• Mar 31st 2010 at 7:29PM
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Nissan Leaf – Click above for high-res image gallery

With all of the reveals and partnership announcements here at the New York Auto Show the most important thing we've heard is a number: $25,280. That's the price that Nissan said yesterday it will sell the Leaf for when it goes on sale later this year (full production starts in 2011), and it's much lower than rumors we've heard from competitors in the plug-in vehicle space. We sat down with Mark Perry, Nissan's director of product planning, to talk about this price – how it came to be, what the reaction has been, etc. – because we're pretty sure readers would like to know more details about Nissan's strategy.

Perry was all smiles when he talked about how Nissan got to the $32,780 price – of course, the headline is that this turns into $25,280 after $7,500 worth of federal tax credits – and we understand why. He told us that this price is the result, in part, of 17 years of work Nissan has done on lithium-ion batteries. By doing everything in-house for so many years, Nissan doesn't need to charge the customer for battery research like other companies that are freshly bursting into the electric vehicle (EV) market and are just now figuring out how to make EVs that work. Plus, by spreading the research and development over many years, selling the Leaf for just under $33,000 allows the company to make a profit off the car, or at least minimizes early losses.

Of course, the Leaf does not exist in a vacuum, and Perry said that the $33k was most definitely based on market factors. Government incentives played a role in setting the price, Perry said, as did estimating what other companies will price their plug-in vehicles at. Considering we don't know for sure yet what cars like the Chevrolet Volt or the Ford Focus Electric will be, we can't say yet how Nissan's announcement will impact those MSRPs. Still, we assume there was a lot of hand-wringing in offices that didn't belong to Nissan. There was a lot more to our talk, so go ahead and take a listen after the jump.


Live photos by Sebastian Blanco / Copyright ©2010 Weblogs, Inc.

Mark Perry at the New York Auto Show, 2010 (4.8 MB, 14 minutes. Download here)

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    • 1 Second Ago
      • 5 Years Ago
      Here is what impresses me about Nissan and Carlos Ghosn coming out with the LEAF in mass quantities and at a profit:

      In 1999, when the Renault/Nissan alliance was formed and Carlos Ghosn was put in charge, Chrysler had just turned down a deal to buy Nissan, comparing Nissan to a ship being filled with money, sent to the middle of the ocean and sank...

      During the time that Nissan was making major investments in the LEAF, they survived 2 major recessions. They financially turned the company around, paid off their debt and established one of the highest operating margins in the industry. They grew sales. They set out to inject some passion in the brand and came out with the GTR and Z. They set out to increase quality (which used to be a weak point), leading to cars like the Altima that has the top spot on Consumer Reports, Consumer's Digest and JD Powers. And they brought more of the R&D and production in-house for greater long-term business strength (unlike Ford, which started outsourcing more of its product to reduce short-term costs)... All this while paying for the in-house development of what will perhaps be one of the most important, transformational vehicles many of us will see introduced in our lifetimes.
        • 5 Years Ago
        Short of delving deeply into the intricacies of corporate structuring, it seems that the battery manufacturing of AESC/NEC Tokin/whoever it is is adequately capitalized since they are building manufacturing facilities on several continents.
        Even in the UK and America ownership and capitalization can be opaque.
        I would not even know where to start, even supposing I had the company accounts of a Japanese corporation in front of me.
        • 5 Years Ago
        Damn.. you increase my respect for Nissan by a factor of 2.

        Yeah, their gas cars have been good but not great.. they had this brewing since '99? I had no idea.

        Glad Chrysler didn't buy them... coulda drove Nissan into the ground!!

        • 5 Years Ago
        Well said lne937s. Totally agree. Carlos Ghosn is all common sense and has no tie to the past. People (and their governments) want electric cars and he's going to sell a tons of them at a reasonable price.

