Mitsubishi puts faith in electric cars

The release of the i-MiEV made Mitsubishi the first mass-volume carmaker to sell electric cars. Photo / Supplied

Mitsubishi Motors Corp aims to announce by the end of 2010 how it plans to get billions of dollars in preferred shares off its balance sheet, and will unveil a growth plan for a 56 per cent jump in vehicle sales at the same time, says its president, Osamu Masuko.

The growth strategy would rely on two pillars, he said: Mitsubishi's strength in environmental technology through its electric car business and expansion in emerging markets through the "Global Small Car", which is due to go on sale by the end of 2011.

Mitsubishi Motors became the world's first mass-volume carmaker to begin selling battery-run electric cars with the egg-shaped i-MiEV, with a sales target of 40,000 units by 2012.

Masuko said Mitsubishi Motors planned to beef up its zero-emission line-up, adding a commercial-use electric microvan in Japan in 2012, followed by a battery-powered version of the Global Small Car in developed markets by the end of 2012.

A petrol-engine version of the Global Small Car is due to hit showrooms in 2011, and Masuko said the carmaker will likely build the low-cost model in Thailand, by constructing a new factory with capacity of about 200,000 units a year.

He said Mitsubishi Motors also wanted to build the model, which it wants to price under US$10,930 ($16,291), in China, Brazil or India.

Through such steps, Masuko said, Mitsubishi Motors would target global sales of 1.5 million vehicles by 2013-14, representing a 56 per cent jump from the year ended this March.

Mitsubishi Motors has suffered a sharp slide in sales in recent years and many analysts have dropped its stock from their coverage due to the unresolved issue of more than $4.4 billion of unredeemed preferred shares issued mostly to the Mitsubishi group.

Masuko, who has been tight-lipped about how Mitsubishi Motors would deal with the shares, said converting them to common stock, selling them through a third-party allocation, buying them back, or a combination of these steps were the only options.

"I want to be able to talk about it by the end of the year," said Masuko. He said, however, the shaky global economy could get in the way.

"If these conditions continue, it might be difficult to wrap up a decision by year-end," he said.

Converting all the preferred shares to common stock would result in a massive dilution of Mitsubishi Motors shares, adding more than 3.5 billion shares to the current 5.5 billion.

In part to prepare for the possibility of releasing at least some of the preferred shares, Masuko said he also aimed to communicate the company's roadmap for growth by the end of 2010.

Mitsubishi Motors has been filling unused factory capacity through supply deals with France's PSA/Peugeot-Citroen. The partners had explored a capital tie-up but dropped those talks in March.

Mitsubishi Motors is owned 15 per cent by Mitsubishi Heavy Industries and 14 per cent by Mitsubishi Corp.

- BLOOMBERG