Nissan Says LEAF Battery Replacement Program Is A Money Loser

JUL 24 2014 BY JAY COLE 38

In June Nissan LEAF owners got some long-awaited answers about how much a new battery replacement for their all-electric car would cost them.

As Plug-In Vehicles Age They Lose Storage Capacity, Knowing How Much To "Start Again" Is High On Any EV Owner's Mind

As Plug-In Vehicles Age They Lose Storage Capacity – And Therefore Range.  So Knowing The Cost To “Start Again” Is High On Any EV Owner’s Mind

In total, a new 24 kWh pack would put an existing owner out of pocket $5,499 – plus the turn-in of your old pack (which Nissan values at $1,000).

Full story on the replacement program itself can be found here.

It is worth noting that even if you had an older LEAF, with an older chemistry, this replacement would bring you to the 2015 standard.

The 2015 Nissan LEAF battery, while still rated at 24 kWh, is “more durable in extremely hot climates” according to the company.

As there is not a lot of data about how much batteries are costing the automakers these days, we all naturally did the math from this news – $6,499 / 24 kWh = $270/kWh…that was provided that Nissan was neither profiting or losing money in the transaction

Now comes word via a nifty exclusive by Green Car Reports that Nissan is actually losing a little bit of money whenever they sell a new battery in exchange for an old one; Nissan does not sell the battery on its own.

Jeff Kuhlman, Nissan’s VP of Communications, made the following statement to the outfit when asked about the actual cost of manufacturing the batteries:

“As you can imagine, we don’t share those figures for competitive reasons.”  But he did elaborate when it came to the battery replacement program itself, “Nissan makes zero margin on the replacement program. In fact, we subvent every exchange.”

Also of interest from the Nissan VP?  The company has yet to make its first “battery sale”.

Green Car Reports

Categories: Nissan

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38 Comments on "Nissan Says LEAF Battery Replacement Program Is A Money Loser"

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Anon

Maybe they would have saved some money if they had active thermal management of the battery?

Direct selling / swapping out the degraded pack for a replacement, is still probably a less expensive solution of the thermal issue, for Nissan.

How is their new “lizard” battery going to handle the heat if it isn’t liquid cooled?

There is no thermal issue.

Anon

Do you operate a Leaf in Arizona, New Mexico or Texas?

taser54

This is in line with Nissan propping up the used Leaf market.

Which reduces the lease cost. no or few replacement packs being sold now means they are MAKING money with this move.

DaveMart

As a cost and works guy I can tell you that this statement can’t necessarily be taken at face value, as ‘cost’ is a surprisingly slippery concept, which depends among other things on how development costs are amortised.

It also depends on when the battery replacement happens.
They might lose money on any battery replaced right now, but that does not matter too much if that is only a tiny proportion of batteries, if it reassures buyers and if by the time most of them actually need replacing costs have dropped enough so that it doesn’t cost them too much.

Just the same there is no reason to doubt the basic accuracy of what is being said, and that batteries at the moment still cost Nissan at point of sale more than $270kwh.

+1

Alonso Perez

To me the #1 factor is what they do with the old battery. Say you change the battery when it is down to 16kWh, a 33% loss of range.

Well, that’s still a monster battery worth a lot more than $1,000, extremely useful as a full-house UPS, solar storage solution, peak demand limiter, or a combination of these fucntions.

Who wouldn’t buy 16kWh for a mere $1,000? That’s $62 per kWh. The real math is probably something like this:

New battery: $8,500
Old battery: $3,000

Difference: $5,500

There are probably accounting or tax reasons for Nissan not to show the numbers this way. But the tell is that they won’t sell you a new pack for $6,500 without the exchange. If they really valued the old pack at $1,000, they would do that.

I think the exchange price is fair, but I also think that Nissan, when they have enough inventory to set up a processing pipeline, will sell the old packs reconfigured for electric power duties at a healthy profit. I believe they will be doing this with ABB.

offib

+1

Lad

I think most Leaf drivers will live with their current batteries until Nissan can offer a longer range battery. They have hinted at the 2017 MY for this upgrade.

David

No where in the original quote does it say they’re losing a “little” bit of money. Not sure if that statement is true.

scott franco

I would say, so what. If Nissan does not want to share the actual cost of the batteries, then they lose an unspecified amount by underselling it, and we lose by not being able to accurately estimate the value of new improvements in range of the Leaf, which I suspect is the goal.

Bloggin

It seems the batter replacement plan may benefit dealers more, which enables them to bring a used Leaf up to full capacity for resale.

It should be a hard sell to offer a Leaf already with capacity loss, and consumer knowing there is a $6k replacement cost looming.

BTW…..

Does anyone know what the used Leaf battery capacity warranty covers?

Is the used Leaf sold ‘As Is’?

Is there an additional battery capacity warranty that can be purchased starting from the point of resale?

