Since the announcement of Nissan's intention to lease replacement batteries instead of selling them outright, the rage of indignation from customers has simply spiraled out of control. Nissan announced in late January that a replacement cost for the traction battery would be provided by Spring 2013 and with this announcement coming the day before Summer without a purchase price, people are feeling like a ping pong ball in a shell game. The result is a very active one-sided conversation that has essentially buried the real information that people need to know, especially ones who are not familiar with the LEAF and are still in the "info gathering, shopping for a new car" stage.
Now, despite the title of this post, I am not completely happy with what Nissan has put out so far, but I do see the benefit for many and do understand that Nissan is in a very tough situation.
**Right now there is an immediate need for some to get their LEAF back to full capacity. Whether its from driving 80,000 miles in good weather or from driving 30,000 miles in hot climates, some simply have lost too much range to make their LEAFs viable. Now the Capacity Warranty states that when the 9th capacity bar is lost (just under 70% of the original capacity) within 5 years or 60,000 miles, The pack will be replaced at no charge. Due to cost many will opt for that, but many simply cannot manage their LEAF with that little of a range.
** There is a heat management issue that may have first come to light in Phoenix but is now becoming obvious that it covers most of the southern tier of the US. Nissan realizes this and they are working hard to develop a battery chemistry that is more heat tolerant AND maintains the cycle life. So, there will be a solution to that but its not here yet.
**Battery costs are still high. A purchase of a replacement battery without exchange would be an expense much too high for anyone who is still making car payments on their LEAF.
**Battery innovations are progressing at a rapid pace. Its predicted that battery costs could be lower by half in as little as 3 years. Now, no one knows that for sure but even if there is no major break thru in the technology, volume production will lower the prices significantly on their own.
So this is what Nissan has to think about when coming up with the best method to replace the lost range owners are seeing. So how to take care of the early adopters in a way that would not get a severe backlash a few years down the line.
Now, everyone wants a purchase plan and everyone wants a spare battery and I am not sure why. A new LEAF pack would probably cost $12,000 or more. So now you have two batteries and I suppose a few could somehow integrate that into some sort of backup for their solar system for a few thousand more?? Ok, I can see that but if that is what you want to do, you best stop complaining about a $100 monthly fee since you have so much money to spend.
So, ok lets look at purchase with exchange? Cant really do that until we determine the value of the degraded pack. So how should we do that? Well, IF a new pack is $12,000 (could be more) then would it make sense that a 70% capacity pack is worth 70% of a new pack price? or $8400 so we should be able to get a pack replacement with exchange for the difference or $3600? uhhh, well that is one way to look at it but that is not how businesses work.
We could actually look at the prices between LEAFs with new packs verses prices of LEAFs with degraded packs but there is the "new car penalty" complicating the issues, so lets look at the value of a 58 mile range LEAF verses an 84 mile range LEAF. If you examine the numbers you will see that there is not a one to one relationship between anything "used" verses "new".
How many of you are willing to pay full, or near full price for something that has been purchased, opened and returned? even if it was out of the store a single day and still complete? ok, that is what i thought. Ok, then you would take it for what?? 10%? 25% off. Ok, now how many of you would pay 10-25% off if you knew part of the item was missing? or chipped? or somehow not "new looking" anymore?
So, a LEAF battery degraded to 70% of its original capacity is probably worth no more than 50% of its original cost or maybe even less. cant say for sure but we can be assured its not worth 70% of its original cost, right?
So lets look at some scenarios. First one with no Battery Leasing Program.
**You have driven your LEAF 45,000 miles and you have 10 capacity bars but its really becoming inconvenient for you. Its a daily stress test to make it home and you are really getting tired of that lady asking you if you want to search for a non existent charging station. You decide its time to chuck the battery and get a new one. And although its a bargain (Ford's price for the smaller Focus EV pack is currently $17,355.76) You balk at the $12,000 price and decide $6,000 for the exchange is a better deal. You pull the trigger, you have 12 bars and you tell the lady to "eff off!" when pulling into the garage with 15 miles left in the tank. Problem is, the battery chemistry has not progressed a lot. (it has some but...) So in 2-3 years, you start noticing that familiar loss of range and you are halfway thru your loan payments for that battery. Then you get up and read about Nissan's new battery innovation that is expected to retain more than 90% of its capacity after 60,000 mile in Phoenix and its only $2500 with exchange. First off, you would be thinking I should have waited! Or, I deserve to get that battery because I was instrumental in getting LEAF sales off the ground as an early adopter! And all those would be valid feelings.
