Nissan’s 2,236 Leafs sold in March was its best U.S. sales month since its December 2010 launch, and while it’s questionable whether April will equal this, Nissan is looking well beyond month-by-month results, and is showing itself to be committed for the long haul.
This week, timed with Earth Day on April 22, Nissan hosted a couple of waves of journalists to take carefully guided tours of its massive new battery plant in Smyrna, Tenn.
The 475,000 square-foot facility is adjacent to its newly online Leaf-assembly operation, and these plants are located an hour north from Nissan’s Decherd, Tenn. plant where the Leaf’s eMotors are built.
The major investment in more EV-making capacity than is yet being utilized is part of a broader goal to localize 85 percent of Nissan and Infiniti production by 2015, and to bring on more EVs in their due season.
Nissan’s battery production can be scaled up to 200,000 complete battery pack assemblies annually. In calendar year 2012, Nissan delivered 9,819 Leafs to the U.S. Do you think the company which knows full well where it’s at has big plans for the EV future?
In any event, the new plant came online just in time to supply the modified 30-year-old Smyrna auto assembly plant where the Leaf now shares assembly line space with Maximas and Altimas.
The battery assembly facility is modeled on best practices learned at Nissan’s “mother plant,” the Zama battery assembly plant in the Kanagawa prefecture in Japan. The Smryna battery factory’s American workers were hand-picked for their skills and talents and sent to Zama so they could come back home and duplicate their Japanese counterparts’ efficiency.
We say the media tour was “carefully” guided because Nissan has developed manufacturing processes to which it staunchly denies access to prying eyes, let alone camera-wielding visitors to wander through and liberally snap images of, lest competitors also learn a trick or two.
In coming days and weeks you will see various media coverage and mentions of Nissan’s battery plant, including some video production, but none of it will be giving away industrial secrets if Nissan has anything to say about it.
Nissan’s stance is understandable given it aims to lead the EV race, and has invested several billion dollars around the globe in order to try and make it so.
The Smryna plant is the largest lithium-ion automotive battery assembly plant in the U.S. and Nissan estimates once it reaches full capacity, it will represent a $1.7 billion investment – all in the name of getting as many all-electric vehicles on the road as possible.
The project is supported also by a U.S. Department of Energy loan for up to $1.4 billion. The taxpayer money was authorized under the Advanced Technology Vehicles Manufacturing Loan Program by Congress as part of the Energy Independence and Security Act of 2007.
Led by Renault-Nissan CEO Carlos Ghosn, the Japanese manufacturer is now well positioned in the center of the country to help America in its quest to 1) create vehicles and technologies that can increase U.S. energy independence, and 2) create cleaner means of transportation, and 3) stimulate the American economy.
Thus far 300 extra jobs have been created in the highly automated plant dedicated to zero emissions, and Nissan figures as many as 1,000 jobs could be derived assuming full production volume in coming years.
In It to Win It
In launching its well-under $40,000 all-electric Leaf, and developing manufacturing facilities in Japan, the U.S. and Sunderland, UK, Renault-Nissan is striking early and striking as aggressively as it can to proliferate battery powered transportation for the masses.
Through March 2013, Nissan counts 23,000 Leafs having been delivered in the U.S., and 60,000 globally.
As an already established manufacturer, Nissan can afford to do things in a bigger fashion than, say, Tesla Motors – which has lots of good ideas also, but its pockets are not nearly as deep.
Tesla’s angle has been to connect with its customers and hopefully future customers, but its strategy to tattoo its brand onto the soul of its well wishers has involved proffering such creations as its already discontinued Roadster and now its Model S – cars costing two- to four-times more than the $30,000 or so average new car price.
The California start-up has amassed a wide range of enthusiastic fans – even many who cannot afford its products – by cavalierly beginning what some have said isn’t possible in the face of established U.S. auto sellers – it’s an unfolding saga and sort of akin to a new rendition of a David vs. Goliath story.
Tesla has delivered comparatively few products, but they’ve been perceived as sizzlingly hot creations, and Tesla has all the while promised everyone who cannot yet swing a Tesla to hang on, as the 99 percent is not forgotten even if the 1 percent is presently being served first.
Fear not, says Tesla, plans are to make more affordable cars ASAP, and its plausibility has been deep for many a person who does not subscribe to Sarah Palin’s Facebook page.
Meanwhile Nissan is making more affordable cars now. They may have less visceral appeal than other upmarket creations, but they work, cost very little to operate, and are more affordable than ever.
The major manufacturer this year took a knife to the MSRP for its updated Leaf SV and SL trim model packages and introduced a base-level S trim level $6,000 less than the lowest priced Leaf from 2012.
