President Barack Obama has set an ambitious goal of putting at least 1 million battery-powered cars on the road by the middle of the coming decade.
Many in the auto industry have charitably called that target ambitious. Others are less polite. But while it may be a difficult goal, Nissan CEO Carlos Ghosn is among those who believe the public may get charged up by the switch to electric power.
To get there, however, he stresses that some of the industry’s basic business models may have to be rethought to reflect the new world of electric propulsion.
Ghosn was in Los Angeles recently for the start of Nissan’s “Zero Emissions Tour,” a 22-city road show that will lead up to the launch next year of the first of four battery-electric vehicles, or BEVs, the Japanese maker plans to launch in the next few years.
The Leaf is a 5-seat sedan similar in size to the subcompact Versa, but it replaces the current model’s gasoline engine with an 80 kilowatt electric motor with about 110 horsepower that draws its power from a lithium-ion battery pack.
While Ghosn is quick to proclaim that battery propulsion “will change the industry,” he also acknowledges that to win over buyers, tomorrow’s BEVs will need to be “affordable, … cool, attractive and fun to drive.”
On the positive side, electric motors develop maximum tire-spinning torque the moment they start to turn, and a prototype Leaf launched fast enough to throw a passenger back deep into the seat. The design of Nissan’s first battery car is as distinctive as Toyota’s gas-electric hybrid Prius, though Leaf program manager Hideaki Watanabe said Nissan opted against a “spaceship-style design” to avoid alienating more traditional buyers who might otherwise want an emissions-free car.
Nissan is betting there is a core group of buyers who will opt for a vehicle like the Leaf to assuage their “environmental guilt.”
But to make the technology sustainable as a business will require reaching into the mainstream. That’s not easy. Even conventional hybrids, such as the Prius, Honda’s Insight and the Ford Fusion Hybrid, are struggling to garner more than 2 to 3 percent of the U.S. automotive market.
There is no hard data, but it's estimated that there are only a few thousand BEVs on the road now, not including hybrids, which also have a gasoline engine. Hybrids have had some initial success in part because they don’t have some of the limitations of the pure battery car, such as limited range, long charging times and high costs, mostly for their batteries.
Because of pricey lithium-ion, or LIon, technology, General Motors is expected to charge more than $40,000 for its extended-range electric vehicle, the 2011 Chevrolet Volt. A special $7,500 federal tax credit will bring the price down to the mid-$30,000 range, still a sizable chunk for a compact sedan.
Ghosn suggests the Leaf will be priced no more than “2 to 3 percent” more than a comparable gasoline vehicle, which would mean $25,000 or less, depending on final equipment levels.
How can Nissan afford to make such a deal without going deeply in debt on each vehicle? The sticker price will cover just the vehicle itself, and not the battery, which will be leased separately, Ghosn said. The monthly fee will be based on what it would cost to fuel up a comparable, gasoline-powered vehicle to run about 15,000 miles annually which, depending upon your assumptions about future oil prices, could run $200 to $400.
In its initial incarnation, the Leaf is expected to deliver up to 100 miles on a charge. Actual mileage may vary, depending on driving style and driving conditions. That may not sound like much but research shows that up to 70 percent of American drivers drive less each day than the 40-mile battery range of Volt and more than 80 percent never reach 100 miles in a day.
That doesn’t completely resolve so-called “range anxiety,” the fear of needing a little bit more in an emergency. To help address that, Nissan has been forming a variety of partnerships with the likes of Project Better Place, which is setting up a network of quick charging stations in Israel, and even special facilities that can swap a discharged battery for a fresh one in no more time than it normally takes to gas up.
Here in the States, Nissan recently inked a partnership with Texas-based Reliant Energy, which will provide fast 220-volt chargers to Leaf buyers and set up quick-charge facilities that could be used at offices or on the road. Nissan says one system under development would give an 80 percent charge in less than 10 minutes.
Such joint ventures are critical to making battery power a reality, most automakers have recognized. Many energy providers see a similar payoff, since the goal is to promote charging at night, when the power grid is underutilized and steep discounts can be offered. BMW, for one, has even been working with New York City parking garages to set up chargers for residents who might want an urban commuter car — like its Mini-e — but would otherwise have no place to recharge.
These partnerships, said Nissan’s Watanabe, could also provide a place for batteries once they’re no longer fit for use on the road. They likely would still have plenty of life and could be put out to pasture on load farms designed to stabilize the grid during times of peak demand. They also could serve to collect power from renewable sources like wind, solar or wave during peak production and keep the juice flowing at night or when winds die down.
Nissan is not only looking for new business models but also updating old ones. Traditionally, there’s been a big profit in providing bigger engines to those who want better performance. As LIon battery chemistry improves, experts anticipate battery packs will get smaller, lighter and cheaper. But for those who might want more range, Nissan is considering the idea of offering optional, longer-range packs — for a premium, of course.
It may also be possible to offer higher-power batteries and more powerful motors for those who might like the idea of a green muscle car.
There’s little doubt the battery car will change the way the auto industry does business. The companies that can adopt their business case to the new technology could lead the charge.