Nissan Announces Lower Pricing on Entry Level Leaf All-Electric Vehicle

Nissan Motor Company has announced that it is reducing the price on a new version of the Lear all-electric vehicle by about $6,000 in an attempt to boost sales.  The announcement was made on Monday at the North American international Auto Show in Detroit.

With a base sticker price of $28,800, a federal tax credit of $7,500, and various other state incentives, the S trim level of the Leaf will now be available for about $18,000.  Nissan is hopeful that the lower point of entry pricing will convince consumers to give the Leaf a second look. Nissan also plans to reduce the price on other Leaf models.

The Leaf generated a lot of buzz prior to its launch in late 2010, but sales have been disappointing. Nissan has only sold about 50,000 Leafs worldwide, and only achieved a 22 percent year-to-year increase in sales last year.

The timing of the announcement coincides with the opening of Nissan’s battery production plant in Smyrna, Tennessee.  For the past two years, the Leaf’s 24-kilowatt-hour lithium-ion battery packs have been made at the company’s facilities in Japan. The currency exchange rate, which has at times fallen to as little as 80 yen to the dollar, has been a major stumbling block to Nissan as it struggled to be competitive against other battery electric vehicles; primarily the Chevrolet Volt.

Nissan CEO Carlos Ghosn said the company has been aware of its pricing problem for some time.

With the opening of its Smyrna facilities, Nissan will be able to trim production costs on a number of components, including the battery packs. Still, Ghosn knows that other obstacles remain – primarily the lack of a robust network of charging stations. With an operational range of between 80 – 100 miles on a fully charged battery, many consumers suffer from what has been termed “range anxiety”; the fear of being stranded on the highway with a drained battery and no available charging station.

Last year, Chevrolet reduced the sticker price on its Volt plug-in hybrid vehicle; a move that tripled its annual sales. When asked whether or not Nissan’s more competitive pricing will have an effect on Chevrolet’s future plans for the Volt, President of General Motors North America Mark Reuss said, “We’re going to watch and see what happens. It will have an effect, no question about it.”

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