The 2013 model year Leafs were only mildly improved in a host of ways, not radically overhauled, and their 24-kwh batteries remain close to the original spec, albeit now made in USA.
But Nissan has no actual head-to-head competitors selling a truly similar product in all 50 states. Granted EVs are coming along, such as the Honda Fit EV, the more modest Mitsubishi i-MiEV, and other manufacturers like GM and Ford have come out with or are in process of coming out with EVs for limited markets.
Aside from its limited-market RAV4 EV, Toyota has shied away from EVs altogether for now, content to sit back and let others do the heavy lifting while it tries to expand its small hybrid empire against increasing competition. Other automakers too have displayed more hesitancy and conservatism than Nissan.
By itself, Nissan has almost whittled its prices down to other economy cars, or at least to the national average new car price if not much less with incentives.
At the extreme, counting a $7,500 federal tax credit, some people in states where additional subsidies are offered – such as California, Pennsylvania, and others – are taking home the least expensive Leaf for under $19,000.
Despite the maverick appeal of what Tesla is doing on the wild and under-developed EV frontier, the fact is, Nissan’s cars – most notably the Leaf S model – can be had for a fraction of a Tesla Model S.
But Tesla, GM, Ford, Mitsubishi, BMW, and several others have plans for the not-too-distant future, and Nissan knows it, so it continues onward, putting its money where its mouth is.
For the most part.
Last fall, the company announced an enhanced battery warranty retroactive to 2011 and 2012 Leafs, as well as 2013 models. The skinny on this was Nissan will cover battery degradation for 5 years or 60,000 miles which ever comes first for cars that show nine out of 12 possible bars on their power display.
This roughly equates to 70 percent remaining power – thus significantly degraded range in cars that may only go 73-90 miles more or less to begin with.
It was a concession following a loud outcry from Nissan’s highly vocal early adopting owners, particularly in hotter states such as Arizona, Texas and California where some said extreme range loss was occurring too soon.
Nissan’s move followed despite it not admitting any actual product defect with its non-liquid-cooled battery packs, but the company says it was listening to its Leaf owners. It agreed to an independent Leaf battery probe, among other actions, and in the process, settled a class-action suit with some of its most disgruntled Leaf customers.
The enhanced warranty coverage – announced last September on the MyNissanLeaf.com forum in advance of its approximately spring 2013 effective date – does not necessarily promise to restore 12 bars, but is something positive and has been taken with mixed reactions by Leaf owners.
As noted, Nissan did not substantially re-engineer its Leaf’s battery for 2013, and its battery is still not liquid cooled or heated. But the car is expected to score higher in its EPA rating due to efficiencies implemented, and Nissan is saying it should conservatively be good for 84 miles range – if not farther – compared to 73 miles EPA-rated range for the first couple years.
It’s an altogether improved car that saw several customer recommendations come to fruition in its update, and it’s better backed now too.
Back to the Future
Bumps in the road aside, Nissan is leading a pioneering effort as it keeps churning out domestically made batteries assembled according to an elaborate and careful multi-stage process.
One of the steps in battery production (see infographic) involves aging the batteries to let complex chemical reactions take place prior to putting batteries into service.
The Smyrna battery plant has actually been operational for several months now, but full Leaf production only got rolling toward the end of February.
And now we shall see how Nissan’s gambit in electric cars continues to play out. Certainly it was a carefully thought-out business decision, intended to pay dividends if not instantly, then over time.
The yen-to-dollar exchange rate, and costs to ship Leafs from Japan have led Nissan to say the long-term investment on American soil was worthwhile.
Nissan has not said what it would do if Leaf sales remained static, and one insider told us we may see sales on par with the end of last year for a while, but the goal is to grow the business as word gets out that EVs can make sense, and more buyers warm up to them in time.
Also implied, but not stated is Nissan is planning more all-electric models with Nissan and Infiniti badging, and aimed at a variety of demographics.
Do you think the Leaf’s looks might turn off the aesthetic tastes of some buyers? The Leaf comes across like the proverbial ecocar even more than Toyota’s Prius. This styling was based on early adapter preferences expressed, but Nissan knows other people will want an electric car that blends in better. No specifics on this, but stay tuned.
Also, there is no talk at present of subcontracting excess manufacturing capacity and it is designated only for Nissan vehicle requirements.
For now, the plant’s production is scaled down, and Nissan is content to plod along with Leaf demand still the only reason for having built America’s largest EV battery factory.
But you can be sure it won’t be this way any longer than is necessary. Nissan has plans within plans and has shown willingness to push them into being with more boldness than just about anyone.