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Nissan Makes Cautious Entry into Hybrid Market

December 8, 2006

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Though Nissan doesn't sound very excited about it, its first gasoline-electric hybrid vehicle will go on sale in January. Company executives complain the project is unlikely to make any money.

A top executive with the automaker says hybrids are an iffy business proposition with uncertain demand and little opportunity for profits anytime soon.

"Hybrids today are not a very viable economic proposition," said Dominique Thormann, Nissan North America's senior vice president for administration and finance. "It's still a loss-making proposition. It's unprofitable."

The hybrid version of the Altima sedan, Nissan's best-selling model worldwide, goes into production in Tennessee soon and goes on sale next year. The Altima is estimated to get 41 miles per gallon in the city and 36 mpg on the highway with a driving range of 700 miles.

Nissan produced the Altima hybrid sedan was to meet California's emission requirements and the company will only sell the Altima in California and seven other states that follow California's strict clean air laws.

In 2003 the California Air Resources Board and automakers reached an agreement that led to the Nissan Altima's production. California agreed to drop a stringent requirement that automakers build fully electric vehicles and automakers agreed to make more environmentally friendly models.

The agreement included vehicles like the new hybrid Altima called Partial Zero Emissions Vehicles, or PZEVs.

Nissan executives believe U.S. customers still prefer power over fuel economy which they think muddles the market for hybrids. Pricing for the Altima hybrid sedan is not yet available.

The Nissan hybrid Altima is using technology licensed from Toyota Motor Corp.

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