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Published on May 5th, 2010 | by Nick Chambers

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Report: Nissan LEAF’s Battery Costs a Staggeringly Cheap $375/kWh to Produce

In the world of electric car pricing, the battery rules. It is the single most expensive piece of equipment on the car, with every other piece of power/drive equipment in EVs being fairly robust and old technology at this point, and, therefore, relatively inexpensive.

So, when Nissan announced their very affordable price for the LEAF last month, the we all wondered how they did it and assumed they were taking a massive loss… With a 24 kWh battery, $32,780 seemed incredibly low. But since then Nissan has said that the LEAF would be profitable from day one.

If a report in the Times Online from last month is to be believed, the key to the LEAF’s profitability may just lie in some secret sauce Nissan has developed for making lithium-ion batteries at incredibly low prices.

The Times Online claims that the LEAF battery pack costs about £6,000 British to build. At today’s exchange rates, this equates to roughly $9,000 US dollars. With a 24 kWh battery pack, that means that the battery costs $375 per kWh hour. To give you an idea of just how low this figure is, a few years ago prices of $1,000 per kWh were being bandied around. Today, the industry average is about $650 per kWh. Industry analysts have said that they expect battery prices to decline faster than previously thought, but that it would still likely be 2015/2016 before battery prices were $325 per kWh. If Nissan’s battery is being built for $375 per kWh now, that means Nissan is about 5 years ahead of the industry average.

When I talked with Mark Perry, Nissan’s North America director of product planning and strategy, at the New York Auto Show last month, he explained that they were able to price the LEAF so low because Nissan had already spent decades researching battery technology and, therefore, they didn’t have to roll research and development costs into the price of the LEAF’s batteries. Could it be that Nissan has scored an amazing coup with some sort of proprietary battery technology and access to cheap manufacturing and raw materials?

In an email response from Nissan spokesperson Katherine Zachary, she says, “We haven’t announced the price of the battery and believe the [Times Online] info to be speculative.” So, there you go. Nissan’s official response is that they can’t confirm or deny it, although she did also tell me that they will be announcing the price of the battery at some point. So at least we have hope that we’ll be able to classify this one as either hogwash or groundbreaking at some point soon.

Source: Times Online (via AutoblogGreen)




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  • http://neilblanchard.vox.com/library/posts/ Neil Blanchard

    This is excellent news! I wonder if we will hear retractions/corrections from all the authors of studies that based their conclusions on $1,000/kWh?

    I’m not going to hold my breath…

    Sincerely, Neil

  • http://neilblanchard.vox.com/library/posts/ Neil Blanchard

    This is excellent news! I wonder if we will hear retractions/corrections from all the authors of studies that based their conclusions on $1,000/kWh?

    I’m not going to hold my breath…

    Sincerely, Neil

  • George

    The $1000/KWh figure has been too high for quite a while. People who do conversions already can buy large format lithium batteries for about $350/KWh.

  • George

    The $1000/KWh figure has been too high for quite a while. People who do conversions already can buy large format lithium batteries for about $350/KWh.

  • dustin S

    awesome, i think this is a good sign of things to come. To make things even better, sell the batteries themselves for electric conversions! I want some for my ’93 nissan D21 4×4 :D

  • dustin S

    awesome, i think this is a good sign of things to come. To make things even better, sell the batteries themselves for electric conversions! I want some for my ’93 nissan D21 4×4 :D

  • douglas prince

    So is this a straight Li-on battery, or a Li-On Sulfide, or some variation on that theme?

  • douglas prince

    So is this a straight Li-on battery, or a Li-On Sulfide, or some variation on that theme?

  • Greg

    The LEAF battery is a lithium-ion and manganese battery chemistry.

    The price of $9000 sounds about right. Back in September there was talk about leasing the battery for $150 and I have read and heard that the battery will last about 5 or more years. That makes the price $9000 or more.

