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Nissan says hybrid cars are still too expensive to make

Nissan Motor Co Chief Executive Officer Carlos Ghosn said gasoline-electric hybrid vehicles are "not a good business story yet" because they still cost too much to produce.

Nissan, Japan's second-largest automaker, will begin selling a gasoline-electric version of its Altima next year in the US.

Toyota Motor Corp, Honda Motor Co and Ford Motor Co already sell hybrid vehicles, powered by both a gasoline engine and an electric motor.

Nissan is selling the Altima hybrid because of pressure from regulators in California, the largest US car market, to cut pollution, said Ghosn.

"The profitability on the Altima hybrid will be much lower from the normal Altima," he said at a press conference today at the National Automobile Dealers Association convention in New Orleans. "We're still working on the cost."

Toyota was the first automaker to market hybrids with the Prius car in 1997. The company sold 53,991 Prius cars in the US last year and expects to sell 100,000 this year. Ford became the first US automaker with the hybrid version of its Escape sport-utility vehicle last year and this month announced plans to make hybrid versions of other models between this year and 2008.

Toyota has said the Prius has been profitable since late 2001. Toyota, unlike Ford, excludes research-and-development expenses when calculating hybrid-vehicle profitability, saying the cost is for a range of vehicles, not a single model.

Gasoline-electric hybrids run on their electric motors at low speeds, helping to improve fuel mileage.

Nissan is licensing some Toyota technology for the Altima hybrid while it develops its own hybrid system. Nissan "will be cautious certainly" about selling additional hybrid vehicles, Ghosn said.

Ghosn, 50, also said Nissan expects to sell 1 million cars and trucks in the US this year. Nissan's US sales rose 24 percent last year to 985,989 cars and light trucks and its share of the US market increased 1 percentage point to 5.8 percent.

If US sales reach about 1.25 million annually "we'd have to seriously look at an expansion," Ghosn said.
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