        GM, VW/Audi and Toyota could have done it, but instead they keep resisting building pure EVs claiming they are too expensive/impossible/not ready/blah-blah-blah. What a racket...
        • 5 Years Ago
        Your post shows the short sighted (and just plain dumb) American auto execs for the losers they are - and have been for 30 years running. No vision, no thoughts or plans other than status quo, planned obsolescence and decline.

        Compare that to Nissan having an ongoing development effort since the 1990's for electric vehicles. They are now poised to reap the benefits of having a long term vision.
        • 5 Years Ago
        What are these major investments in the Leaf Nissan made back then?

        People are getting way off the scale with this.

        For starters, Nissan isn't a battery manufacturer. Look at their joint venture with NEC Tokin. It's only capitalized $4M total, Nissan only put in $2M. You don't get much for $2M. You sure as heck don't get a piece of NEC Tokin's brains about how to make and sell batteries. You can maybe build a single plant with it, but it'll just be a facility for NEC Tokin to package batteries in.

        I strongly suspect all this joint venture is to either package NEC cells for auto use or only to help companies design them into autos. Because that's about all the money put in will buy.

        In a lot of ways, Nissan has made smart moves since they failed and Renault bought them. But to point to only the Altima is cherry picking. The Altima massively cannibalized sales of the Maxima. The Sentra went from a strong competitor (in the US) to the Corolla and Civic to a dark horse. They failed to do much with their early success in the SUV space with the Xterra and Infiniti still doesn't have a lot of success to point to besides the G35, despite a lot of new models. And the GT-R? It started out a small seller due to restricted supply and now seems to fake lack of demand. No matter how good a value it is, it's selling like an $80K car does, slowly.
      • 5 Years Ago
      The 1998 Nissan Altra was the first production EV to use li-ion batteries (it had a 32kWh pack), so certainly Nissan has a track record with li-ion powered EVs.
        • 5 Years Ago
        Such a pity they didn't sell it back then.
        • 5 Years Ago
        Water under the bridge, my friend. I am sure they have just been biding their time waiting for the market to swing in the direction of electric vehicles again.

        The important thing is Nissan is pretty much single handedly bringing the EV market to life. GM and Mitsu are planning such small production numbers and will have negligible effect on the vehicle market. The Leaf is truly a game changer and Nissan deserves accolades for their achievements.
      • 5 Years Ago
      Isn't the $25280 for lease? You rent the car?
      how about 349/month * 36 month lease ($1999 initial payment)?
      • 5 Years Ago
      I really don’t see where the saving is here people. The Est. price of the volt is the high 30's ok.....let’s say 38 or 39K est. Not the Volt additionally has a gas engine as an extender so if GM removed the engine which cost around let’s say 5K then they are right around the Nissan start price. SO all of you that are patting then on the back I really don’t get. Plus I would never get caught in a car that can run out of juice I just would not do it....doesn’t seem smart to buy a 30K commuter car either.
      • 5 Years Ago
      Great interview Sebastian. So Nissan Leaf's pricing is the biggest announcement at the New-York auto show, uh?

      So basically, the key factor is that their batteries costs them less than the competition. I also think that electric cars are less complicated machines with less parts. Kudos to Nissan for not gauging the public. It's so unlike the auto industry, it's hard to believe.
        • 5 Years Ago
        that is the MSRP, as they say dealers are independent businesses. Your pricing may vary.
      • 5 Years Ago
      "selling the Leaf for just under $33,000 allows the company to make a profit off the car. "

      That's the story they're going to stick to, so they can try and dodge 'dumping' laws.

      Pass the koolaide.
        • 5 Years Ago

        Here's the full text from Fox Business. WSJ is annoying in that you get to see the full text by linking directly from Google News, but links from anywhere else doesn't show the full text.

        I wouldn't say there is no possibility Nissan is taking a loss, but at least with this move it isn't immediately clear they are doing "dumping". If they kept the battery-lease AND kept the $40k price then I would agree with your point.

