Nissan’s $5,500 Battery Replacement Program Operating at a Loss, Exec Admits

One month ago, Nissan finally announced the news that owners of its LEAF electric hatchback had been wanting to hear for many years: that it would sell them a brand new battery pack for their cars when their existing battery pack reached the end of its useful life.

It's official: the Nissan LEAF battery pack costs more than the $5,499 exchange price Nissan is offering customers.

It’s official: the Nissan LEAF battery pack costs more than the $5,499 exchange price Nissan is offering customers.

At the time, the headline price offered by Nissan of $5,499 after $1,000 trade-in rebate created quite a stir. Not only was it far cheaper than many had feared, but it seemed to indicate that Nissan had dramatically lowered the cost of building its electric car battery packs.

But as GreenCarReports found out in an exclusive interview with Jeff Kuhlman, Nissan’s vice president of global communications, the price Nissan is asking its customers to pay is far less than the cost of making the pack.

In other words, Nissan is subsidising its LEAF battery replacement program.

The revelation came when GreenCarReports asked Nissan to comment on how much it was spending on LEAF battery production. Predictably, Nissan declined — the prices automakers pay for high-value parts like battery packs is a closely-guarded secret — but Kuhlmann did at least admit one thing.

“Nissan makes zero margin on the [battery] replacement program,” he said. “In fact, we subvent every exchange.”

Naturally, the amount of subventing — or subsidising — Nissan applies to each battery pack isn’t something Nissan is willing to disclose, but it will likely change as the cost of producing battery packs drops.

Nissan admits the lower-than-cost battery pack is designed to keep customers happy.

Nissan admits the lower-than-cost battery pack is designed to keep customers happy.

Interestingly, Kuhlmann says, not a single owner has approached Nissan yet to order a replacement battery pack for their LEAF under the new program. That said, he reiterated, Nissan’s LEAF battery replacement program isn’t about making money: it’s “a ‘customer-first’ initiative” designed to keep Nissan’s existing customers happy and help encourage more consumers to make the switch to electric cars.

While the news that Nissan is subsidising its LEAF battery packs will no doubt cause some commentators to claim that this is categoric proof that electric cars are not financially viable and should be discontinued in preference for other low emission technologies, it’s worth remembering that automakers subsidising new technologies isn’t a new practice.

For many years, Toyota heavily subsidised the sticker price of its Prius hybrid, allowing the car to be sold relatively inexpensively and in large numbers. As time went on, Toyota gradually recouped the cost of subsidising the Prius in its early days until the Prius family became one of its most important vehicle lines.

Nissan, we suspect, is following a similar track.


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  • Matt Beard

    However… I would be willing to bet that they will get enough usable cells out of the returned packs to do quite nicely for any warranty battery repairs.

  • offib

    Sure, but wouldn’t specifically ordering a seperate pack be more expensive than mass producing packs that are destined to be fitted into LEAFs?nI’d imagine making a special order would be expensive anyway, especially if there’s no stock of batteries at the dealer unlike how they would have several parts and what else in stock.

  • Esl1999 .

    I’m sure Nikki will agree with me here when I say that most Leafers will start to seriously consider changing there battery packs at about the 50 mile/80 kilometer max charge point.

    • Surya

      I think you’ll have to drive your car A LOT to get to that point any time soon. The degradation is a process that slows down.

  • No surprise here u2026 a used battery packs (core) value is much more than $1000. nnMost likely an pack removed for upgrade will have a capacity of 60% or more remaining (45 LEAF range miles). To go below 60% will likely take over 7 years of ownership, unless driven in a more extreme climate, or more used by a mote aggressive driver. Weight of used pack in a fix location (reduced kWh/kg) doesn’t matter (just stack two together) so the ‘used pack’ coud have another 5-10 years of life in it. nnThe secondary market value could easily offset the price difference between a new and used pack for Nissan. (eg: Solar PV at dealers in California using LEAF packs as Energy Storage u2026 generates revenue off tiered utility rates, plus California offers rebates on installed Energy Storage). There is no reason Nissan’s should operate at a loss u2026 unless there’s no used LEAF packs available for a secondary market! (currently the program is operating at a loss, so technically the VP is right)nnGiven the (relativity) small number of packs that will be upgraded in the next few years, a second gen pack, or cheaper options will likely become available. Most 2013/2014 LEAFs will drive past 2020 without slowing for a battery upgrade. By 2020, $5400 will buy at least twice the 24 kWh’s of battery capacity vs. today. :)nnCredit has to be give to Nissan for taking leadership in what many consider a risky area of battery life cycle. By communicating replace policy and program well before most need a replacement pack makes it clear that Nissan will be in the BEV business well after 2020. I’m anticipating a significant bump in Nissan’s future sales as a result of removing uncertainty of replacement batteries for customers and making clear the future cost expectation should they need a replacement pack. A huge differentiator for a potential PEV buyer! :)n

  • Donald Eyermann

    Subsidizing new models is not at all a new practice. In fact those very nsame detractors of battery electric vehicles who call for “other low nemission technologies” (all of which are linked to FOSSIL FUEL, by the nway…such as; greater than 90% of hydrogen is actually refined from nfossil fuel gas, and renewable sources are a minor fraction….its just nPR BS folks) are perfectly happy with Fuel Cell vehicles (which coast asn much as a million dollars each to have been manufactured) being only nleased to select people in a limited market….at well below actual ncost.nnOh that’s fine….it doesn’t mean that FCEVs being priced nbelow cost is “categoric proof that “fuel cells” are not financially nviable and should be discontinued in preference for other….” etc. etc.n nnAfter all, its only been about fifty years that we have been hearing [nonsence] about a “hydrogen Future”. nnHydrogenn would be even more expensive than gasoline is the real truth….that isn why the Fossil Fuel Corporations, and President Bush (Dubya is an oil nman) going to great lengths to promote hydrogen. nnWhereas as nsolar cells get even better, and likely will be coupled with heat ninduced electron excitement… developing concurrently with battery nimprovements (such as the Leaf going from 80 miles to 128 miles in the nnew model…a 60% range increase)… results in battery cars being beingn even less costly to operate in the future. nnHmmmm…..other nalternative low emission technologies will likely cost more per mile in nthe future….while battery electric cars likely will cost less per nmile… that’s doesn’t seem like a heavy brain power drain to figure out which is the better solution for mass mobility.