Will others take the lead?
When Nissan introduced the LEAF to the US market in December of 2010 I don’t know that anyone saw what this vehicle would do to the future of transportation. Certainly there were lofty goals and aspirations, but much of that was dreams and wishes with no real understanding of how this vehicle would impact the market simply because a change like this in the automotive world had never been seen before on this scale. True, GM came to market with the EV1 in 1996 – and produced a whopping 1,100 units over three years. Also, GM did not sell a single vehicle. They leased every one. The LEAF sold roughly 90,000 in its first five years in the US. Nissan came to market with a plan for a mass market EV, a plan which they have followed through on with the ripples being felt around the globe. When the LEAF came out, the only other battery electric car on the market in the US at the time was the low volume Tesla Roadster which became available in 2008. Chevrolet also launched the Volt with its onboard 4-cylinder range extending gasoline engine in December 2010. Since that time manufacturers from Asia, Europe, and the US have all jumped aboard the EV train offering pure battery electric vehicles, range-extended battery electric vehicles, and plug-in hybrid electric vehicles with some having already gone by the wayside. This time the EV movement is carrying much greater momentum than its mid-90’s attempt. But with modern second generation vehicles with greater range right around the corner is Nissan positioned to hold the market share that they established with the first generation LEAF?
General Motors has already announced the launch of the 2017 Chevrolet Bolt with production beginning the end of this year. That could mean deliveries either late this year or early next year. Chevrolet’s first true EV (if you don’t count the Spark EV, which many don’t), the Bolt carries a 60 kilowatt hour battery pack which should provide an EPA range of over 200 miles. When introduced at the Consumer Electronics Show in Las Vegas earlier this year, GM CEO Mary Barra placed the cost at “around $30,000 after government incentives”, which would put the price around $37,500. Both 60 kWh and $37,500 are important to keep in mind if your name is Nissan because currently their least expensive 30 kWh SV trim level starts at $34,200. But the Chevy Bolt is only one point of concern for Nissan. The Tesla Model 3 also lurks behind the curtain.
The Tesla Model 3, which Elon Musk said would be unveiled this month, is expected to have a starting price of $35,000, also according to Musk. But Tesla’s online marketing for its Model S bizarrely prices the 70D at $58,200 after government incentives and gas savings, with the actual price of $75,000 listed further down the web page. So my guess would be a starting price of at least $42,500 before federal EV incentives kick in [Update: Tesla’s announced starting price is $35,000 before incentives]. I also expect that, just as with the launch of the Model S and then the Model X, every early Model 3 buyer will pay significantly more than that for the Performance or Signature trim level, as that will likely be the only trim level produced initially. For example, the Model X theoretically starts at $80,000 with a 70 kWh battery, but the early deliveries were the Signature 90 kWh battery vehicles at upwards of $132,000 with no 70 kWh vehicles produced yet. All that to say that it is unlikely to see any Tesla Model 3s anywhere close to $35,000 for quite some time after initial deliveries begin. Musk has said production should start in late 2017, though Tesla also has a history of delaying initial deliveries beyond the promised launch date. With $100,000 plus vehicles (and the customers that buy them), this may not be a concern. But if Tesla wishes to play in the mainstream auto market in a big way, this behavior could prove troubling. The Tesla Model 3 would like to be an affordable, everyman EV, but we don’t really see that happening anytime soon.
What do these two vehicles in particular mean for Nissan? Precisely what they mean is that Nissan’s second generation 2018 model year LEAF must come out early in 2017, with a real world price closer to the Bolt than the Tesla, and offer a 60 kilowatt hour battery as standard equipment at that price. This would mean that to remain competitive Nissan would need to double the size of their current battery pack, and do it without raising the price by more than about $3,300 from their current SV trim level. Every month that the Chevy Bolt is on the market against Nissan’s aging first generation LEAF will cost Nissan market share. In the five years plus since Nissan launched their EV, many studies have been done that show that both range and price must come together to meet at the not yet clearly defined sweet spot for broader mass market appeal. For many, that sweet spot will be called the Chevy Bolt and it may just be the answer to their needs – 200 mile range for around $30,000 after incentives. That Nissan laid the groundwork will be immaterial to most of them. The next year or so will be very interesting in the EV marketplace.