Nissan said it expects governments to begin phasing out incentives on electric vehicles in three years.

Senior vice president Simon Thomas said he believes governments will not provide sales subsidies indefinitely and may begin a phase-out when current commitments expire in three years.

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Nissan is relying on incentives to price its Leaf EV below EUR30,000 (US$37,000) in most European markets and compete with hybrids from Toyota and and Honda. Thomas said that the company may find that economies of scale from increased production may be offset by diminishing payments.

“My assumption is that they won’t be cut off but they might be pared back. There’s no obligation for governments to extend those programs beyond the definitive agreement — and in some countries we don’t have a definitive agreement.”

The Leaf will be launched in Europe in December, initially in Portugal and the Netherlands in December, followed by the U.K. and Ireland two months later – countries chosen in part because of available government incentives, typically worth EUR5,000 (US$6,250) per car, and because they have committed to establishing a battery charging network.

Thomas said that the introduction and phasing-out of scrappage incentives over the past 18 months proved how unpredictable incentives are. He added: “We have had to go into this with our eyes open. You literally can’t tell what a government’s going to announce next week.”

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Bloomberg News notes that pressure to reduce national spending is mounting in Europe because of the region’s debt crisis. European Union finance ministers and the International Monetary Fund have pledged almost US$1 trillion to bail out Greece and prevent defaults. The U.K.’s new coalition leadership is considering US$8.7bn of immediate cuts to tackle its budget deficit.

The Renault Nissan Alliance is investing EUR4bn (US$5bn) to develop and produce electric cars and batteries and predicts that EVs will represent 10% of global car sales by 2020.

In Europe the Leaf will be assembled at Nissan’s UK plant at Sunderland in the Northeast of England. The company is also building a battery plant there and another in Portugal.

See also: UK: Nissan Leaf costlier in Europe even with incentives