        Given this turn of events, I think the Japanese pricing was announced with the expectation that the leasing idea might be abandoned. If leasing was actually going to be used, I expect they would have subsequently lowered the price nearer to Prius levels after subsidies, since they promised that the total lifetime cost would be comparable.
        • 5 Years Ago
        jake, I admit it seems much more fuzzy at this point. I'll stop screaming dumping, but I'm still going to keep my eye open. It still seems a little too good to be true.

        Thanks much for the reference.
        • 5 Years Ago
        I saw a comment somewhere else that talked about "dumping" when the Leaf price was announce.

        I don't think they will have much issue with that. Cars almost always vary on price depending on the local market. A top spec Accord (the US Accord is the Inspire in Japan) or Camry cost $35-37k in Japan before the 5% tax, while similar versions cost about $30k in the US.

        The Japanese Leaf costing ~$40k vs ~$33k in the US doesn't seem out of line.
        • 5 Years Ago
        Things are usually more expensive elsewhere when you convert the currency over from country to country.. see this all the time everywhere. But everyone's buying power differs.

        I read a lot about European cars & usually if you convert the currency, they are 10-20% more expensive over there.

        It's also possible that they're taking a hit or breaking even on it here and making money elsewhere. Americans are the most eco-deaf country after all.
        • 5 Years Ago
        Dan, why do you think electric cars are extremely profitable?

        After all, no electric car company has been profitable to date.
        And no highway capable electric car has been both profitable and affordable to mainstream consumers.. until now.

        Show me some proof elsewhere!
        • 5 Years Ago
        "The Japanese Leaf is ~$41K without the most expensive part (the battery)."

        Nissan abandoned the lease idea in both the US and Japan (they announced this on March 30, yesterday). According to the report, the reason why it can't work in Japan is because only one person can be registered as the owner of a car.


        They were still saying as recently as March 22 that they were going with the lease idea in Japan, but they apparently abandoned it.

        If the Japanese price doesn't include the battery, then I don't see why Mitsubishi had to lower the price of their iMIEV (which includes the price of the battery).
        • 5 Years Ago
        Jake, that's an interesting turn of events. I can't see the full text of the link you provided, so I can't see what else may have changed. Google isn't helping either. Does the rest of the article indicate a price change or a battery purchase?

        • 5 Years Ago
        I don't think so. I think it's obviously the other way around, they are very profitable.
        Sebastian unfortunately asks as critical questions as an apple fan boy would ask Steve Jobs. I could make a stronger joke about it but then Sebastian would just throw a hypocrisy fit and delete my post.

        What he should have asked is at what price would they start losing money on it. Everybody is so fooled by this price point as if it is a miracle. it's a high price, not a low price. when he said the price is market based he meant it's priced at what they can get away with. they are milking the attention.
        I didn't actually realize that they were partners in a battery factory. that might mean they get the battery at more reasonable prices, maybe 250$/kWh, that means 6000$ for the pack cells. empty car, battery, power electronics and electric motor with fixed gear. that's it. that's the car. no fuel pump, no starter motor, alternator, combustion engine, gearbox, radiator, radiator pump, catalytic converter, gas tank, fuel pump, etc etc
        at 33 it's hugely profitable. it's my bet they are profitable at 25k before incentives and a real crime that you didn't ask about that Sebastian
        • 5 Years Ago
        neptronix, in Europe, that price differential is due to a VAT. I believe Japanese Leaf doesn't have to deal with a VAT.

        Jake: "The Japanese Leaf costing ~$40k vs ~$33k in the US doesn't seem out of line."

        But that's not the case. The Japanese Leaf is ~$41K without the most expensive part (the battery). The US Leaf is ~$33K with the most expensive part. What's the going price for a KWh? Work that into the equation and the difference becomes dramatic.

        Maybe I'm a pessimist, but when things appear too good to be true, they usually are.
        • 5 Years Ago
        It is a little strange, isn't it?