Thomas J. Thias

Gawd I Hate Super Market Check Out Lane ‘Natonal Enquirer’ Type Headlines So Rampant In Use By Those Reporting On These Emerging Stories Of The Surging Global Electric Fueled Vehicle Industry.
Starting to hurt my head. lol

Best-

Thomas J.Thias

517-749-0532

Twitter.com/AmazingChevVolt

Jouni Valkonen

It is just natural that Nissan (and Tesla) is subsidizing their replacement battery, because affordable and fair priced replacement battery increases the resale value of electric car. And therefore Nissan leaf is a better investment as a car.

Brian

Exactly. Plus, very few will take them up on this offer anyway. Instead, it just allows them to sell even more new Leafs. I’m betting that announcing this price is making Nissan more money (in new sales) than it is costing them (in selling batteries for a loss).

+1. Excellent move on Nissan’s part.

my thoughts exactly.

David Murray

They may also be figuring that the cost will come down in a few years but the price will remain the same. So they may not be profitable now, but maybe when the time comes that people start really buying these batteries, the price will make more sense.

ItsNotAboutTheMoney

Rather like the Volt battery list at something like $3.2k with the old one returned. A price target based on cost at time of replacement.

We’ve been trying for weeks to get one from our local Nissan dealer without any luck.

I agree with the earlier comment that this effort might just be to prop up the used market for Leafs.

Maybe they watched too many of your burnout videos and got skeered.

+1

It makes little sense to upgrade the battery pack in the first five years of EV ownership.

Should owners have an EV range that is critical for daily use, the option of tradin- in current a BEV for a newer/different model is likely going to cost less. Each year new models with increased range are coming to the market. Even with slightly reduced range, a large number of car owners would be happy with a second-hand EV. (most people drive less than 30 mies per day)

note: the $5400 upgrade price ignores the remaining core capacity value. Between 60% and 25% remaining capacity, a pack could easily generate value over another 5-10 years of service in another non-vehicle application. (eg: Energy Storage use could even generate revenue based on tiered rates)

Solar is cheaper than shifting load.

ItsNotAboutTheMoney

For commercial users that pay demand charges, being able to lower peaks can be useful.*

Also, solar peaks are not grid peaks: in some locations you’re seeing renewable generation forcing lower daytime spot prices.

* JB Straubel storage symposium keynote with very interesting graph of the effect of backup on demand at a Supercharger: http://www.youtube.com/watch?v=zWSox7mLbyE
He talks about Tejon Ranch at around 25 minutes. (However, I’d encourage everybody to watch the whole thing because he’s a very, very important man.)

ggpa

If I buy a battery for $6499, the dealer gets a good chunk of that money.

I assume that the batteries cost Nissan less than $6499 to manufacture, but they lose money on the retail sales after allowing for dealer markup, shipping etc …

Al S

Has anyone actually gotten one of these installed yet?

If so, how much is installation?

They were talking 3 hours of shop labor and a kit for $250.

alainl007

Hi there,

“Nissan Says LEAF Battery Replacement Program Is A Money Loser”

Give me a break!!

“The suggested retail price of the Nissan LEAF battery pack is $5,499. This price includes and requires a return of your original battery pack (valued at $1,000) to the dealer in exchange for the new battery. This price does not include tax, installation fees or an installation kit required for 2011 and 2012 vehicles. The MSRP for the installation kit (which includes brackets and other minor parts required to retrofit the newer pack to original vehicles) is approximately $225. Nissan expects the installation to take about three hours. However, dealers set the final pricing, so we recommend confirming with your local retailer.”

Nissan win what?
A battery pack for : 1.000$
Kit : 225$
Installation +-3 hours well let say 4or5!!
Dealer set the price : Mean some extra profit!!
Total profit : Old battery+the rest=+-2.300$

;-))

Good road with EV.

JBlanco

I don’t think Nissan makes money on the dealer’s labor.

Mike

There’s new tech coming soon from Japan:

http://techon.nikkeibp.co.jp/english/NEWS_EN/20140723/366762/

ggpa

Please define “soon”

Ambulator

A specific energy of 370 Wh/kg is not seven times what is seen in lithium cobalt oxide cells. I’m not sure what they are saying.

mustang_sallad

Nissan can clearly justify at least some loss on this program if it translates to increased sales overall. How big a hit would Leaf sales take if it was announced that a new battery would cost $10k?

shrink

If the battery needs replacement so soon on an EV, how can one justify it as a sustainable Eco-friendly car?

There had been criticism that the battery manufacturing creates a lot of emissions and it’s still not entirely clear what Nissan is doing with the old battery.

There have been dozens of LEAF battery replacements already for free under warranty for excessive capacity loss in too short a time.

Hopefully the heat-resistant battery is actually better, but it’ll take a while for that data to come out.

Research the cost to make a gallon of gasoline.