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Will Incentives Last Long Enough For Leaf To Be Profitable?

Will Incentives Last Long Enough For Leaf To Be Profitable?

Nissan fears that electric-car incentives may be rolled back in three years, and the automaker is already planning to battle the rollback, according to news reports.

            Bloomberg Businessweek reports that Nissan “expects governments to begin phasing out incentives in three years, denying consumers the full benefit of cost savings from bigger scale and better technology.”

            Incentives for the Leaf have been announced around the world. U.S. incentives will cut the cost of the Leaf from $32,780 to $25,280 here, thanks to a $7,500 tax credit. Incentives are similarly large in Europe, the magazine reports. “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,” Businessweek writes.

            According to The Wall Street Journal, however, Nissan isn’t laying down and waiting for the incentives to get cut. “By pricing low and going for volume, Nissan’s CEO Carlos Ghosn is making a calculated grab for the lion’s share of available tax dollars - and also pressuring Washington to extend the program when the money runs out,” writes Holman W. Jenkins, Jr., of the Journal. “Mr. Ghosn has made no secret of his expectations - ‘We are negotiating with the U.S. government to make sure we have a reasonable return on our investments and continue to develop the technology,’ he said last year. And so a boondoggle is born. Last month, after meeting with White House Car Czar Ron Bloom, the Alliance of Automobile Manufacturers produced a multipoint proposal for how the handouts can be made to flow more or less in perpetuity.”

            Clearly, electric car makers know what they’re up against. In a separate Wall Street Journal report, Nissan’s U.S.-based sales and marketing chief reportedly admitted that Nissan expects to break even on the Leaf in the car’s third year.

            If that’s true, it would mean that Nissan expects the Leaf to reach profitability shortly before the government incentives begin running out.

           

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