Update on Battery Warranty Enhancement for 2011 & 2012 LEAF

[TomT]

Yeah, it is rather like one of those "you are damned if you do and damned if you don't" kind of things... One problem is that people have been conditioned to expect major drops in consumer electronics prices over time and to pay more to be at the initial cutting edge. However, they have not been so conditioned when it comes to vehicles...

Thus, it is hard to instill that mindset in many that might be considering an EV with regard to battery replacement prices. They might potentially see a high price for a battery replacement and think of it like a transmission or engine, which remains fairly constant in price over the years, rather than a new 3D OLED TV which will drop quickly in price over the coming years... Thus, the battery will appear to be far more expensive than it actually would be when they reached replacement time.

That's something of a frustrating cop-out by Nissan.

[jhm614]

LEAF battery performance in hot climates:

To date, there have been a very small number of battery replacements related to capacity loss, and all of them have involved scenarios that included prolonged exposure to extreme heat. These have been very localized, but we are taking them very seriously.

Currently, we have almost completed testing of a new battery chemistry intended to substantially slow capacity loss in extreme heat. During constant testing at battery temperatures of 45 C/113 F, the new battery chemistry is performing similar to the manner that the current battery performs in temperate areas like San Francisco or Seattle.

We expect that, if testing continues on its current path, we will have this new chemistry ready to implement by mid-2014, and it will be compatible with 2011-2013 model vehicles. For those owners who have already had a replacement due to heat-related capacity loss, we intend to provide a transferable coupon for a battery with the updated chemistry to use within five years.

Battery replacement program:

Q. Can I exit the battery program and keep my car in a functional state with a battery that I own?

A. We understand this sentiment and are investigating as we finalize the program. We are open to constructive suggestions and dialogue. Based on suggestions here and in other places, we are also evaluating mileage and capacity options to lend a degree of flexibility to this program.

Finally, we are very proud of LEAF, and are committed to supporting you, our customers. We take your feedback seriously.

It's great to see Nissan's step up for early adopters in hot climates. And it's great to see Nissan working through / taking feedback the tougher side of the rental program. Your commitment to the Leaf and EVs makes me feel better about my commitment to the Leaf.

[evchels]

Andy indicated last night that Nissan has no interest in making a profit on the replacement of batteries... They feel they will loose money on the early side of the replacement or lease curve, in fact.

Last January, Andy also said that he would give us a price to buy a pack in Spring and that Spring meant April/May in his language. With no apology, explanation, or even acknowledgement of missing this commitment, I am not likely to believe what Andy said this weekend either.

Actually, Andy did do this during his comments to the group on Saturday, acknowledging with humility that he promised a battery price and did not deliver, then going on to explain the reasoning behind the change (essentially what has been posted here re survey data and evolving battery tech.) Of the informal remarks he made toward the beginning of the evening to kick-off the conversation, this was one of the moments I most wish had been taped for the rest of you, because I agree, it's been due for a while and he did it sincerely. (If he and I ever make another video about batteries, I'll ask him to repeat it! )

The other thing I've never heard in the conversation that night and otherwise, is that Nissan won't ever release a price. It's clearly not going to be now, but I think it's too soon to say whether it might happen by the time many of you would actually buy a battery pack. Though, I totally understand that folks wanted a price for planning purposes as much as anything, and I look forward to seeing what Nissan does with the feedback on the rental program as an interim measure.

[RegGuheert]

Thanks for the update, Brian!

I would like to make a couple of comments about your second reason for not offering a price for the LEAF replacement battery:

Q. Why is there no outright price for a swap?
A. There are two main reasons we decided against releasing an outright battery price: 1. Customer research steered us a different direction; and 2. the evolving costs of batteries over time make it impractical to do so.

First, my understanding is that GM has taken this question completely off the table with the Chevy Volt by making the replacement batteries available for $3000. If I am wrong about this, please correct me. If I am correct, then why is Nissan unable/unwilling to offer LEAF replacement batteries for $4000, considering the 50% higher capacity but lack of TMS complexity. Really, the only difference I can see in the equation between the LEAF and the Volt is that it appears there will be significantly more LEAF battery replacements than Volt battery replacements within the first ten years of operation. Is the failure rate of the LEAF battery your main concern here?

