Nissan Hybrid Strategy

With Nissan showing off their 'first' hybrid car this past week, it's a good time to look at where Nissan has been, where they are now, and what they have planned for the future of hybrid cars.

To say Nissan was reluctant to get into hybrid cars would be an understatement.  With the knowledge they would be losing money on each hybrid car they sold, Nissan CEO Ghosn wanted nothing to do with hybrids.  They would rather have focused in on electric cars or continued to play around with fuel cell technology.  But even those R&D projects weren't getting a lot of focus as Nissan had to focus in on turning the company around, not worrying about cars that weren't going to really make a difference for a decade or so.

But, by staying out of the early competition, they also lost out on the praises Toyota and Honda got for their early efforts at making more fuel efficient cars.  What with new fuel economy regulations (emissions) coming into play, it finally got to the point where Nissan felt it had to do something.  And so Nissan bought the Hybrid Synergy Drive from Toyota, placed it into their Altima, and began selling it in limited numbers in the eight states that followed the California emissions standards.

They also started researching their own hybrid technology, but that wouldn't be available until 2009-2010.

So, that brings us to today.  Nissan is still using Toyota technology in their Altima and is still limiting sales to the eight states they started in.  They are still working on the technology for hybrid cars, and have gotten a prototype into the hands of some reporters just last week.

That model had some issues, but Nissan feels those should be worked out by the time the car goes into production.

"We still have a few issues with this development vehicle," says Tatsuo Abe, manager of Nissan's hybrid engineering unit. "We need to make some adjustments before 2010."

In the meantime, Ghosn still doesn't want to lose money by selling a hybrid car for less than they paid to build it, and so the new hybrid car will be an Infiniti.  By making it a luxury car, they can package the hybrid as a luxury option and still make a profit.  Although, they aren't sure which model will receive the new technology, or even if they want to go with a new car.  All they seem sure about is it won't be a hybrid-only car, like the Toyota Prius.

Nissan will be putting lithium-ion battery packs into their new Infiniti hybrid, whatever model it is.  It should be a rear-wheel drive, V-6 with a 3 mile range on all electric power.  They also believe the hybrid version should get 40 percent better fuel economy over its more conventional gas only counterpart.

And that's pretty good.  The lithium-ion battery pack, especially, will make the new Infiniti hybrid notable.  The next generation Prius and the global hybrid from Honda due out next year will both come with nickel-metal hydride battery packs, but the future is in lithium-ion.

But in the end, it seems like Nissan doesn't want to sell a lot of hybrids.  By making it a luxury car, they will be putting the hybrid into a class a lot of people can't get to.  Then there's the question of fuel economy.  Nissan has already said

"Toyota is the current leader, and one of our intentions is to approach hybrids from a different angle," Shizuta said. "This is as much about power assist as it is about fuel economy."

But that really doesn't make a lot of sense.  Toyota already sells luxury hybrids that focus more on power assist rather than fuel economy (although they do get better fuel economy).  But even so, just look at the sales figures on the Lexus luxury hybrid line-up.  Those numbers are limited and will stay limited.  They also have to compete with newcomers like the Escalade Hybrid from Cadillac (GM).

Nissan, unlike Honda and Toyota, has decided to stay away from a hybrid only model.  Honda went for the hybrid version of the Accord, focused in on power rather than fuel economy, and eventually had to cancel it for lack of sales.  Instead, Honda is now looking to bring a hybrid only compact sedan which will replace the Insight and compete with the Prius in fuel economy and price.

Is Nissan doomed to repeat the process that Honda already went through?  Will they fail to learn the lesson from their Japanese competitor?