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Can Mitsubishi's little i undercut the bigger Nissan Leaf?

Mitsubishi expects to lose money on every i sold in the U.S. for the first few years. Photo credit: Ryan Beene

When Nissan hiked the base price of its 2012 Leaf EV earlier this week by $2,420 to $36,050, it may have given the upcoming Mitsubishi i electric car more of an edge.

With a sticker of $28,840 including delivery, the i will be $7,210 cheaper than the Leaf when it becomes available for retail sale in January.

After the $7,500 federal subsidy, the i will cost $21,340. Tack on the up to $5,000 extra subsidy available in some states to EV buyers, and you could be looking at a base price of $16,340. That gets you a pure-electric city car that can seat four with an EPA-rated range of more than 60 miles per charge for the price of a compact car.

At more than $36,000, Nissan's Leaf cannot get below $20,000 after federal and even the most generous state subsidies.

I'll bet Nissan's decision put a smile on the face of Yoshikazu Nakamura, the head of Mitsubishi's global EV business. Sitting in a garage on a sweltering day at the automaker's proving ground in Okazaki, Japan, earlier this month, he told me that selling the cheapest EV in the U.S. market was a crucial part of the company's early EV strategy.

So important, in fact, that Nakamura admitted that the company is going to lose money on every i sold here for the first few years.

Mitsubishi's strategy seems to differ from what Nissan did with the Leaf and, to some extent, what General Motors did with the Chevy Volt plug-in hybrid. Both of those cars were clearly designed to be "real cars," with the size, amenities, passenger room and cargo room of gas-powered cars already on the market. The intent, one could assume, was to offer consumers a green alternative to gasoline cars with little compromise.

The Mitsubishi i, on the other hand, is small. So small that my colleague, Hans Greimel, Automotive News Asia editor, remarked to me that the i is small even for the Japanese market, where pint-sized cars are so ubiquitous that a Toyota Prius looks huge by comparison. American consumers don't like cars that little.

Just ask Roger Penske.

Penske Automotive Group launched the Smart car brand as an independent distributor for the U.S. market in 2008. The tiny, Daimler-made micro cars were a hit early on, selling nearly 25,000 units in 2008 when U.S. gas prices were at all-time highs. But consumers shunned the tiny two-seaters in favor of larger vehicles as fuel prices receded, sending sales down to fewer than 6,000 units in 2010. Penske handed over Smart car distribution to Mercedes-Benz USA last February.

So now Mitsubishi is betting that combining a low price with an all-electric powertrain will create an argument compelling enough for consumers to look past the i's limitations. We'll see next year whether they're right.

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