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Nissan to lease Leaf EV

Monthly charge: Nissan's first production electric vehicle, the Leaf EV, will be leased, not sold, in Australia.

Leaf won’t be Oz’s first EV, but Nissan says it will be first with mass-market price

11 Aug 2009

NISSAN’S upcoming Leaf electric vehicle (EV) will not be available for purchase by Australian customers in the traditional sense, but instead will be offered for lease when it arrives here as planned in 2012.

According to Nissan Australia managing director and CEO Dan Thompson, the Leaf, which was officially revealed by Nissan in Japan on August 2, will command forecast monthly repayments and running costs that are on par with an equivalently sized and specified five-seat family hatchback.

He said that will make the Leaf, for which Nissan had previously targeted a starting price of less than $30,000, significantly more affordable than GM Holden’s plug-in Volt hybrid, which is also due on sale here in 2012, and Mitsubishi’s i-MiEV, which is the first EV to receive Australian Design Rule (ADR) approval and is likely to beat the Leaf on sale here.

Nissan says the Leaf, which was shown in 96 per cent production-ready form last week, will go on sale in Japan and the US in late 2010, before becoming available to European fleet customers and then the public in 2012, when right-hand drive vehicles are expected to arrive in Australia.

Mr Thompson said the Leaf would be a fleet-only proposition initially in Australia and confirmed its mass-market positioning – and recharging infrastructure would be vital if the Leaf has any chance of being a success with private buyers here.

12 center image Left: Nissan Australia's Dan Thompson.

Before its nationwide retail release in 2012, however, Europcar has committed to offering the Leaf for lease via selected metropolitan outlets in Australia and New Zealand.

The car rental firm this week said it was on target to make available between 40 and 50 Leafs to customers in Sydney, Melbourne, Brisbane and Auckland from early 2011, as part of a global deal between the Nissan-Renault alliance and Europe’s largest car-hire company, which will install recharging stations at its major operations hubs.

However, Nissan has distanced itself from the Europcar announcement and says its first right-hand-drive vehicle will not commence the ADR process until 2012.

While Mr Thompson conceded two years was not sufficient to establish a national recharging network in Australia, he said his company’s new in-house Nissan Financial Services department would be geared up to handle financing aspects of the vehicle.

He said a set lease period for customers will address some of the larger hurdles associated with the take-up of EV technology, such as battery life, residual values and redundancy issues as newer-generation battery technologies emerge.

The five-door Leaf will not share any body or interior components with any future Nissan C-segment vehicle such as the next-generation Tiida/Pulsar, but Nissan has committed to producing two further EVs during the life cycle of the original Leaf.

“Nissan wants to deliver an EV that isn’t a premium-priced proposition that instantly becomes a niche product,” said Mr Thomspon.

“Our objective is to provide a vehicle and the associated cost of ownership that includes paying for the electricity charge instead of paying for the petrol, equal to what a consumer would buy in 2012 for an equivalently specced five-seat hatch.

“Our mission is to get the cost of this technology down to that level, and that the government puts down an appropriate level of incentives, and then obviously pricing the vehicle to where it needs to be to get mass market acceptance.

“At the (anticipated $A50,000-plus price for the i-MiEV and Volt) level then the mass-market strategy is at risk, so what we’re looking at is bringing to market a leasing model, rather than a purchase model,” he said.

Mr Thompson said Nissan Australia’s financing model was central to the Leaf’s success here.

“Having the captive finance company as part of the Australian business (Nissan Financial Services Australia), we have the ability to handle the financial transactions of a lease, and it also takes out – as with any new technology – the consumer barrier of not knowing five years down the road the residual value of the battery, so that takes a hurdle as well as a fair bit of scepticism out of the equation.

“It’s basically: here’s the Leaf and it’s going to cost you ‘X’ hundreds of dollars per month in lease costs. We’re packaging it that way.

“So the challenge for us now is to get that lease payment to what the lease payment would be for equivalently specced hatch with an internal-combustion engine.

“It requires quite a bit of work, but the product is real. I have spent the last week in Japan driving the car and talking to the designer and engineers. Now it is a matter of getting the right market conditions in place, to accelerate the uptake of the technology.

“Nissan Finance would own the car at the end. The consumer has the option of obviously handing back the vehicle to Nissan Finance, and depending on the evolution of the product, the other option is to update the batteries.

“And that’s one of the biggest questions people have today: ‘How fast will the next-generation of batteries evolve?’ That will have a direct impact on the first-generation of EV vehicle four or five years down the road.

“That’s why from my perspective we are looking at the leasing model, so when the customer hands back the first-generation EV after four or five years we can say: ‘You should have this new one with a new-generation battery with better range and better performance and whatever else may be’.

“We are very aware that with the technology of lithium-ion batteries there have been quite significant breakthroughs over the last few years, and we have every belief that over the next generation of batteries we will get improved range, lighter batteries, and a better package overall than what there is today.

“So there is no (customer) ownership of the car with this model. It’s a whole new frontier for Nissan. It’s a whole new frontier for the automotive industry,” he said.

Mr Thompson said the local rollout of the Leaf would put Australia at the forefront of Nissan’s future global mobility strategy.

“This is something that we have been actively pursuing ever since I have been at Nissan Australia – over the last 18 months – and we know very well that initial production capacity is very limited – for Nissan at least.

“But a good part of work is trying our accelerate our discussions with government, and to demonstrate to Japan or head office that this market is ready, that it is willing to accept it, and to get the early allocation and early production.

“Because we are quite confident that once we roll out in Europe during 2010 and 2011, and with our production capacity being only 50,000, demand will far, far outweigh supply.