        Not so much that it's too cheap, but more that I don't believe they're making money. I believe they're dumping. The massive price differential between the Japanese price (especially adjusting for the battery) and the US price is highly suspicious.

        This quacks like a duck, but people are too enamored with the (US) price to see the duck.
        • 5 Years Ago
        nrb, who told you the $40K Japanese model doesn't have a battery. I hope you didn't beleive the wrong tweet from BreakingNews.
        • 5 Years Ago
        This is a new one.. someone complaining that an electric car is too cheap, lol

      • 5 Years Ago
      Apple doesn't generally manufacture its products exclusively "in house". An example would be the ipod:


      It uses a lot of subcontractors. Some of the subcontractors are, ironically, their competition.
      • 5 Years Ago
      The mass production electric car industry is in its infancy. Due to the nature of the technology and the implementation, it won't be exactly like the ICE automobile industry. Initially, the large automotive companies will have an advantage. However, over the long term, small companies can not only survive but thrive. Electric cars don't have to be built from the ground up by a single manufacturer. One can get a motor/wheel assembly, batteries, chassis, software and the body all from different manufacturers. Electric cars can be built like desktop PC's. Mass market manufacturers that design, build and sell cars in house may be a thing of the past. It will take quite a few decades for this to happen, but this is a possible scenario.
        • 5 Years Ago

        Sorry to burst your bubble, but Apple has no factories and makes nothing. they outsource everything. In the case of the iPhone, iPod, iPad, Mac Mini, it is outsourced to Foxconn/Hon Hai (which is a Taiwanese/Chinese company, is the largest contract manufacture in the world and has twice the annual revenue of Apple). Foxconn also makes the Kindle, smartphones and tablets for other companies, the Xbox 360, Wii, PS3... Apple computers are primarily ASUS and Quanta computers.

        IBM PC's used to be made under contract with Lenovo, until the contractor bought out the computer business from IBM, which is why Thinkpads say Lenovo on them now. ASUS and Acer (which is now the #2 computer brand in the world) also were contract manufacturers for other companies, before they started selling their own.

        In comparison top Apple, Nissan is far more vertically integrated, outsources very little, controls far more of the intellectual property, and manufactures more of the components, as well as the final product. If other manufacturers don't step up, Nissan could become the biggest EV brand and also become the Foxconn/Lenovo of electric cars.
        • 5 Years Ago

        No bubble busted here. My point was about the cost of R&D. Apple does all the R&D in-house - even the processors (new iPad A4) and does all the manufacturing abroad.

        For car batteries, ad hybrid power-trains, you can either use your own design or get it from someone else, in which case you pay extra. Nissan saved money by using their own design & R&D, which makes their batteries less expensive than say, BMW.

        I agree that the computer comparison is kind of weak over all ;)

        • 5 Years Ago
        Actually, Nissan went the other way: they achieve economy of scale by building everything internally, including the batteries. So it's like the Apple model vs the PC model you are referring to.

        So, yes EV will be like computers, but using the two models of integration:

        1) All internal -- for mass production. i.e. Apple
        2) Building blocks -- for small scale production. i.e PC

      • 5 Years Ago
      It's very tough to pin down the actual profit made on a car, because it depends on how you count the R&D. I guarantee if you divide the R&D for this car by the number of units sold and add that to the cost of building the car, it's more than $33K and thus Nissan is in a way making a loss on the car.

      But of course that's not the only way to count it. If they use that same R&D for other cars, then don't you divide the R&D across those cars that you sell too? I bet someone at Nissan filled in a rather large number for the "number of cars to amortize EV R&D across" in their spreadsheet. And they could easily be right, if EVs take off (and this low price will help that market grow!), then this R&D money will apply to a lot of cars.

      Heck, just by (honest, he swears) claiming they will sell 500,000 Leafs per year, Ghosn created a defensible justification for lowering the R&D costs per vehicle to one tenth. Even if it doesn't come true!

