April 5 (Bloomberg) -- Nissan Motor Co., dependent on Toyota Motor Corp. for gasoline-electric hybrid engines, said it's designing new battery components to close a technology gap with competitors.

Nissan's new motor, lithium-ion battery and inverter may nearly double the acceleration performance of vehicles that run on fuel cells, electricity or hybrid engines, Japan's second- largest carmaker said. The parts may be ready for use by 2009, said Executive Vice President Mitsuhiko Yamashita.

Chief Executive Carlos Ghosn initially opted not to follow Toyota and Honda Motor Co. in making hybrid vehicles since they cost more than conventional cars. Seeing the success of Toyota's Prius and Honda's Insight models and prompted by the need to meet U.S. fuel economy standards, Tokyo-based Nissan will unveil a gas-electric Altima sedan later this year, using Toyota parts.

Nissan is aiming for a new system that ``may be more efficient, high-powered and compact than the ones in the market today,'' said Credit Suisse's Tokyo-based analyst Koji Endo, who rates Nissan ``outperform.'' ``The new electric system may be used for Nissan's future hybrid and fuel-cell vehicles.''

Surging gasoline price pushed Nissan to look at alternative fuels, part of last fiscal year's record 450 billion yen ($3.8 billion) research investment. Nissan's Ghosn had said he's ``not so enthusiastic about hybrids'' because the gas-electric cars cost too much to build, and he ``hates selling cars at a loss.''

Price Gap

An ``appropriate price gap'' between a hybrid vehicle and one using a conventional gasoline engine should be about 200,000 yen in order to popularize the gas-electric version, Yamashita said, at a Tokyo interview on April 3.

Nissan's shares rose 0.6 percent to 1,399 yen in Tokyo, after gaining as much as 1.4 percent earlier. The stock has risen 17 percent this year, outpacing the 5.8 percent gain by the key Topix index.

Nissan's electric motor and lithium-ion batteries will be up to 35 percent smaller and lighter, and 30 percent cheaper than conventional systems, the carmaker said. Its inverter, which regulates electricity used in a car's engine, will be 30 percent cheaper and 20 percent smaller with double the power, Nissan said.

``We are looking at developing more of the components'' before Nissan considers selling a hybrid engine system of its own, Yamashita said.

Nissan will introduce a hybrid version of the Altima sedan in the U.S. this year. The carmaker will be buying 100,000 units of the hybrid system from Toyota over the next five years.

Fuel Economy Standards

The hybrid Altima will be sold to help Nissan meet U.S. fuel economy standards, instead of selling it for business reasons because the cost of the gas-electric system is too high, Ghosn said at the 2006 North American International Auto Show in Detroit in January. The vehicle won't be profitable for Nissan at least in the first five years of sales, he said.

The hybrid Altima ``is an exception, because of emissions and regulations, not because of business reasons,'' he said.

The carmaker's attempt six years ago at selling a hybrid car wasn't profitable. It made 100 units of the Tino wagon, selling it for 3.15 million yen each, 40 percent more than a conventional model.

The Tino wagon was run on Nissan's Neo Hybrid system, which combines a lightweight lithium-ion battery with a gasoline engine. The system improved fuel economy by more than twofold while cutting carbon dioxide emissions by over 50 percent, Nissan said.

High Costs

The hybrid's ``cost is still higher than what customers are expecting to pay,'' Yamashita said. ``But we can't abandon this technology just because the cost is too high. We are working on solutions to cut costs.''

Global sales of hybrid vehicles were 0.5 percent of the 62.2 million new cars, light trucks, vans and wagons sold last year, according to an estimate by Hirofumi Yokoi, a Tokyo-based analyst at CSM Worldwide, a consulting company in Farmington Hills, Michigan.

A hybrid vehicle combines a gasoline engine with an electric motor. At low speeds, the motor powers the vehicle and the gasoline engine kicks in as the car gains speed. The battery pack for the motor is charged by the gasoline engine and by power regenerated whenever the brake is applied.

Research Budget

The maker of the Z sports car raised its research budget by 15 percent every year since 2001, turning record profits into investments to catch up with Toyota, while U.S.-based carmakers General Motors Corp. and Ford Motor Co. are closing factories and slashing jobs to improve their earnings.

``This tendency will continue in the coming years, but this will depend on what kind of advanced engineering we are going to do and how many models we will be releasing in the market,'' Yamashita said.

Nissan, with 17,700 researchers out of its global workforce of 163,686, has been hiring 10 percent more development staff every year since 2001.

Development cost may reach 5 percent of last fiscal year's total sales of 9 trillion yen, up from 4.6 percent from the previous year.

To contact the reporter for this story: Kae Inoue in Tokyo at kinoue@bloomberg.net

Last Updated: April 5, 2006 03:19 EDT