Nissan Could Cause Price War With Electric Car

Automaker says its new electric car will cost just over $25,000 when it goes on sale in the U.S., a move that could force rivals to lower prices on similar vehicles.

NEW YORK (AP) -- Nissan Motor Co. said Tuesday its new electric car will cost just over $25,000 in the U.S., a move that could force rivals to lower prices on similar vehicles.

The Leaf, a four-door hatchback due in showrooms late this year, will have a base price of $32,780, but buyers can get a $7,500 electric vehicle tax credit, Nissan said.

The price tag puts the Leaf, which can go up to 100 miles on a single charge from a home outlet, within reach of mainstream car buyers, and it also will force competitors to respond when they introduce their cars.

General Motors Co., which also will begin selling its Chevrolet Volt rechargeable electric car later this year, said that it will look at Nissan's pricing before announcing the Volt's price closer to its December sales date.

"I think it's fair to say their pricing, it won't overwhelm, but it will have some influence on our pricing decision," said GM spokesman Rob Peterson.

GM was looking to price the Volt, which can go 40 miles on full electricity before a small gas engine kicks in to provide power, around $35,000. It would cost $27,500 with the tax credit.

But GM executives have said they are trying to lower the price as they begin building models at a Detroit factory.

Other competitors, such as Ford Motor Co. and Chrysler Group LLC, also plan to sell fully electric cars, but those will come out after the Volt and Leaf hit showrooms in December. The Volt and Leaf are the first two electric cars to go on sale that will appeal to the mass market.

Orders in the U.S. start April 20 and Nissan is aiming for 25,000 orders by December.

Nissan says the Leaf will cost 3.76 million yen ($40,000) in Japan. It will price the car lower in the U.S. because it wants to sell more of them in that market. The automaker says it is confident it can still make money at that price.

But Erich Merkle, president of the consulting company in Grand Rapids, Mich., said Nissan may be deliberately setting the price low and may even lose money to establish itself as the market leader.

GM maintains that the Volt is a better value than the Leaf because drivers don't have to worry about running out of electricity. The car's gas engine gives it nearly unlimited range, GM says.

Although the Volt can travel farther, GM still has to compete with the Leaf on price, especially among drivers who don't drive that far or have a second car for long-distance travel, Merkle said.

"They're going to find themselves going up against the Leaf, and being compared to that probably quite a bit," he said.

But Aaron Bragman, an auto industry analyst with IHS Global Insight in Troy, Mich., said the Leaf and Volt will compete for different customers. He said the Leaf will appeal mainly to suburban commuters -- a smaller market -- because of its 100-mile range limit.

In larger cities, plugging in the car to recharge becomes a problem for apartment dwellers, he said.

"The Volt, in particular, has a much larger appeal," he said.

Bragman sees the cars as the beginning of automakers trying to determine how to equip and market electric cars.

"They're still trying to figure out what's going to sell and what's not going to sell," he said.

Foster reported from Yokohama, Japan. AP Auto Writer Tom Krisher in Detroit contributed to this report.

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