      This is all the magic of big volumes. It's why cars from small manufacturers cost so much and why Nissan has a huge advantage in this market.

      On top of this all, I fully expect Nissan will raise the price before removing the restriction on the availability of Leafs, like they did with the GT-R. So the "$25K" Leaf becomes $25K for a select few and $28K ($35K before tax credit) for the average joe. It's still a deal at $28K.
        • 5 Years Ago
        I think it is good even if the car is "profitable" ignoring R&D costs (in other words profitable on a component/manufacturing cost level). That means in order to make a profit overall, all they need is more volume.

        Sometimes things are priced that they are a loss even ignoring R&D (usually as a strategy to manipulate the market), and that means no matter how much volume you sell, it will always be a loss at that price.

        I think Nissan will have no problem amortizing their R&D, since they are planning multiple EVs (including the rumored Infiniti that will be based mostly on the Leaf).
        • 5 Years Ago

        Only a big company like this can pull this sorta thing out of their hat...
        That's why i've never been hopeful for the smaller companies and have been scuffawing at them forever on here..

        What would be really cool, is if Nissan licensed out the technology, sorta like how Toyota has done in the past with their hybrid system. Tons of automakers used Toyota's system at one point. I think some still are?
        • 5 Years Ago
        Nissan was early in the battery research field and I'm sure has written off most of the battery R&D from their sales of ICEs along the way. Nissan is a battery manufacturer and has an agreement with Renault to supply batteries for their "Better Place" BEVs

        Nissan's CEO has announced that a 400 mile range with one charge is possible in the future; but, the current range for the Leaf is spec'ed at 100 miles. Additionally, if I'm thinking correctly, the chassis and drive line on the Leaf should last for decades and the maintenance appears to be limited to tires, brakes, bearings, and a 8-10 year battery replacement.

        Since it appears the chassis will last so long, upgrading the battery pack is a feature I would like in the car. As the battery tech improves, i.e., longer ranges, I would like to be able to swap out the old battery for a new longer range model. Without this feature, I'm a non-buyer unless they surprise us all with a longer range capability when they release the car.
        • 5 Years Ago
        The plan has always been to sell the batteries to other companies too:

        No doubt that Renault/Nissan will have first pick, but they intend to amortize their R & D costs and production lines by selling to others too.

        This is very good news for affordable EVs and plug-ins.

        Earlier remarks in this thread on different methods of allocating costs are entirely accurate and are a matter for the directors of individual companies to decide as long as the books for the whole company balance ( I am oversimplifying somewhat, as there are also different nation's legal restrictions on where you can put the cost of sales and production in that country so that the taxes aren't evaded - but big companies are very good at getting around those things).
        The cost of producing a car partly depends on how many you think you can sell at a particular price point, and you have a fair amount of flexibility in how you account for R & D, setting up the production line, etc.
        Basic labour and material costs tend to be relatively fixed, it is allocating the overhead which can vary.
        • 5 Years Ago
        If Nissan has actually done the R&D in previous years, then it's a "sunk" cost, and doesn't need to be "accounted for" in this year. Nissan has already paid the bill on that R&D.

        It would be interesting to know what percentage of profit goes to R&D. And why the rest of the Auto Industry isn't at that level. To the Innovator Goes the Profits.

        This is one of those characteristics that ticks me off about the US auto industry. They only spend research money on V8's and horsepower.

        Then there's the oil industry, essentially saying, "You know all the money we could make on Wind? Screw Wind."

        I didn't know Nissan was in the battery business though...
      • 5 Years Ago
      Well done Nissan. I truly hope to buy the Leaf as my next car. I just wish the could sell it here in Italy for a translation of USD25k (about 20k EUR), if they put VAT and other taxes on it it would become way to expensive to buy for me (sadly). The Prius is sold in Italy for $35k.
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