Second, why is the battery pricing so much different than the car itself? My understanding is that when a new vehicle is developed, the price of the car will not repay the design, tooling and overhead costs for quite a few units. On top of that, for a fundamentally new vehicle such as the LEAF or the Volt, those costs may never be recovered and the per-unit cost of the manufacturing the vehicle may take some time to recover, but the understanding is that it will cross below the manufacturing costs at some point. Given this, why is Nissan not able to project the battery cost curve and pick a proce which will exceed the cost at some future time, hopefully before too many battery purchases occur? Is the curve too steep or unpredictable to do this?

Personally, I can wait for the battery price, since our LEAF battery will be under warranty for capacity for three more years and for defects for another six. But, as you know, some LEAFs get wrecked and some have already exceeded the capacity warranty and will soon exceed all warranty coverage.

[JPWhite]

Q. Can I exit the battery program and keep my car in a functional state with a battery that I own?

A. We understand this sentiment and are investigating as we finalize the program. We are open to constructive suggestions and dialogue. Based on suggestions here and in other places, we are also evaluating mileage and capacity options to lend a degree of flexibility to this program.

Finally, we are very proud of LEAF, and are committed to supporting you, our customers. We take your feedback seriously.

This is crucial question and one that will assure the success or failure of the Battery Replacement Program.

Exit from the program should be possible at any time. The terms of exit will favor Nissan in the early portion of the program and favor the vehicle owner after a reasonable period of time. 3 years seems like a reasonable commitment. At some point, maybe after 6 years, the owner should be 'free and clear' should they choose to exit. The owner can then sell the vehicle on without a monthly fee being attached to it, just like a real car. Nissan would need to protect themselves against someone stopping payments at year 6 (free and clear) then re-entering the program 3 years later when the battery is worn out. I would suggest that the 'missed' payments would be required to re-enter the program with the same VIN number vehicle regardless of previous/current ownership.

I would discourage Nissan from putting an upper limit on miles driven per year. Higher mileage drivers would be hesitant to participate or penalized if they do. To provide some fairness in pricing maybe a tiered pricing plan could be offered. 50% discount for low mileage drivers willing to commit to 7,500 miles/year or less. Standard price up to 15,000 miles/year. 50% over standard price/month for an 'unlimited' plan. A tiered plan like this would fairly equate gas savings realized compared to the rental fee. Folks doing over 15,000 miles should contribute more to the battery program since they will benefit more in fuel savings/yr and wear out the battery more quickly. Folks doing just say 5,000 miles/year do not get as much fuel savings and their battery will last longer, so should get a discount to make participation worthwhile to them.

[TomT]

Agreed. Andy went out of his way to apologize for not being able to follow through on his promise. It was clear to me that he felt bad about this and was certainly very contrite about it. I firmly believe that it would be unfair to say or think otherwise.

Actually, Andy did do this during his comments to the group on Saturday, acknowledging with humility that he promised a battery price and did not deliver, then going on to explain the reasoning behind the change (essentially what has been posted here re survey data and evolving battery tech.)

[Stoaty]

Q. Why is there no outright price for a swap?
A. There are two main reasons we decided against releasing an outright battery price: 1. Customer research steered us a different direction; and 2. the evolving costs of batteries over time make it impractical to do so.

Weighing feedback from current and potential owners, we found that most favored a monthly payment approach and wanted to have ongoing assurance on the health of the battery. This approach provides the best balance of cost to the owner and increased receptivity among potential future buyers.

While this may not be optimal for current owners (I purchased my Leaf), I think this is a good idea for the overall success of the Leaf. No point in scaring away potential buyers with a price that won't be an accurate indication of what they will have to pay in 5-7 years.

The information about the "Hot Battery" is welcome indeed, and I am glad Nissan shared this information in advance of the actual guesstimated release date.

