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Originally published January 8, 2010 at 12:04 AM | Page modified January 8, 2010 at 5:27 PM

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Nissan turns new Leaf with all-electric wager

The crowd of 600 falls silent as an employee asks CEO Carlos Ghosn if he's staking too much of Nissan's future on electric cars and not enough on green alternatives like Toyota's Prius gas-electric hybrid.

Bloomberg News

The crowd of 600 falls silent as an employee asks CEO Carlos Ghosn if he's staking too much of Nissan's future on electric cars and not enough on green alternatives like Toyota's Prius gas-electric hybrid.

Ghosn smiles as he steps to the edge of the stage at Nissan's headquarters in Yokohama, Japan.

Hybrids, diesels and gas engines aren't enough, Ghosn responds. In a world where oil prices may triple and political upheaval and climate change are intensifying, governments are promoting all-electric cars. Consumers will embrace them as soon as the price is right, he says.

"This is about preserving the planet," Ghosn says. "If we start being skeptical, nothing is going to happen."

A few minutes later, Ghosn shifts from evangelist to micromanager. A Nissan ad that touts zero-emission motoring for future generations is vague, he tells a dozen executives.

"We should say specifically 'young people, first-new-car buyer,' " he says.

Ghosn, 55, who turned Nissan into the most profitable of the world's seven biggest automakers in 2005 and made Ghosn-san a Japanese household name, is placing the auto industry's biggest bet yet on electric vehicles, or EVs.

He is facing an abundance of challenges. It may take until 2030 for automotive batteries to be cheap enough for widespread commercial use, the National Research Council said recently. Before then, governments may tire of propping up the EV industry with tax breaks and buyer incentives.

Ghosn's first electric car, the Leaf, can travel only 100 miles without recharging — putting him in competition with hybrid vehicles that have no such limits.

In December, Nissan brought a Leaf to Seattle to generate interest. By the end of the year, some 900 Seattle-area drivers will have the chance to buy one

Not only will they get one of the first mass-produced, highway-capable, battery-powered autos, they'll also help answer questions about what it will take to make such cars practical.

The driving habits of first adopters — who will spend $28,000 to $35,000 for the car before a federal tax credit of $7,500 — will be closely studied by scientists to help federal and local governments figure out how to build a charging network that's envisioned to one day stretch across the continent.

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The biggest stumbling block may be out of Ghosn's control: gas prices. His success, or that of anyone who builds EVs, hinges on whether car buyers get fed up paying increasingly higher prices at the pump, says Jerome York, the former Chrysler chief financial officer who has advised billionaire investor Kirk Kerkorian. On Thursday, gasoline averaged $2.71 a gallon in the U.S., according to AAA.

"If gas is $2 a gallon, this whole regulatory effort to promote EVs is going to be an ugly train wreck," York says.

Ghosn has supporters.

"We look very positively on the fact that they're being innovative and have a plan for EVs that it looks like they'll be able to achieve," says Gilles Michel, assistant director of the New Jersey Division of Investment, which began buying its 6.6 million Nissan shares in March 2009. Since then, the stock price has more than doubled.

Ghosn needs a bold move to restore his brands' luster. Nissan's profit peaked in 2005 at $4.8 billion. He's going all out to populate the planet with electric vehicles, starting in December with the Leaf.

Ghosn is upending a century of automotive tradition by selling the Leaf without a battery. Instead, owners will rent the battery pack and pay for the miles used, like a cellphone plan.

Drivers will recharge at home or at public plug-in stations, hitching to 3-foot-high metal posts. Or they may swap the batteries, like exchanging an empty propane tank for a full one. The price: about $120 a month in the U.S. for battery rental and electricity.

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