I don't really understand Nissan's Strategy

[ydnas7]

Renault Nissan spent their $5billion on LEAFs and ZOEs etc because they honestly believed that 160km on was sufficient range for a city use car.
Nissan comes from the land of vending machines, http://web-japan.org/trends/11_culture/pop140317.html" onclick="window.open(this.href);return false; Chademo is just another vending machine. http://www.chademo.com/wp/jpmap/" onclick="window.open(this.href);return false;
France has ubiquitous 3 phase AC power, AC22kW and higher is really cheap and easy to deploy, there's 1053 public ones in France alone, and a residential unit are available http://www.schneider-electric.co.uk/sites/uk/en/products-services/electrical-distribution/products-offer/ev-link-charging-solutions/residential-charging-solutions/ev-link-residential-garage.page" onclick="window.open(this.href);return false; . http://www.renault.fr/gamme-renault/vehicules-electriques/zoe/zoe/toutes-les-bornes-de-recharge.jsp" onclick="window.open(this.href);return false;

but going forward, Tesla model 3 for $35k (2013 money) will exist to be reserved, like the $57,500 Tesla Model S was. Both Tesla model 3 and Nissan LEAF gen 2 are likely to be similarly successful, without much pricing overlap. If base Tesla is 200mile EPA $35k + 6 month wait VS base LEAF at 150mile EPA $28k and same day delivery....
there is room for both
addressable market for $28k is probably twice as large as addressable market for $35k car.

 

[jpadc]

I don't see this being ZEV focused for Nissan.
If it were, they would only be selling in ZEV states as other compliance vehicles.

There are a number of federal requirements (e.g., for average MPG for the set of vehicles) that having this car helps Nissan meet. Such federal requirements are are even greater outside the US. These requirements and other incentives from the US federal government are the sole reason for the Chevy Volt. US dealer attitude tells you all you need to know about Nissan's real interest in the LEAF.

I like my car very much and it meets my needs, but don't kid yourself... you're driving an Edsel http://en.wikipedia.org/wiki/Edsel

 

[EdmondLeaf]

but going forward, Tesla model 3 for $35k (2013 money) will exist to be reserved,

Reservations in 2017 or 2018? Model 3 should be for general public and readily available, at some point Tesla have to start building volume and sell volume.

 

[jlsoaz]

Nissan is publicly committed to the electric car. The company will reportedly release a new version of the Leaf in the next couple of years with double (or more) range. However, having an electric car with additional range does little good if there is not a charging infrastructure to support it. Tesla seems to be the only electric car company that understands this. By the end of 2016 Tesla owners will be able to reach virtually any place in the country solely by using the Supercharger network, making long distance travel practical for the electric car.

To my knowledge, Nissan has no plans to erect a similar network of quick chargers centered on the Interstate highway system. Looking at the CHAdeMO chargers on Plugshare, huge swaths of the country are left uncovered. Furthermore, many of the existing chargers have limited access. For example, at the Dave Solon dealership in Pueblo, CO the CHAdeMO charger is "for use during normal service business hours, which are not as long as dealership hours."

I don't understand the business strategy of investing tens of millions of dollars into a technology without also making a modest additional investment in the infrastructure needed to make the success of the product possible. A $20 million dollar investment would underwrite 400 CHAdeMO chargers, which--if strategically placed along the Interstate highway system--would make a 150-mile range Leaf a practical choice for long range trips. As far as I can tell, Nissan has no such plan.

I am currently leasing a Leaf. When my lease is up I currently plan to purchase a Tesla Model III, not because I prefer this (as of now concept) car, but because I know that the car will be supported by the necessary nation-wide charging infrastructure.

This seems like such a no-brainer to me I am mystified by Nissan's approach.

Hi - good post.

When sending feedback to Nissan I have tried to prioritize two or three basic points and you have stated one of them. They did, about 2.5 years ago, say that they understood that they needed to be in the charge station business, but in the end they have made mistakes such as you described.

I live 70 miles from my dealer and 40 miles from the nearest public L2.... 60 miles from the nearest CHAdeMO (not put in by Nissan). I have tried to be as persuasive as I could be but have been unable to make any headway with dealers, Nissan corporate or anyone else to get them to see the point of installing DCQC along the highway instead of behind the dealership gates and not available 24x7. I also worked with a partner to install a public L2, first in the county, which does work and helps ease range concerns somewhat.

