The two key players in the electric vehicle market have triggered a price war as they look to win over a new generation of environmentally conscious consumers.

Nissan Motor Co. announced last week that its new Leaf electric vehicle will retail for less than Y3 million (2.99 million or €23,500), after a government subsidy scheme to promote electric vehicles is factored in. Mitsubishi Motors Corp. immediately retaliated by slashing Y619,000 (€4,890) off the price of its i-MiEV.

Mitsubishi began selling its electric vehicle to individual customers on Thursday with a price tag of Y3.98 million (€31,250), nine months after it was first made available to corporate customers and local governments. And if users take advantage of the government scheme, the i-MiEV is cheaper than its rival.

Mitsubishi was forced to respond to the pricing of the Leaf as it was concerned that consumers would wait until the Nissan electric vehicle appears in showrooms in December.

It remains to be seen whether Nissan responds to Mitsubishi's tactic, but the winners in any price war will be the consumers.

"We have set the price of our new model as low as possible to help promote the widespread use of EVs," Toshiyuki Shiga, chief operating officer of Nissan, told reporters at the unveiling of the Leaf in Yokohama on Tuesday.

Nissan has set its sights on sales of 6,000 Leaf hatchbacks in fiscal 2010, which started April 1, and has started accepting advance orders. Powered by lithium ion batteries, it will have a range of 160 km and be able to seat five adults.

Shiga said the company will be able to reduce its costs by mass-producing the vehicle at existing plants in Japan and begin localized output in Europe and the United States from 2012.

And while Toyota Motor Corp. has received some bad press due to safety flaws in its vehicles, including the hybrid Prius series, Japan's car manufacturers are convinced that green fuel technology will overtake conventional gasoline-powered vehicles in the not too distant future.

According to Nissan, the electricity that a Leaf will consume over a period of six years, and if it is driven for an average of 1,000 km a month, will cost the user Y86,000 (€676). A conventional vehicle would guzzle Y679,000 (€5,338) worth of gasoline in the same period.


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