niche" products and something way outside the automotive mainstream. He also poured cold water on hydrogen fuel cell vehicles, which many automakers see as the industry's next big technological breakthrough. “The cost to build one fuel cell car is about $800,000. Do the math and you figure out that we will have to reduce the cost of that car by more than 95 percent in order to gain widespread marketplace acceptance,” Ghosn said.
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