So, anyway, I have tried to prioritize suggesting to Nissan that, even if they are falling back on the idea that the Leaf is an "around town car", it would be advisable to install inter-city high-speed charging. Perhaps this explains things... if they cling (for as long as they dare) to the idea that the vehicle is suitable for around-town only, then they can avoid some of the inter-city charging effort.

There are other complicating factors. Around where I live, there have been severe reliability problems with the small number of DCQC that were installed (Eaton hardware on Chargepoint network, not sure if that was the issue). Those problems have recently been worked out by installing new hardware on a different system, but it is worth being aware that when one looks at a map, it is not safe to assume that all DCQC works like a charm. Also, sometimes companies do not execute everything they say they are going to do in a timely fashion.

I like that old baseball expression about "hit em where they ain't". It's not the same principle but it's something I'm reminded of when considering where I'd like to see a DCQC. Basically, if just one DCQC had been installed along my highway route, it would have saved me many thousands of dollars in vehicle maintenance, gasoline and insurance (I would not have had to retain a gasoline beater).

So, I've communicated to Nissan:

1) Bigger battery. I would have been happy to pay a decent amount more on my lease. I thought maybe Nissan did not line up longer-range Leafs to be ready for when people came off lease, but that hasn't happened.
2) Protect the battery better so the car's value is more clear down the road (they seem to have done this with the chemistry, a bit).
3) Quick Charge Stations along the highways in this region.

Nissan does have an agreement with at least one CHAdeMO installer that I'm aware, but I am wondering if maybe that has not gone well.

 

[eloder]

How do you define making money hand over fist?
In the last quarter, loss was $154mm, cash flow was negative $433 mm excluding borrowing.
Cash flow for full year 2014 was negative $.99 BB excluding loans.
That means cash needs are accelerating. I understand it has a lot of irons in the fire, but they are very far from the business of selling cars paying for those irons.

Jury is still out.

Amazon has never been profitable by GAAP standards.

That's what happens when you continuously invest money into yourself.

 

[EdmondLeaf]

I really understand Nissan's Strategy, as of today there are 5689 new Leaf in dealers inventory which is 3 to 4 months supply (cars.com). To me it seems that there is not much interest in buying Leaf even with nice discounts offered by Nissan. I really doubt that additional 400 CHAdeMO chargers will dramatically increase appetite for Leaf by general public. Nissan never advertised or expected that Leaf will be used as long distance car and in fact required home evse installation before purchase. At the end of 2014 Tesla stated that in 2015 will have capacity to produce 100K cars, this was reduced to 55K delivered cars, this combined with reduced wait from order to delivery may suggest that appetite for luxury BEV is fulfilling. The real question is what to do to increase adoption of EV because Nissan and Tesla strategy is to make money.

 

[epirali]

How do you define making money hand over fist?
In the last quarter, loss was $154mm, cash flow was negative $433 mm excluding borrowing.
Cash flow for full year 2014 was negative $.99 BB excluding loans.
That means cash needs are accelerating. I understand it has a lot of irons in the fire, but they are very far from the business of selling cars paying for those irons.

Jury is still out.

Amazon has never been profitable by GAAP standards.

That's what happens when you continuously invest money into yourself.

No matter how you slice it they are resource limited to their current level of investment, and no more. And the truth is the model 3 will cut significantly into their margins.

 

[Zythryn]

... At the end of 2014 Tesla stated that in 2015 will have capacity to produce 100K cars, this was reduced to 55K delivered cars, ...

This is incorrect.
At the end of 2014 Tesla stated that by the end of 2015 they expect to be at a production rate of 100,000 cars annually.
Not that they would have built 100,000 cars for the year, but they would reach that rate.

 

[epirali]

... At the end of 2014 Tesla stated that in 2015 will have capacity to produce 100K cars, this was reduced to 55K delivered cars, ...

This is incorrect.
At the end of 2014 Tesla stated that by the end of 2015 they expect to be at a production rate of 100,000 cars annually.
Not that they would have built 100,000 cars for the year, but they would reach that rate.

Sorry can you clarify? Do you mean they can make 100K but don't have the market?

 

[Zythryn]

... At the end of 2014 Tesla stated that in 2015 will have capacity to produce 100K cars, this was reduced to 55K delivered cars, ...

This is incorrect.
At the end of 2014 Tesla stated that by the end of 2015 they expect to be at a production rate of 100,000 cars annually.
Not that they would have built 100,000 cars for the year, but they would reach that rate.

