Nissan: Demand Will Fall Off A Cliff After 'Clunkers' Runs Out

When the new spigot of cash for clunkers money dries out in the next few weeks, Nissan’s COO, Toshiyuki Shiga, says we’ll be right back where we started.

We were in Japan last week to see Nissan unveil its new electric car, LEAF, and we had an opportunity, along with other reporters, to speak with Shiga.

The first question thrown at Shiga was asking when he saw demand bouncing back. He says it’s “too early” to predict, and while the second quarter beat estimates, there’s still a “lot of risk” out there. Nissan “remains cautious.”

While cash for clunkers, and similar programs around the world, has provided a short term boost for sales, Shiga isn’t making any long term plans around the government program.

“I’m afraid that after the government support stops, then the demand falls off,” he said. He sounded like he was saying the programs are ultimately futile. Shiga sees that the program will boost spending for a month in the US, then we’ll be right back to square one.

This could be seen as a hypocritical move on Shiga’s part. Nissan’s electric car program is going to be heavily subsidized. Nissan received a low cost loan from the DOE to build a battery and car plant in Tennessee. Anyone that buys the LEAF electric will get a $7,500 rebate from the US government.

The difference between the two is that one is an old product that shouldn’t need help, and the other is a new product that could use an early push.

On the topic of government subsidies for electric cars, Nissan’s SVP of Product Planning, Andy Palmer says they “are important, but we expect that they will go away.” He expounded on the company’s thinking:

Could we put battery plant in the United States with out government incentive? No. Do government subsidies help bring the electric car to the United States? An emphatic yes. Are electric vehicles more expensive? Yes. In the future? No. As you go through maturation, the cost comes down. At begining, does it help attract consumer? Absolutely yes.

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