Mitsubishi to Market Electric Cars

By JOHN MURPHY
Looking to gain an early lead in the emission-free vehicle market, Mitsubishi Motors Corp. Friday launched a compact, four-door electric car that it will market in Japan to corporate customers starting in late July.

The Mitsubishi Motors Corp. i MiEV (Mitsubishi Innovative Electric Vehicle) sits on display during the media preview of the 2009 New York International Auto Show in New York, U.S., on Thursday, April 9, 2009.
The lithium-ion battery powered i-MiEV, which can travel 160 kilometers (99.2 miles) on a single charge, is the first step into the eco-friendly car market by the small Tokyo-based auto maker better known for its brawny SUVs like the Pajero .
By bringing its electric car to market this year, Mitsubishi is hoping to gain a lead over Nissan Motor Co., Japan's third largest auto maker by sales volume, which plans to mass market its own electric vehicle starting in 2010.
But sales volume will be small. Mitsubishi expects to sell 1,400 vehicles in Japan in the fiscal year ending March 2010, raising sales to 5,000 vehicles next fiscal year when it starts individual sales in Japan. Worldwide, Mitsubishi plans to ship the i-MiEV in limited quantities to the U.K., New Zealand, Hong Kong and Singapore starting this year. It has also agreed to supply i-MiEVs to PSA Peugeot Citroen SA in late 2010 or early 2011.By 2020, Mitsubishi says its expects electric vehicles will make up 20% of its overall production volume .
For now, Mitsubishi's ambitions are constrained by its production capacity and by the high cost of electric vehicles. Mitsubishi plans to produce about 2,000 electric cars in the fiscal year ending March 2010, ramping up to 30,000 vehicles by 2013, as its lithium-ion battery production operations are expanded at Lithium Energy Japan, a joint venture run by Mitsubishi, G.S Yuasa Corp. and Mitsubishi Corp. Nissan, which is putting the finishing touches on its own lithium ion battery plant outside Tokyo, plans to roll out 50,000 electric cars in the first year of production.
With a 4.59 million yen price tag, the i-MiEV may also struggle to find buyers during the worst recession to hit Japan since World War II. Mitsubishi is counting on generous government incentives to stimulate the market for the vehicles. The national government is currently offering subsidies of up to 1.39 million yen on "clean energy" vehicles like the i-MiEV. Some local governments are also offering additional subsidies that could bring the price of the i-MiEV down to as low as 2.2 million yen.
Still, many auto makers and analysts remain skeptical of the potential for large scale sales of electric cars because of their limited range and the need to build more recharging stations to support them.
Mitsubishi is selling its electric car to corporate customers in Japan first in order to allow more time for local governments and businesses to set up more recharging stations around the country to support electric car drivers.
Mitsubishi, however, is confident that the Japanese government's commitment to promoting electric vehicles through various incentives will help the market here grow substantially. By 2020, the Japanese government expects next generation eco-cars like electric vehicles, hybrids and plug-in electric vehicles, powered by both batteries and gas, will make up half of all new car sales.
Write to John Murphy at john.murphy@wsj.com