Nissan Motor Co., the Japanese automaker struggling to make its Leaf electric car affordable, says it expects governments to begin phasing out incentives in three years, denying consumers the full benefit of cost savings from bigger scale and better technology.
Governments won't provide sales subsidies indefinitely and may begin a phase-out when current commitments expire in three years, Nissan Senior Vice President Simon Thomas said today in an interview in London, where he announced European prices for the Leaf electric car.
The Japanese carmaker is relying on incentives to price its mid-sized Leaf below 30,000 euros ($37,000) in most European markets and compete with gasoline-electric hybrids from Toyota Motor Corp. and Honda Motor Co. The company may find that economies of scale from increased production may be offset by diminishing payments, Thomas said.
"My assumption is that they won't be cut off but they might be pared back," Thomas said. "There's no obligation for governments to extend those programs beyond the definitive agreement -- and in some countries we don't have a definitive agreement."
The Leaf makes its European debut in Portugal and the Netherlands in December, followed by the U.K. and Ireland two months later. The initial countries were chosen in part because of incentives, typically worth 5,000 euros per car, Thomas said.
The introduction and phasing-out of "cash-for-clunkers" payments over the past 18 months has shown "how unpredictable incentives are," Thomas said. "We've had to go into this with our eyes open. You literally can't tell what a government's going to announce next week."
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