Nissan Leaf sales slump, and Volt future
I don't know if I find it strange or not. I mean who can buy this car, realistically/logically? More people than we think, but even people that think logically make emotional decisions when it comes to autos. I sold cars for about 5 years and when it came to used cars people bought what they wanted, not what they NEEDED. Even when their salesman (me) told them the car was too small or too expensive for them. Why do cash strapped people buy a 12 year old BMW with obvious problems? These are great cars, but at times, not cheap to run.
I think the Leaf has been purchased by what I like to car hyper-logical people. Great people that live somewhat predictable when it comes to the work commute. This car would never work for me as my life is so random. I read an article last week that stated "EV's are perfect for island life" in that the island is small (potential range) and gas is expensive. They made other minor points, but my takeaway was: the Leaf is perfect. I disagree. My island is large and infrastructure is minimal. I started thinking about where I could drive a Leaf to and how I could get back. There are 2 major towns on my island: Hilo and Kailua-Kona. These towns are 85 miles apart over some significant terrain. On one route I would have to climb from sea level to 6,000' elevation in 40 miles and then drive another 50 miles down the other side. I think the leaf can barely make it??? The other way is 100 miles up down, up down around, climb 2000' then back down to sea level then drive 50 more miles. NO WAY THE LEAF can make it?? Not without severe anxiety anyway. Then I need another 14 hour charge to get home. Unless I want to park the Leaf at the 1 public charging station in Kona for 4 hours. But wait, don't I need a FULL charge to get home? Crap, I guess that doesn't work. For 2012 the are offering free charging which is in part an effort by Hawaii to kick start the revolution... So here's the kicker though... The Volt works better for ME! At level 2 I can receive almost a full charge or I can choose not to charge for my return trip. I have choices and I have complete freedom.
But what if I wanted to go to the beach? Well Better Place has a few resort located stations but none will let me charge for more than 4 hours, how does that work for any Leaf owner? How many miles can I get from a level 2 charger for the Leaf in 4 hours? I'm guessing best case scenario is around 40 miles, or worse case scenario is 25 miles... The closest town to the north Kona beaches is at least 20 miles. Crap! The Kona beaches are 80 miles from Hilo, where I live. hmm? I don't know what I can do to make the Leaf work for whole island journeys. I need a gas engine for anything but close proximity town runs and commutes. I go to Kona about 12 times a year.. And ride with friends and family about 1/2 of the time... So that leaves me with renting a car 6 times a year.
So I guess my island is unique and the Leaf works better in most other markets? The answer is yes, given that you live in a big city, and your commute is around 60 miles r/t, or 100 miles if u can charge at work(level 1). Anything more and you are dipping heavy into the battery on a daily basis, and I worry about longevity and warranty amount other things. Theoretically, 80% of the populace lives in urban/suburban settings, so the car should work for 80% of them. How big is that market potentially? Hmm??
250MM total population/3.1= 78MM households
Subtract commuters with commutes beyond 40
78MM x .80= 62MM
How many of these people are in the right income bracket? Maybe 1/2? How many of those like the Leaf styling? Maybe 1/2? Even if we slice it down, the market should be at least 1MM. But Nissan loses its tax credit after 250,000 sold right?
Can someone please tell me how they thought they were going to make money and continue selling these when the market for cheap priced Leaves ends at $250k? I wonder what the margin is on the Leaf. Can Nissan possibly make more than $5,000 on the car? I just don't quite get how this is anything more than brand marketing for Nissan. How many billion are they invested in this car? 4 billion? They need to sell 800,000 to break even, if my math is anywhere near close to correct? If they sell 20,000 a year that's gonna take them 40 years... If they sell 80,000 worldwide then it will only take 10 years. This technology will be obsolete in 3 years! Typical automotive life cycles are around 5 years. So, if I was Carlos Ghosn I would be sweating right now and threatening his subordinates to get sales to 160,000 worldwide and sales of about 1/2 in the US market. That would be sales of about 6,600 units per month. They've never even gotten close to half that in the 14 months the car has been on the market. What is the sales curve for bleeding edge tech in the automotive sector? I would hope it would be in the 80% part of the bell within the first year, but we all know electrics are on a different curve so who knows. We know it took Toyota 7 years to get to to the top of the curve but then, in 2007 our economy/china/so.America/EU was booming.
I doubt Nissan can match toyotas sales curve, ever! It took Toyota 5 years and 2 car gens to get to 100k annual sales. So in 2013, Nissan may be selling 50k a year in North America from it's 3BB Tennessee plant. Wow, that is pretty scary if you ask me! Does crazy Ghosn realize he is going to running 3 plants for production of around 200,000 units sales worldwide? I think 1 plant could handle total capacity worldwide. How many Prius plants are there?
If Toyotas Prius is any indication to potential, which I doubt it is, they maybe could exceed that, but my guess is the market is much smaller even though adoption is likely to be a bit faster.
I hate to be bearish on their future, but I just don't like their chances. Especially given that the Nissan product portfolio is pretty weak, beyond the Rogue. The 2014 Altima looks bad, the new pathfinder will struggle with its new girlie looks, and the rest is really like whatever. Titan, dead. Frontier, ok, but what horrible TV ads (showing the truck snowboarding and putting tag line of "innovation for the planet") with it, Maxima, niche only, same goes for Cube, Armada, infiniti. The sentra and versa are poor designs, but will sell ok.
So to summarize, the market is smaller for the Leaf, compared to the Prius and Volt, and their overhead and potential for obseletion are really working against them. Sales were 469 for April, so it really doesn't look good.
As for the Volt, I'm Bullish for its future. I see GM focusing on profitability and slowly building momentum over the next 5 years. With the news of Cadillac and Volt 2.0 this week we gain an understanding that GM is nearing completion of the next thing, which will be right on time for lease run outs. If a 6 passenger model is announced next year (for 2015) I will be even more bullish on the future of GM and Voltec platforms. I just wonder if the cadi will be built on current volt platform or, if volt drivetrain parts make it to a revised platform. Not sure if that is possible in short timeframe. Maybe volt 2.0 will be built on a new suv volt platform, which I think is more likely.
I say ditch the Cruze platform and motor and get started on a better platform NOW! How cool would it be if they can reduce battery size for 2.0 version, and reintroduce a middle seat?
GM needs to reduce the unit cost in the future, hard to do when you are re-inventing for volt 2.0... But I think Akerson knows competition will be stiff by 2015, and he will continue to push major cash for future models. Volt 1.0 needs to achieve sales in the 5,000 range at the 43k price and market. Volt 2.0 needs to either sell at $35k and hit a sales target of 80,000 units/year or sell for $40k and hit sales of 50,000 units/year. It's a very sofisticated car, I don't know if $30k will ever be possible, but it would really make it easy to sell more than 100k per year.
GM please follow your hearts, and believe in the Volt, because it is the future. You could sell 10 models with Voltec parts inside and you could sell 200,000 a year, easy. I know it's possible, you just have to do it.
Aloha! codyozz 89 Chevy K1500 (want to convert to EV) driven 80miles/month.
2008 Specialized Hard Rock Bike (lifetime mpg; 1 coffee/5 mile trip) with 6' Bamboo cargo trailer. 400# capacity. No Volt yet....