    • Nick Chambers

      Greg,

      If $9,000 sounds about right, then GM is doing it wrong with the Volt. The Volt has a battery pack of 16 kWh (~67% the size of the LEAF’s), yet it is rumored to have an MSRP somewhere around $40K. If Nissan can build a 16 kWh battery for 9K then the Volt battery should cost 6K. Even with the extra engine and associated emissions control systems in the Volt, I would expect that to roughly bring the whole package (16 kWh battery and Engine/Emissions System) up to the cost of an entire LEAF battery pack (the rumored 9K). The Volt is a slightly larger car so perhaps that accounts for another 2K or so. If Nissan can sell the LEAF for 33K and still make a profit, then GM should be able to sell the Volt for 35K and still make a profit. What’s up with that extra 5K? Is that to recoup their R&D expenses?

  • Greg

    The LEAF battery is a lithium-ion and manganese battery chemistry.

    The price of $9000 sounds about right. Back in September there was talk about leasing the battery for $150 and I have read and heard that the battery will last about 5 or more years. That makes the price $9000 or more.

    • Nick Chambers

      Greg,

      If $9,000 sounds about right, then GM is doing it wrong with the Volt. The Volt has a battery pack of 16 kWh (~67% the size of the LEAF’s), yet it is rumored to have an MSRP somewhere around $40K. If Nissan can build a 16 kWh battery for 9K then the Volt battery should cost 6K. Even with the extra engine and associated emissions control systems in the Volt, I would expect that to roughly bring the whole package (16 kWh battery and Engine/Emissions System) up to the cost of an entire LEAF battery pack (the rumored 9K). The Volt is a slightly larger car so perhaps that accounts for another 2K or so. If Nissan can sell the LEAF for 33K and still make a profit, then GM should be able to sell the Volt for 35K and still make a profit. What’s up with that extra 5K? Is that to recoup their R&D expenses?

  • Frank Elliott

    Woah, Nick, whoa.

    You can’t extrapolate what the Volt’s battery pack should cost from the Leaf’s battery pack.

    The Leaf battery pack is air-cooled. The Volt’s battery pack has thermal management to optimize its performance and longevity. But this adds cost and complexity.

    I’m not privy to Nissan’s R&D on its battery so I cannot flat-out declare that the Leaf’s battery will prove to be problematical down the road.

    But I surely am far more comfortable with GM’s approach to its battery that I am with Nissan’s. I would not be surprised if four or five years out — maybe sooner — we started hearing about the degradation of range in the Leaf becuase the battery A: Is too deeply discharged too often and B. has been subjected to extremes of heat and cold.

    • Nick Chambers

      Frank,

      Okay, so add the liquid cooled system in there and you still make up the extra 5K? I don’t think so. My feeling is that GM has to bring the price of the Volt down in response to the LEAF price. If the Volt is priced at 40K, it’s a non-starter. Price it at 36K and I think I’d feel that it is fairly priced. Since most of these first generation LEAFs will be leased, the owners will have 3 years to determine if the batteries are degrading faster than they wanted. Nissan has already said they have a battery with double the range that will be available in a few years. My guess is that the first generation LEAF owners will not be keeping their batteries for more than 3-4 years anyway until the new battery comes out and they either ditch their 1st gen lease and get another one or Nissan offers a deal to switch out the old batteries.

  • Frank Elliott

    Woah, Nick, whoa.

    You can’t extrapolate what the Volt’s battery pack should cost from the Leaf’s battery pack.

    The Leaf battery pack is air-cooled. The Volt’s battery pack has thermal management to optimize its performance and longevity. But this adds cost and complexity.

    I’m not privy to Nissan’s R&D on its battery so I cannot flat-out declare that the Leaf’s battery will prove to be problematical down the road.

    But I surely am far more comfortable with GM’s approach to its battery that I am with Nissan’s. I would not be surprised if four or five years out — maybe sooner — we started hearing about the degradation of range in the Leaf becuase the battery A: Is too deeply discharged too often and B. has been subjected to extremes of heat and cold.

    • Nick Chambers

      Frank,

      Okay, so add the liquid cooled system in there and you still make up the extra 5K? I don’t think so. My feeling is that GM has to bring the price of the Volt down in response to the LEAF price. If the Volt is priced at 40K, it’s a non-starter. Price it at 36K and I think I’d feel that it is fairly priced. Since most of these first generation LEAFs will be leased, the owners will have 3 years to determine if the batteries are degrading faster than they wanted. Nissan has already said they have a battery with double the range that will be available in a few years. My guess is that the first generation LEAF owners will not be keeping their batteries for more than 3-4 years anyway until the new battery comes out and they either ditch their 1st gen lease and get another one or Nissan offers a deal to switch out the old batteries.

