Like any automaker bringing a new car to market based on fringe technology, there’s a period of time — anything from a few months to a few years — where the automaker loses money on every car sold. The length of time it takes an automaker to reach profitability on a particular new model depends on the costs incurred making the vehicle, the price it is sold for, and how popular it sells.
Like Toyota’s Prius hybrid, Nissan’s all-electric LEAF originally cost Nissan far more to make than it was sold for, representing a massive loss for the Japanese automaker. But after nearly four years on the market, Nissan’s popular electric hatchback is finally becoming profitable.
That’s according to Nissan CEO Carlos Ghosn, who told journalists at a dinner held last week at the Paris Motor Show that Nissan is finally starting to see rewards for investing so heavily in electric car technology.
“We are getting there,” Ghosn said on the question of LEAF profitability. “Are we amortising and deprecating everything we have spent? No. But if you look at the margin of profit — the direct cost of the car and the revenue of the car — we are getting into positive, which is good for this technology.”
What does this mean in real terms? To date, Nissan and its alliance partner Renault have invested more than $5 billion in electric car technology in order to lead the plug-in car marketplace, including the building of specialist facilities for the manufacturing of electric car battery packs and motors and equipping factories for electric vehicle production. While Renault-Nissan’s total electric vehicle program has not yet shown a return on its investment as a whole, the LEAF as a model is now profitable. In other words, Nissan is no-longer making a loss on each and every car it makes, although there’s some hint that the wider electric car investment from the alliance will take longer to pay dividends.
Naturally, the LEAF is proving more popular in some countries and markets than others, due to local incentives, attitudes towards plug-in vehicles and individual dealer interest. And while many would assume the cities like San Francisco, Los Angeles, Portland and Seattle might top the charts as Nissan’s biggest LEAF marketplace, Ghosn disclosed that Atlanta, Georgia remains Nissan’s number one LEAF market, with more than 1,000 of August’s LEAF sales totals for the U.S. coming from Atlanta.
“No. 2 is San Francisco. No. 3 is Seattle, and No. 4 is Los Angeles,” Ghosn confirmed. “These four cities represent 80 percent of the sales, so when 80 percent of the sales are concentrated in four cities you can imagine the potential you are going to unleash when other cities follow.”
It’s that potential that should excite electric vehicle enthusiasts and Nissan board members alike. Especially when you consider how the LEAF fares to another pivotal ‘green’ vehicle in historical terms: the Toyota Prius.
With an estimated 140,000 LEAFs sold to date since the model was launched in late 2010, the LEAF still has a long way to go to hit the kind of production figures enjoyed by Toyota’s famous Prius hybrid family. But while the Toyota Prius may still rule when it comes to sales figures, Ghosn’s statement on LEAF profitability shows that the Nissan LEAF is currently in an equal — or perhaps better — position after four years of sales than the Prius was after its first years.
While the exact specifics of model profitability aren’t generally discussed by automakers, we can say for sure that after almost four years of sales, the Nissan LEAF has sold more than 140,000 cars. After a similar amount of time since launch, Toyota had sold just 81,700 Prii — although we note that Toyota chose a much smaller launch market for its Prius than Nissan did for the LEAF which will undoubtedly skew the figures a little.
If we consider where the Toyota Prius was back in 2001 after four years of sales and look at where it is now, we think the future has to be similarly bright for Nissan’s electric LEAF.
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