Chief Executive Carlos Ghosn's costly rejection of today's expensive gasoline-electric hybrid cars as a bad business proposition also dented Nissan's image, prompting a perception that the company cares more about investors than the environment.

With drivers and governments around the world growing more conscious of fuel economy and pollution, Nissan is losing ground, especially in the high-volume, big-profit US market.

Last year, Nissan's US sales slipped 5 percent and are recovering only gradually this year. Doing well in the United States is key to reversing a profit fall expected for the business year that ended last month.

"Toyota has created a green image for itself through aggressive marketing of hybrid vehicles," said James Rubenstein, an industry analyst and professor at Miami University in Ohio.

"Nissan has not done this -- it doesn't have an innovation-oriented image. At the moment, Nissan is selling cars that try to look a bit different."

Nissan, 44 percent-owned by Renault SA, admits its image lags, but it reckons consumers will increasingly put performance ahead of perception, levelling the playing field with Toyota and Honda.

"My guess is that three, five, 10 years from now, people will look at the actual figures for mileage rather than the technology behind it," Carlos Tavares, Nissan's executive vice president of product planning and corporate strategy, told Reuters.

"As long as we're on the shortlist in this regard, we can compete for customers as they make their final decision based on emotional values such as driving pleasure, craftsmanship and user-friendliness," he said.

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Nissan is already taking steps to make its cars cleaner.

Last month, it introduced a new engine valve control technology that cuts carbon dioxide emissions by up to 10 percent while improving acceleration and torque.

The system will first appear in the new Infiniti G37 coupe, showcased at the New York auto show last week.

Under the "Nissan Green Program 2010" initiative unveiled in December, Nissan has said it would sell 1 million vehicles equipped with continuously variable transmissions (CVT) this business year. That would yield CO2 emissions reductions equivalent to 200,000 hybrids, it said.

Nissan is also working on the world's first "3-litre car" -- that can run 100 km (62 miles) on 3 litres of gasoline -- clean diesel engines, plug-in hybrids, electric vehicles and other technologies suited for different markets.

Perhaps one of its most important projects is achieving a technological breakthrough in vehicle-use batteries.

Nissan is considering a joint venture with electronics giant NEC Corp. to develop and produce lithium-ion batteries, viewed as the Holy Grail to slashing the cost of hybrid and other electric cars. All commercial hybrids now run on nickel-metal hydride batteries.

Tavares said Nissan's lithium-ion technology was ready, and production would start in time for the planned launch of Nissan's first internally developed hybrid car in 2010/11.

"We hope to be the first in this field," he said.

That remains to be seen.

Industry experts expect Toyota to roll out a third-generation Prius hybrid late next year using a lithium-ion battery developed by a joint venture with Matsushita Electric Industrial Co.

"I have a high regard for Nissan's fundamental technological capabilities," said Credit Suisse Securities auto analyst Koji Endo. "But Toyota's been selling hybrids for 10 years now. How long will it take for Nissan to catch up?"