Image: Nissan Leaf
Kazuhiro Nogi  /  AFP - Getty Images
Japan's Nissan Motor's Leaf is displayed during the pre-order announcement at the company's global headquarters in Yokohama on March 30.
updated 3/30/2010 7:33:59 PM ET 2010-03-30T23:33:59

Nissan's new electric car will cost just over $25,000 when it goes on sale in the U.S. in December, aiming to bring gasoline-free technology within reach of mainstream drivers.

The Leaf, a four-door hatchback, will have a base price of $32,780, but it's eligible for a $7,500 federal tax credit for electric vehicles. That will make it cheaper to buy than electric vehicles coming from rivals and may force competitors to cut prices. But the Leaf's limited range of just 100 miles per charge for its lithium-ion battery could be a dealbreaker for some motorists.

"We want to make sure the car is affordable, ready for the mass market and has mass appeal," Mark Perry, director of product planning and advanced technology at Nissan North America Inc., said in an interview.

Customers can start reserving a Leaf in the U.S. on April 20 and Nissan is aiming for 25,000 orders by December. It hopes to build and sell 50,000 of the cars around the world during the first model year. Production is starting at an existing factory in Oppama, Japan, south of Tokyo, and will expand to Nissan's factory in Smyrna, Tenn., in 2012.

Christopher Richter, an auto analyst at CLSA Asia Pacific Markets in Tokyo, predicted the car will prove popular among "people who want to be green, people who love technology and people who are status-conscious."

Sales during the first year will be limited to about 20 large cities in the U.S., including New York, Seattle and Atlanta, Perry said. He said Nissan hopes to expand Leaf sales nationwide by the end of 2011.

The Leaf's relatively low starting price — as well as an option to lease the vehicle for $349 a month — could touch off a price war among rivals. A spokesman for General Motors Co., which will begin selling its Chevrolet Volt electric car later this year, said it will look at Nissan's pricing before announcing its own closer to its December sales date.

The Volt is widely expected to cost around $35,000 before the $7,500 tax credit. Unlike the Leaf, the Volt is not a pure electric car. Instead it's propelled by electricity stored in a battery for up to 40 miles, at which point a gasoline engine kicks in, giving it hundreds of miles more in range.

Perry said the Leaf's 100-mile range is more than adequate for the distance driven by most Americans in a given day. Still, analysts say the psychological effect of so-called range anxiety might be an obstacle for the Leaf. The Volt's internal combustion engine eases that concern by allowing drivers to continue going long after the electric charge is depleted.

"The Volt ... has a much larger appeal," said Aaron Bragman, an auto industry analyst with IHS Global Insight in Troy, Mich.

It will take about eight hours to recharge a Leaf using a 220-volt electric plug — the kind used by most electric clothes dryers. Charging using a standard 110-volt outlet could take twice that. Nissan is giving Leaf customers the option of buying a home charging station at an estimated cost, including installation, of $2,200. That cost can be offset by a 50-percent tax credit up to $2,000.

At average electricity rates, charging the Leaf would cost about $2.80 per charge.

The Volt has a smaller battery than the Leaf and can't go as far on full electric power. But it can be fully recharged in eight hours on a standard 110-volt home outlet. Using a 220-volt outlet, it takes less than four hours.

The Leaf and the Volt will be the first among many electric cars due from mainstream automakers in the coming years. Until now, electric cars like the two-seater Tesla Roadster with a price tag of $100,000 have largely been playthings of the wealthy.

Tax credits for plug-in electric vehicles top out at $7,500. The size of the credit shrinks by automaker after it's sold at least 200,000 vehicles in the U.S. The credit then phases out over a year.

Nissan says the Leaf will cost 3.76 million yen ($40,000) in Japan. It will price the car lower in the U.S. because it wants to sell more of them in that market. But Perry said Nissan is confident the company will make a profit on each Leaf sold in the U.S. at a lower list price.

One reason is because Nissan owns the intellectual property to the battery, which was developed jointly by Nissan and NEC. "We control the battery costs," Perry said.

But Nissan may be deliberately setting the price low and may even lose money to establish itself as the market leader, said Erich Merkle, president of the consulting company in Grand Rapids, Mich.

Although the Volt can travel farther on a single charge, GM still has to compete with the Leaf on price, especially among motorists who have short commutes or a second car for long-distance travel, Merkle said.

So far, some 81,000 people in the U.S. — where the Leaf went on a promotional 22-city tour earlier this year — have said they are interested in the car via Nissan's Web site. In Japan some 9,300 people have signaled an interest.

Nissan CEO Carlos Ghosn, who also heads France's Renault, has been a vocal proponent of electric vehicles, and predicts the segment will grow to about 10 percent of global sales by 2020.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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