Bloomberg News

Nissan Joins GM in Selling EVs as Way to Save Money, Not Planet

April 24, 2013

Nissan Motor Co. (7201) is joining General Motors Co. (GM:US) and Tesla Motors Inc. (TSLA:US), the largest U.S. sellers of rechargeable autos, in promoting the money-saving benefits of battery-powered cars over saving the planet.

Nissan is readying new advertisements for the 2013 Leaf hatchback to expand its appeal beyond environmentally conscious drivers who’ve bought the car since it debuted in 2010, said Erik Gottfried, director of sales and marketing for the car. A campaign with “more-practical messaging” builds on a $199 per month lease offer that aided sales last year, he said.

“The environmental play hasn’t worked out in anyone’s favor so far,” Dave Sullivan, an analyst at AutoPacific Inc., said in a telephone interview. “They have to sell the benefits of why you would need this on a day-to-day basis.”

Nissan with the Leaf and GM with the Chevrolet Volt plug-in hybrid, want higher U.S. sales of rechargeable vehicles after missing targets. Weaker-than-planned demand for cars powered wholly or in part by batteries has made President Barack Obama’s goal of getting 1 million rechargeable autos on U.S. roads by 2015 increasingly unlikely, with fewer than 90,000 sold in the past two years, according to data compiled by Bloomberg.

Elon Musk, Tesla’s billionaire chief executive officer, this month unveiled a financing plan for electric Model S sedans that he said lets people spend the equivalent of $500 a month for a car that has a $69,900 base price. While the actual loan payment for the cheapest Model S would be $1,051, the company estimates the “out of pocket” cost is half that, factoring in a tax credit plus fuel and time savings.

Reduced Prices

Nissan in January announced sharply reduced prices for the U.S. version of Leaf, along with improved range and faster recharge time. Production of the modified 2013 model car for North America also began in January in Smyrna, Tennessee, at the main U.S. plant of Yokohama, Japan-based Nissan.

The company’s new advertisements will be for a national audience, not only drivers in California and states where large carmakers must sell electric vehicles, said Gottfried, who began his job this month. He didn’t say when the spots would appear.

“We’re focusing on the value and economic equation of having an EV -- what impact that would have on your household budget,” Gottfried said in an interview this week in Nashville, Tennessee.

GM, based in Detroit, emphasizes in ads how long drivers of its Chevrolet Volt plug-in hybrid can travel without purchasing gasoline. The Volt can go 38 miles (61 kilometers) on electric power before its gasoline engine engages to recharge the battery. Plug-in hybrids can also be recharged by plugging into an electrical outlet. U.S. Volt sales totaled 23,461 last year compared with an original target of 45,000.

Carlos Ghosn, Nissan’s chief executive officer, targeted U.S. sales of 20,000 in both 2011 and 2012. The carmaker, Japan’s second-largest after Toyota Motor Corp. (7203), has declined to give a U.S. volume goal for Leaf this year.

Sales of Nissan’s Leaf reached a record 2,236 in March. It went on sale in December 2010 in the U.S., where deliveries through last month totaled 23,051.

Lower Costs

“You certainly need more than an environmental focus, particularly when you have available capacity and, in the case of Nissan, lower costs,” said Alan Baum, principal of Baum & Associates, an auto consulting firm in West Bloomfield, Michigan, said by telephone.

While Tesla, which has said it expects its first profit in the quarter that ended March 31, sells a pricier luxury model, “their lease deal is a slight nod to cost issues,” Baum said.

“Mainstream automakers need higher volumes to amortize the development cost of the vehicles and allow them to improve their next-generation vehicles which will become more important as consumer demand and fuel-economy requirements increase.”

The base S trim version of Leaf, is priced $28,800, before a $7,500 tax credit. That’s $6,400 below the previous entry- level version, Nissan said. The SV level costs $31,820, and the top-end SL trim starts at $37,250, the company said this week.

The 2013 Leaf has 15 percent more range, averaging 75 miles per charge, and can be repowered in three hours from a 240-volt outlet, half the time previously required, the company said.

Nissan late last year opened what it says is North America’s largest lithium-ion battery-assembly factory next to the auto plant in Smyrna, about 40 miles from Franklin, Tennessee, where Nissan has its North American headquarters.

To contact the reporter on this story: Alan Ohnsman in Nashville, Tennessee, at aohnsman@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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