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.