Friday, October 2, 2009

Govt. subsidy vs. govt. subsidy

An Al Gore-backed company received a $500 million government loan to design and build a care like Nissan's Leaf, due out this Spring. Demand for the Leaf's is also dependent on government subsidies:
Key to its success will be bringing down the cost of the batteries, which currently cost around $10,000 per car to make. Sensibly, Nissan plans to lease the batteries to customers rather than try to sell the car at an inflated price. Initially, the carmaker will share the burden by taking advantage of government subsidies and cheap loans to ensure sales are profitable from day one. The challenge will be to get costs down to a sufficient level by the time governments begin scaling back incentives. Mass production should help.

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