Thursday, October 06, 2011

Electric Cars Face Challenging Market In Brazil

Electric Cars
Brazil market not as ready as U.S, Japan, Europe for electric-vehicle push, Nissan CEO Ghosn says

Ghosn: No clear initiative to support adoption of electrics by Brazil government

Brazil's oil fields, high use of ethanol also seen as key factors

RIO DE JANEIRO -(Dow Jones)- The future of the automotive industry is likely in electric vehicles, but the technology faces a challenging market in Brazil, the chief executive of Japan's Nissan Motor Co. Ltd. (7201.TO) said Thursday.

Carlos Ghosn, who also serves as chairman and chief executive of France's Renault SA (RNO.FR), cited Brazil's recently discovered oil fields, heavy use of biofuels and a lack of government support.

"We are pioneers in electric cars," Ghosn said during an announcement of Nissan's first factory in Brazil. "When the Brazilian government wants, when the Brazilian government is ready, we will instantly bring this technology to Brazil."

Nissan, which produces the popular Leaf electric car, doesn't view Brazil as a good candidate for early market tests of electric vehicles. The pressure to adopt the new technology isn't as strong in Brazil, which is currently rushing to develop offshore oil fields that could transform the country into one of the leading crude producers and exporters. In addition, the country is the world's largest producer of sugar-cane ethanol, with more than 80% of new cars able to run on the clean-burning biofuel.

"The attractiveness of Brazil as a market for electric cars will depend on the will of the Brazilian government to support the consumer in order to buy electric cars," Ghosn told Dow Jones Newswires in an exclusive interview earlier this week. "As long as there is no clear initiative by the government to support development of electric cars in the country, I don't think it's going to happen."

There are some signs that Brazil's government is waking up to the need for incentives to foster growth of so-called "green vehicles." Local press reports said that President Dilma Rousseff's administration was discussing plans that could allow Brazil to be at the forefront of electric-car adoption, including the end of a 25% industrial production tax on electric and hybrid vehicles.

Rio de Janeiro Governor Sergio Cabral also hailed the future of electric vehicles during Thursday's ceremony to unveil Nissan's $1.5 billion plant, which is expected to produce 200,000 vehicles per year. Rio de Janeiro wants to offer incentives to ensure that electric cars are produced in the state, said Cabral.

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