Last week carmaker Toyota Motor Corp. (NYSE: TM) said that it had no plans to introduce an all-electric car into the Chinese market. Unlike both Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM), Toyota remains cautious about the Chinese government’s requirement that automakers share their electric-drive technology with their Chinese partners.

That requirement apparently does not concern Nissan Motor Co. Ltd. (OTC: NSANY) which has announced today that it has received approval from the Chinese government to sell its all-electric Nissan Leaf in China. The Leaf will be exported from Japan, not built in China, although that is Nissan’s long-term goal.

China offers substantial subsidies to purchasers of electric cars, and the country is Nissan’s largest market. In 2010 the company sold 1.3 million cars in China and it hopes to boost that number to 2.3 million by 2015. The Nissan Leaf, and a planned cheaper all-electric model targeted at the Chinese market, are clearly in Nissan’s plans to reach that total.

But demand for the all-electric cars in China has been cool, to say the least.  BYD Co. (OTC: BYDDF) has sold fewer than 500 all-electric models in the country so far in 2011. For a country where 17 million cars are expected to be sold this year, that’s not exactly thrilling.

The all-electric models are all still too expensive, not just for the Chinese, but for everyone. Until battery costs fall significantly, only a relative handful of buyers will queue up for an all-electric.

Far more effective in meeting emissions and fuel economy goals are the relatively cheaper and more effective changes being introduced on conventional internal combustion-powered cars. Automakers want to sell the electric cars because the cars’ zero-emissions ratings and unlimited miles/gallon of gasoline boost overall fleet ratings. Without electric cars, automakers will have difficulty meeting new US economy standards of 54.5 miles/gallon by 2025.

Improvements to auto aerodynamics and turbocharged engines, coupled with stop/start technology and regenerative braking are all likely to have a bigger fleet impact on auto emissions and fuel economy than the number of all-electric cars an automaker sells. Still, every sale helps, and going after the world’s largest car market with a heavily subsidized all-electric is probably good insurance for Nissan.

Paul Ausick

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