But you made a purchase and you are several months beyond any return period. Many stores have a 30 day price protection guarantee. If you buy something today and that same item is discounted to a lower price within 30 days, they will refund you the difference. Its not a program that many take advantage of but check it out. A lot of stores do it. But too much time has past for that but not for the financial obligation you have agreed to. Then the real pain starts when they announce a $100 a month battery lease program (while you arent even half way thru your $200 a month loan payments for the battery you purchased)
Now; lets look at the Nissan Battery Lease Program. This will be a challenge mostly because other than the basics of how the program works, we dont have prices so filling in any dollar values is dicey at best but not knowing facts never stopped me before so why start now? ;)
Same scenario; 60,001 miles and wanting more range. Now, it took about 4 years to start feeling the pain of range loss so guessing this new replacement battery will be the same. But now its a much tougher decision. There is no mileage or degradation parameters for entering the lease program. So the longer one waits the cheaper the overall program right? But if we decided to jump right in, We are now have a Car we own and a battery on loan as long as we continue to fork up the $100. Well, as one can guess the first few years are like heaven. We have all the range back and for less money than the gas bill for the "other" car. Still very low maintenance. IOW, looking like a great decision financially.
Now, the scenario must diverge. We now have had our LEAF for 8 years and 120,002 miles on it and once again, the lady is starting to harass us. So its time to look at another battery purchase since the stupid lease program wont do anything for us until we have only 8 bars and we are already suffering at 10 bars. So waiting is not an option so what to do?? Well its now the year 2020, the average battery price is now about $150 per Kwh and with weight reduction we can either get a 30 Kwh pack for $4500 which would double our lease payments but only last 5 years or simply get a brand new LEAF III which would quadruple the payments but gives us a 200 mile range and will take 10 years before any range issues comes up because of the new battery technology using energy of misguided forum posts!
Then we have the driver who is retired or works from home and is really doing the "Live Local" program and only drives less than 10,000 miles a year. Their LEAF will cover their transportation needs for 10 years before degradation becomes a problem but all batteries will wear out and its now 2020 (again!) and they decide its time to try that lease program which btw is now $150 a month for a 2011 but a ridiculously low $75 a month for a 2015 LEAF II. But luckily for them, there is a special low mileage option that they take for $100 a month. Its now 2030 and the newer better, more advanced battery pack with a 10 year technology advantage is still going strong and one is beginning to wonder if that $12,000 investment over the past 10 years was worth it now that the LEAF is approaching 200,000 miles. And despite the fact that 200 mile range EVs can be had all over town for Under $20,000 (after adjustment for inflation of course) they realize yea it wasnt a great deal but still not bad!
Finally, we have the road warrior. They blew thru 60,000 miles in two years and are very happy with the $300 a month they are saving in gas but the range is getting tight and they are looking at the very real possibility of that $300 a month savings being cut up by public charging station fees. Now with the driving they do, keeping a car 10 years is not in the cards for them. They *might* keep a car they like a whole lot for 5-6 years but that would be rare. So this LEAF thing starting to fail to provide after two years is simply not in the budget! like WTF??? Cant afford to buy the battery that Nissan has just recently offered for sale so lets take a look at that lease thing they started a while back?
Well FIGURES I drive too much for the "advertised price of $100 a month" Its another bait and switch. But then again, the $150 plan seems workable and should give me enough to drive another 2-3 years. So he jumps on it holding out as long as possible with the degrading pack until the time charging on the road just becomes too time consuming. Now its a $3600 more than what was budgeted and it cuts the gas savings to barely $100 a month but the battery chemistry is a "bit" better so it goes an extra year before the range issues pop up (so now its $5400 more money) . So its dump the car with 150,000 miles (especially since it was just paid off last month) and get another new LEAF with 50% more range, better battery chemistry and for a few grand less than your 2011!
Ok, we have established that I have an active imagination and ad libbing is something I tend to do. Now we can bounce the numbers around but it does become clear that offering a battery for purchase is going to burn an already burnt early adopter. It is expected that early adopter getting version 1.0 of anything will pay up the nose but how many times can you kick a poor horse? Offering a battery for purchase at this point only delays the existing issues for a few years. If it took 2-3 years before you started thinking along those lines, what makes you think it will take longer the 2nd time around?
The other thing we need to think about is that this is not the final word from Nissan on Battery pack replacement. Now, if one wants to think that Nissan just threw this lease thing together (along with its total lack of details on cost) just to make the Spring deadline, then ok. I am with you on that. I dont agree with that, but its easy for me to understand why someone would think that.
Personally, I think Nissan thought long and hard on the subject and made the best decision for the current situation. A situation that is currently in the state of rapid change and that is battery technology improvements. It could be 5 years to see a doubling in capacity at half of todays prices or it could be 3 years. Leasing takes the gamble out of that decision and allows one to calculate the budgetary cost for the future.
Now, just to clarify. I am not a complete fan of this program ( the 8 bar thing for the 2nd lease battery is simply too much!) but in exploring other possible scenarios, I feel this is the best way to go today. Two years from now, I doubt I will continue to feel that way. We still have at least 6 months before the program launches and 100% of the pricing details to see first before I can really make anything resembling long term plans. I have 7 months left on my lease so we shall see.
**disclaimer** As part of the Nissan LEAF Marketing Focus Group, I do get some insight to the inner workings of Nissan's decision making process. This article has none of that (since we really didnt get much) and is purely from an owner perspective. Now I dont feel I have to say this but some people get carried away over taking individual statements way out of context and running with them. But this is all speculation on my part as to why I think Nissan went this route. Like all decisions, it has its good parts and bad parts but overall, I think they really did the right thing
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