For buyers of the electric LEAF sedan coming up from Nissan, the battery pack and vehicle will come under one deal. While Nissan has previously said it was considering offering the battery under a separate lease contract, the automaker now says the vehicle “will be available to consumers via lease or sale, in a single transaction that includes the battery.” This could be a trendsetting move for how automakers finance the next generation of electric vehicles and what types of business models emerge around the market, since Nissan’s LEAF will be one of the first widely available plug-in models targeted for mainstream consumers.
Customers will be able to start taking the first step toward that transaction — paying a $100 reservation fee — in April, Nissan said in a release today. The final price for the car will be set “shortly” before that. A few months later, in August, Nissan plans to begin accepting “firm orders,” and by December 2010 deliveries will begin in the earliest markets.
We’ve reached out to Nissan this morning to confirm whether or not the company is dropping the separate battery leasing option altogether. But if that “single transaction” that Nissan describes today for the LEAF and battery pack means the pair come in an all-or-nothing deal, it would represent a conservative play. Separating the two could have opened a door for companies like Better Place to provide batteries under subscription-based pricing schemes and other alternative business models.
Taking the more conservative route, however, may be a smart strategy for Nissan as one of the earliest entries to this nascent market. Electric vehicles already ask consumers to take a leap out their comfort zone, and adding one more foreign element could nudge some buyers on the fence to say “no thanks.” As Edmunds Green Car Advisor notes, many U.S. buyers would likely, “balk at the idea of buying an EV that came without an essential piece of the electric powertrain.”
All-in-one financing for electric vehicles comes with some costs, however. To start, the LEAF could end up carrying a price tag on the higher end for a mass market sedan. That’s because with current technology, batteries are generally the most expensive part of an electric vehicle. So in theory, offering the battery pack under a separate agreement could allow an automaker to take a significant chunk out of the sticker price on plug-in models, and potentially help them compete with more affordable conventional vehicles.
Rolling the battery pack into the same contract as the vehicle could also reduce the warranty period. While the bulk of an electric vehicle may have just as much longevity and durability as conventional models, today’s batteries are widely expected to degrade down to 80 percent of their original storage capacity (and thus reach the end of their useful life in electric cars) after only about eight years on the road.
Outside of the vehicle, batteries can hold value long after those eight years. So if Nissan — which launched a new battery recycling joint venture last fall — were to offer the battery separately, it could have car buyers pay for only the small percentage of the value they’re getting (helping to lower that sticker price). The idea would be to have the automaker then capture the rest of the battery’s value in secondary markets, such as grid storage. For now, we have to wait and see what Nissan’s “single transaction” will entail, and how much room it will leave for Nissan and others to get creative on the battery side.
Photos courtesy of Nissan