“That’s why the US government has agreed to provide financing to Nissan – I think it’s about $US1.6 billion – to get US production of the EV ready, so once we get to the global rollout – and really into the mass-market part of the plan from 2012, that we have battery and vehicle capacity ready in the US.

“They are also talking about the UK, with production facilities available in Sunderland, and obviously Japan. UK, Portugal and China are also under discussion from a production perspective in terms of battery and for the whole vehicle. The objective is to localise for the really big markets by 2012.” Mr Thompson said government incentives and the key question of infrastructure preparedness would be crucial to private Leaf sales in Australia, as with other markets.

“In every market the business model will be different, depending on how deep or how engaged the government wants to be – whether they want to stand back and bring support or whether they want to stand in and establish infrastructure.

“We approached quite a few governments back in October and at the (2008) Sydney motor show we had a Nissan EV prototype. We thought it a great opportunity to launch into an ‘EV education’ and awareness-building with government, and we had some workshops with quite a few government representatives all the way from federal to state and local levels.

“And so that was the initiation, with Nissan coming out saying: ‘We have a product that begins 2012. It will be a legitimate family-sized hatch, and it obviously supports the government initiatives of fuel carbon reduction and sustainability.’ “Victoria participated back then, as did many other governments, and from the get-go they were one of the most aggressive governments in wanting to pursue further.

“Whether the government can help out, or take a step back and ensure that somebody else is stepping forward in terms of infrastructure, is part of the discussion that needs to happen.

“So across the globe different countries and different governments are taking different approaches to infrastructure, and some of them want to take the lead by actually driving the implementation of infrastructure while some want to take a back seat and take a different strategy to encourage third parties and independent companies to implement infrastructure,” he said.

The Victorian government earlier this month became the 28th government worldwide to formalise agreements with the Nissan-Renault Alliance over the introduction of its electric cars and will support small-scale trials of the electric car.

“We’re at the stage now with the Victorian government that we have agreed to sign the MOU and the three key focus areas for us are: required infrastructure – who is going to handle it incentives – what are the incentives needed to report the financial model working for consumer uptake or consumer demand and accelerated technology uptake and education.

“There needs to be a quite a bit of education of what is EV: people are starting to understand hybrids, but it’s probably not (clear) what is hybrid, what is electric, what is plug-in hybrid, what General Motors is doing with the Volt. They’re all different technologies.

“Over the next few months we need to determine what will the infrastructure model be.

“Nissan commits resources to the state of Victoria, and likewise the state of Victoria commits resources to Nissan to form an EV quasi working group that will have to study all the key elements.

“They’re not all barriers but there are elements that will probably slow down the uptake the EV (unless they are resolved).” Mr Thompson conceded the Leaf would not be Australia’s first full-electric new vehicle to become available from a major manufacturer, but insisted that being first was less important than having the charging infrastructure to support a mass-market rollout of any EV.

“It’s not our objective or our strategy to be first to market – but it is to be the mass-market leader.

“We have a bit more of a holistic strategy (in) not trying to rush to market, because we know that mass market will not happen if the financial equation isn’t there.

“The car is ready. We can certainly launch a few hundred cars into the market but without working on appropriate infrastructure and the like it wouldn’t go anywhere, so it would be very much a niche product. For example, charge points.

“This is something that we believe from an initial point of view you don’t need a massive amount of infrastructure coverage standpoint. You won’t have a massive number of EV cars on the road for one.

“But more importantly the range of our EV is 160km and close to 90 per cent of people in Australia drive less than 100km per day, so obviously the concept is charging at home, over the evening, when there is obviously less demand on the grid and lower rates for charging.

“It is very much a trickle charge and that takes about eight hours to charge, so we are considering a quick-charge unit where you can charge up to about 80 per cent in 30 minutes if you only need about 50km of charge you just charge it in for about 10 minutes, and then you’re off,” he said.

Mr Thompson said EVs would be a vital part of government commitments to reducing overall CO2 emissions and that third-party EV recharging companies such as Better Place would fill the current infrastructure void.

“There is already quite a bit of entrepreneurial activity across the globe with these quick-charge units, and all the EVs are being designed and equipped to use this technology.

“That’s why the electric car is the only solution in Nissan’s opinion – because, fundamentally, the infrastructure is already there. It’s not that complicated.

“From the technology point of view there doesn’t need to be big breakthrough – you just need to get the right business model worked out, and obviously there are plenty of companies and start-ups and governments that see a dollar in it.

“Governments obviously see that this is a very big part of their CO2 commitment … and it can make quite a significant dent (to emissions reductions) by 2012,” he said.

Mr Thompson said Nissan would encourage a shift towards renewable energy production in Australia, which unlike many nations relies almost exclusively on coal-fired power stations for its electricity, to counter criticism that widespread employment of EVs simply shifts the burden of CO2 emissions from tailpipes to power stations.

“Certainly if it is brown coal or dirty coal, that is an issue. We are pushing for and encouraging renewable energy (from the government side).

“Consumers in Australia today have the option to purchase green power and the premium is not that significant.

“(But) it’s still a big challenge for governments in Australia, as opposed to our friends across the pond in New Zealand, where most of their energy is generated using renewable (resources).

“As part of the EV strategy, our intention is that when somebody plugs into the grid, they are tapping into an renewable energy source, and so planning that needs to be done to ensure that this is the case.

“It is likely that this will be packaged somehow into the business model, so when somebody buys an EV, they have a charging package that ensures that it is sourced from green power.

“We are encouraging this. We are not trying to own the entire infrastructure, but we are encouraging this sort of packaging to accelerate the uptake of EVs,” said Mr Thompson.

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