YOKOHAMA — Nissan Motor Co.'s CEO said Friday the Japanese automaker's electric vehicle will become profitable within three years, adding he expects it to be one of the "most profitable" vehicles in Nissan's lineup.
Nissan launched its all-electric-powered Leaf vehicle in December in the U.S. and Japan and deliveries began earlier this year. One of the first mass-market EVs, Nissan has had trouble keeping up with demand.
But the question of profitability has loomed large over the Leaf, which has relied on generous subsidies to lower the retail price.
Nissan President and CEO Carlos Ghosn said that the car would begin to pay off by 2014 and become one of Nissan's best investments.
"Within three years, you'll see this will be one of the most profitable products and investments Nissan has ever made," Mr. Ghosn said in an interview Friday with The Wall Street Journal.
That bullish statement on the future of Nissan's EV strategy comes as Japan's No. 2 auto maker prepares to announce its latest midterm business plan on Monday and on the heels of a forecast Thursday for a 15 percent drop in profit for the current fiscal year.
The lower earnings projection reflects continued yen strength against the dollar and higher materials costs, despite expectations for higher global sales.
Mr. Ghosn said Friday that he expects to spend more time on struggling French partner Renault SA, where he also serves as CEO, and less in developing markets.
"I will spend more time at Renault because it needs more attention," he said, adding that he will not reduce time spent in Japan.
Nissan said Thursday that it aims to increase its U.S. market share to 10 percent. Nissan had an 8 percent share in the last fiscal year ended March and its share has recently reached 9 percent on a monthly basis.
Nissan, Japan's second-biggest car maker by sales volume after Toyota Motor Corp., projects a profit of 270 billion yen ($3.36 billion) in the fiscal year through March 2012, down from 319.22 billion yen in the last fiscal year.
The car maker expects sales to rise 7.1 percent to 9.4 trillion yen in the current fiscal year from 8.773 trillion yen, while it forecasts a 14 percent decline in operating profit to 460 billion yen from 537.47 billion yen.
The company also will double its dividend payment for this fiscal year to 20 yen a share.
Nissan restarted production at its Japanese factories from mid-April, after suspending production due to the earthquake and tsunami on March 11, but a shortage of critical parts is still hampering output.
The auto maker said Thursday it expects to resume full production at its plants world-wide by October, as parts suppliers fully recover from the disaster.
Despite its lower profit guidance, the company is upbeat about its sales outlook. Nissan aims to lift global sales 9.9 percent to 4.6 million vehicles. By region, it is projecting a 12 percent rise in China for this fiscal year to 1.15 million vehicles, a 6.8 percent increase in North America to 1.33 million vehicles and a 1.7 percent gain in Japan to 610,000 vehicles.
The company's earnings are based on the dollar averaging 80 yen and the euro averaging 115 yen for the current fiscal year. Nissan reports its earnings under Japanese accounting standards.
Nissan and Renault are in talks to take combined a more than 50 percent stake in Russian auto maker Avtovaz to boost sales in the growing Russian market. The Japanese and French car makers are negotiating with some shareholders of the Russian company, Nissan said Thursday.
The Yokohama-based company seeks to have less than a 25 percent stake in the company while Renault, which already owns a 25 percent stake in Avtovaz, is looking to lift its stake from the current level, the CEO said. Nissan expects the deal will likely be concluded within the year.
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