Although the details have not yet been released, chief executive officer Carlos Ghosn has indicated that Nissan-Renault is considering initiating a battery leasing program designed to assuage consumers’ concerns over the high price of replacing automotive battery packs used in electric vehicles.
In an interview with Le Journal du Diamanche, Ghosn said that, among other details, the automaker has not yet settled on a price point but said the cost would likely be Òjust under 100 Euros per monthÓ, which would equates to about $150 U.S.
For consumers considering electric vehicles as an economical alternative to gas and diesel vehicles, the specter of an additional, monthly battery lease payment clouds the picture.
Nissan has set the purchase price for its new Leaf all electric vehicle (AEV) at approximately $30,000. The Leaf is expected to go into limited production in the last half of 2010 with wide release set for 2012. If the $30,000 range holds through development, the Leaf would be priced considerably below the competition.
Fellow Japanese automaker Mitsubishi’s i-MiEV AEV is currently being sold for about $47,000 in the Japanese market, and General Motors has set the price for its new Chevy Volt hybrid-electric at approximately $40,000. The Volt is expected to utilize a less expensive 16 kWh lithium ion battery pack, while the Leaf will be equipped with a 24 kWh lithium ion battery pack.
Some are pointing to Nissan’s battery leasing model as the justification for its lower initial sticker price compared with the competition.
Ghosn has made increasingly frequent allusions to the possibility of the battery leasing option, which is leading to confusion among industry watchers. Some say it indicates a new direction for Nissan as it moves forward with EV development while others contend that battery leasing would likely be limited to Renault brand EVs. Weighing in on the speculation, vice president of product planning for Nissan North America Larry Dominique said, ÒWe want our customers to have just one payment.Ó
According to the industry watch Website, BNET, Ghosn is attempting to price the Leaf in a way that makes it competitive with what most consumers would face in monthly car payments combined with recurring costs at the pump. BNET says, ÒBut that’s a cost that an electric car owner can avoid, whether they’re paying a monthly lump sum or a car payment plus a battery leasing payment.Ó The mitigating factor will be the price consumers pay to recharge their EV’s batteries – whether leased or bought outright – over the cost of buying gas or diesel fuel each month. The overall advantage will depend on the consumer’s unique driving habits and the market price for electricity vs. fossil fuels.
Another strategy being considered by Nissan is moving to a lease-only option for its EVs whereby consumers would be required to lease the entire vehicle, including the battery pack, for a specified amount of time before being afforded the option to buy the car. In the late 1990s, manufacturers of electric vehicles in California required drivers to return their vehicles at the end of the lease period. The vehicles were then crushed for scrap, resulting in a public relations crisis for the automakers.
The leasing strategy would also require Nissan to consider the residual value of its leased EVs. According to Donimique, ÒWe want to be able to control the residual value. We want to be able to control the end value, so at the end of a lease or loan we have the vehicles back and we can decide what to do with them.Ó Plug-in batteries retain up to 80% of their useful life after their diminished capabilities render them unusable in vehicles. Recycling them for use in stationary systems is a real possibility.
Battery leasing is not a new concept. A new start-up company, Project Better Place, is looking to capitalize on the EV revolution by offering consumers a battery subscription service that would provide recharging and swapping services similar to current cell phone plans, and Think Car USA planned to lease batteries for use in its City EVs prior to being forced into bankruptcy last year. Project Better Place has already entered into a partnership with Nissan in Israel.
Johnson Controls-Saft CEO Mary Ann Wrights thinks the leasing option makes sense for automakers and consumers. Wright says, ÒUntil we know how these things are going to behave on the road, and how much these things are going to cost, it would make sense to lease them.”