Electric car competition about to heat up

Japanese automakers need to keep improving their electric vehicles to maintain their global competitive edge as new rivals in China and South Korea enter the race for energy-efficient cars, Mitsubishi Motors Corp. President Osamu Masuko said.

“The competition will become severely intense from this point forward, so our global strategy will be to constantly study how we can maintain our comparative advantage,” Masuko said in an interview Wednesday, though he admitted that few people in Japan actually understand the merits of driving the zero-emission car.

Auto giants Toyota Motor Corp. and Honda Motor Co. are currently trying to survive the shrinking auto market with electric-gasoline hybrids, and success in the electric vehicle market would allow Japan to stay ahead amid the recent turmoil afflicting conventional rivals General Motors Corp. and Chrysler LLC.

“There’s no doubt we’re in the midst of dramatic changes,” Masuko said. “During this chaotic period, there will be people who will take on new challenges while others will scale down their operations.”

Mitsubishi Motors will roll out its long-awaited i-MiEV electric vehicle to mostly corporate customers in July and to the wider Japanese public next April. The car will be released overseas starting in right-hand-drive territories, including Britain and Hong Kong, later this year.

The price tag on the egg-shaped hatchback is a steep ¥4.59 million, or around ¥3.2 million with government subsidies, but it can travel 160 km on a single charge and reach a top speed of 130 kph.

Masuko said his company plans to introduce next year a commercial-type electric car that can be used as a delivery van and launch a plug-in hybrid by around fiscal 2013. The company will also expand by summer its lineup of environmentally friendly cars eligible for the government subsidies for fuel-efficient vehicles.

While Fuji Heavy Industries Ltd., maker of the Subaru brand, and Nissan Motor Co. also plan to launch electric cars, the market is still in its infancy with a lingering stigma over safety risks involving lithium-ion batteries.

“We’re going to establish the EV market together with Fuji Heavy and Nissan,” Toru Hashimoto, corporate general manager in charge of the i-MiEV business, said in a separate interview.

“But of course, we’re ahead in mass production so we hope to maintain that strength and continue driving (the market),” Hashimoto said.

While Mitsubishi has received orders well past its initial target of 1,400 i-MiEVs this fiscal year, Masuko said the number needs to reach around 30,000 for the company to turn a profit on the model.

“It’s essential for customers to understand electric cars and add the product to their shopping list,” Hashimoto said.

To stamp out consumer worries about electric vehicles, the automaker plans to place test cars at its dealers this autumn in hopes of convincing skeptics the i-MiEV has good acceleration and speed while cutting noise.

“You wouldn’t know unless you actually ride in the car, so we’re going to increase opportunities for test drives,” Masuko said.

But as the auto market gradually shifts from gasoline cars to hybrids, electric vehicles and other next-generation models, analysts say Japanese automakers will need to distinguish their products from new rivals with strong cost performance emerging in China, South Korea and India.

“With the emergence of new competitors, (Japanese automakers) will not be able to maintain their advantage if they take the wrong strategy,” said Tatsuya Mizuno, a former auto analyst at Fitch Ratings in Tokyo and currently a representative of Mizuno Credit Advisory.

“There’s no doubt Japanese automakers excel in terms of technology,” Mizuno said. “The question is how they can avert being dragged into cost competition.”