[smkettner]

Q. Can I exit the battery program and keep my car in a functional state with a battery that I own?

A. We understand this sentiment and are investigating as we finalize the program. We are open to constructive suggestions and dialogue. Based on suggestions here and in other places, we are also evaluating mileage and capacity options to lend a degree of flexibility to this program.

Finally, we are very proud of LEAF, and are committed to supporting you, our customers. We take your feedback seriously.

This is crucial question and one that will assure the success or failure of the Battery Replacement Program.

Exit from the program should be possible at any time. The terms of exit will favor Nissan in the early portion of the program and favor the vehicle owner after a reasonable period of time. 3 years seems like a reasonable commitment. At some point, maybe after 6 years, the owner should be 'free and clear' should they choose to exit. The owner can then sell the vehicle on without a monthly fee being attached to it, just like a real car. Nissan would need to protect themselves against someone stopping payments at year 6 (free and clear) then re-entering the program 3 years later when the battery is worn out. I would suggest that the 'missed' payments would be required to re-enter the program with the same VIN number vehicle regardless of previous/current ownership.

The only thing that works for me is a lease or purchase option for a single replacement battery. Lease option needs to have a buy out at some point.
I will simply not enter into a rental contract for a battery in a car I own. The rental price will go toward a different brand EV.
Nothing wrong with a battery rental option with capacity guaranty for others. I will not do it.

[Nubo]

Q. Why is there no outright price for a swap?
A. There are two main reasons we decided against releasing an outright battery price: 1. Customer research steered us a different direction; and 2. the evolving costs of batteries over time make it impractical to do so.

I think there are several problems going on here. First, putting too much faith in a survey that kind of lead people by the nose. You probably read some of the critiques here earlier so I won't belabor the point.

Also people will naturally experience "sticker shock" in the brief few seconds they'd normally spend answering such survey questions. When sitting down to a more serious examination of the proposition the boundaries may be considerably different. And while an expensive battery may be "scary" so is the prospect of not being able to get a replacement to a core component without what may be seen as an undesirable continuing financial relationship.

And in any case, why does it have to be either/or? Why not a choice between leasing and buying? Pick whichever makes more sense for one's situation.

Finally as to evolving cost structure, Can you explain better why having a variable price is such a difficult problem to overcome? I have no expectation that other parts prices are permanent, why would I expect this for the battery?

Thanks!

[FairwoodRed]

A video of Andy expressing those sentiments would be welcomed.

While I really wanted a replacement price, I can understand the stated reasons for not giving one.

EvChels, It sounds like now is the time for Nissan to hear suggestions on the Rent To Own battery program they are developing. Would you be willing to start and moderate a thread for this? In the end, I’d like to see a poll with all the suggestions listed and a vote on if a suggestion is desirable, indifferent, or a detriment. Being able to show how popular or unpopular a suggestion is might prove enlightening to Nissan.

Andy indicated last night that Nissan has no interest in making a profit on the replacement of batteries... They feel they will loose money on the early side of the replacement or lease curve, in fact.

Last January, Andy also said that he would give us a price to buy a pack in Spring and that Spring meant April/May in his language. With no apology, explanation, or even acknowledgement of missing this commitment, I am not likely to believe what Andy said this weekend either.

Actually, Andy did do this during his comments to the group on Saturday, acknowledging with humility that he promised a battery price and did not deliver, then going on to explain the reasoning behind the change (essentially what has been posted here re survey data and evolving battery tech.) Of the informal remarks he made toward the beginning of the evening to kick-off the conversation, this was one of the moments I most wish had been taped for the rest of you, because I agree, it's been due for a while and he did it sincerely. (If he and I ever make another video about batteries, I'll ask him to repeat it! )

The other thing I've never heard in the conversation that night and otherwise, is that Nissan won't ever release a price. It's clearly not going to be now, but I think it's too soon to say whether it might happen by the time many of you would actually buy a battery pack. Though, I totally understand that folks wanted a price for planning purposes as much as anything, and I look forward to seeing what Nissan does with the feedback on the rental program as an interim measure.