  • curt

    I heard Tesla’s ex-PR man claims the Nissan battery won’t last, but seeing how Tesla’s battery pack approach is so much different than Nissan’s which then again is different than the Volt’s its hard to say what is best. Considering NEC and Nissan has been working on it since the early 90s (I’ve kept track of it – which is a lot longer than Tesla) I’m willing to gamble that they might have resolve the thermal issues. Nissan’s approach would be better (whole lot less complexity) on a mass scale and in the end would be cheaper to produce.

    I’m willing to take the gamble (have plunk down my $99 reservation) on the Leaf. Given all the tax incentives and given the age of my present car, I just can’t pass this up.

  • curt

    I heard Tesla’s ex-PR man claims the Nissan battery won’t last, but seeing how Tesla’s battery pack approach is so much different than Nissan’s which then again is different than the Volt’s its hard to say what is best. Considering NEC and Nissan has been working on it since the early 90s (I’ve kept track of it – which is a lot longer than Tesla) I’m willing to gamble that they might have resolve the thermal issues. Nissan’s approach would be better (whole lot less complexity) on a mass scale and in the end would be cheaper to produce.

    I’m willing to take the gamble (have plunk down my $99 reservation) on the Leaf. Given all the tax incentives and given the age of my present car, I just can’t pass this up.

    • http://Web Greg H.

      I wouldn’t be so hasty to reserve anything at this point in time. Don’t forget the other necessities and “not so hidden
      First there’s the $100 fee for the battery charging station assessment and then there’s a cost associated with the cost and installation of the battery charging station which I don’t think is inexpensive as Nissan mentions in its online video that these costs can be financed with the car.

  • http://Web Paul Rako

    If this is true, $1000 per kwh is an underestimate. Cost to produce is not the retail cost of a product. When I was an engineer for both Ford and GM in 1980, we had to get 5 to 10 times over design cost for a retail price. So before you tie ribbons and go dancing about the maypole, think about $3750/kwh, because that is what Nissan would have to price the battery at in order to stay in business, and that does not include the money for the product liability fund. Iron phosphate chemistry is relatively safe, but that does not matter to American trial lawyers. The actual retail cost is what you can go to the Nissan parts department and buy a battery for. It won’t be 9000 dollars, that is a pretty safe bet, but we will see. Then you will be able to get an accurate estimate for the cost per mile, if Nissan guarantees the battery for 50k miles (prorated no doubt) and it costs $12k, (half the 1000/kwh estimates), then that is 24 cents per mile you should add to the cost of the electricity. Gasoline engine cars do not need a $12k fuel tank replaced every 50k miles, so that gives them a bit of a cost edge.

  • http://Web Willie Anderson

    Exercise for the student: using today’s (Hong Kong) prices, compute the cost, weight and volume of a 25 KWh lithium-polymer battery based on the cells used in electric R/C airplanes and helicopters. I know that LiPo cells are (ahem) less than perfectly stable, but what kind of battery is in that laptop on your lap?

    Answer: a typical 22.2V, 5Ah cell is 50mm x 50mm x 150mm, weighs .9 Kg and costs $50 retail (not including S&H). It would take ~225 of these cells to make a 25 KWH pack. It would weigh 190 Kg (420 pounds), would be less than 0.1 cubic meters (~3 cubic feet), and would cost $11,250 retail. The HK dealers don’t have a typical North American jobber margin, but the production cost of this pack would be less than $10K, for sure.

    So, this analysis, based on today’s retail market in HK, says that you can buy a KWH of Li-Poly for $450, order-of-magnitude. This agrees pretty well with the Nissan data point.

  • http://Web Ally Taylor

    this is a good car to have sex in the back seat! (:

  • http://Web ian

    to find the real cost don’t forget to amortize the total cost of the battery replacement, maintenance,

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