Sorry can you clarify? Do you mean they can make 100K but don't have the market?

Sure.
By the end of 2015 Tesla expects to be building at a rate of 2,000 cars a week.
A full year's production at that rate would therefore be 100,000 cars/year.

They did not say they would build 100,000 cars IN 2015, just that by the end of 2015 they would reach that rate.

In order to build 100,000 cars in 2015, they would need to reach that rate at the beginning of the year, not the end.

For 2016 we should see guidance of 100,000 cars IF they have demand for that many (which I think we will).

 

[epirali]

[
Sure.
By the end of 2015 Tesla expects to be building at a rate of 2,000 cars a week.
A full year's production at that rate would therefore be 100,000 cars/year.

They did not say they would build 100,000 cars IN 2015, just that by the end of 2015 they would reach that rate.

In order to build 100,000 cars in 2015, they would need to reach that rate at the beginning of the year, not the end.

For 2016 we should see guidance of 100,000 cars IF they have demand for that many (which I think we will).

Thank you. I haven't been following their quarterly reports that closely, but didn't they report 11,627 for last quarter? That seems pretty far from the goal of producing 25,000 cars per quarter, as i don't think they have any plans or infrastructure for doubling capacity rapidly. Specially if the Gigafactory for batteries is a requirement (that is batteries are a limiting factor).

 

[Zythryn]

[
Sure.
By the end of 2015 Tesla expects to be building at a rate of 2,000 cars a week.
A full year's production at that rate would therefore be 100,000 cars/year.

They did not say they would build 100,000 cars IN 2015, just that by the end of 2015 they would reach that rate.

In order to build 100,000 cars in 2015, they would need to reach that rate at the beginning of the year, not the end.

For 2016 we should see guidance of 100,000 cars IF they have demand for that many (which I think we will).

Thank you. I haven't been following their quarterly reports that closely, but didn't they report 11,627 for last quarter? That seems pretty far from the goal of producing 25,000 cars per quarter, as i don't think they have any plans or infrastructure for doubling capacity rapidly. Specially if the Gigafactory for batteries is a requirement (that is batteries are a limiting factor).

Production, closer to 10,000 deliveries.
They do not currently have a goal of producing 25,000/quarter prior to 2016.
They are on their expected schedule, per latest quarterly report.

They built a second assembly line late last summer. Once at full speed they expect to be at that 2000/week capacity.
In the last report they mentioned their battery supply is sufficient for 70-80 thousand vehicles a year.
Gigafactory is on target to start production in 2016.

 

[tkdbrusco]

If Tesla really is producing at that rate in the next few years, they will far exceed the 200,000 cap for the $7500 federal credit by the time the Model3 gets to market. If late 2017 is really their target for the model 3 (and they are always behind schedule) this will be problematic. If the Model 3 is going to be the mass market "middle class" car, losing that $7500 credit could be a big deal for them. $7500 off of a $40,000 car is much more significant than the same amount off of a $85000 car. Come late 2016/early 2017 if Tesla is looking like they won't be able to get the Model 3 to market while the credit is still available, I'll go buy a Bolt, or a Leaf2, or whatever else is out there that still has the credit available.

 

[EdmondLeaf]

Either way you slice it, EV market is tough and one may wonder if gasoline price is a big factor or EV is not there yet for common buyer to accept it. IMO Leaf is reliable commuter car and it won't take much for Nissan get the range updated either with their battery or whatever is best for them. Volt is also nice offering and I am very happy that GM have Volt 2 ready. It is not so hard to understand Nissan and GM strategy, offer innovative dependable product at lowest price possible, or even loss, and adjust production as demand changes. As of involvement in infrastructure building, one have to prove that such expenditure will improve company bottom line for this product line.

This maybe not exact numbers but right now Tesla is in better position that Nissan and GM concerning EV fed credit. Tesla so far sold in US about 44K with GM and Nissan about 70K each. I know different price range, but show me the effect of charging infrastructure on sale.

 

[Zythryn]

If Tesla really is producing at that rate in the next few years, they will far exceed the 200,000 cap for the $7500 federal credit by the time the Model3 gets to market. If late 2017 is really their target for the model 3 (and they are always behind schedule) this will be problematic. If the Model 3 is going to be the mass market "middle class" car, losing that $7500 credit could be a big deal for them. $7500 off of a $40,000 car is much more significant than the same amount off of a $85000 car. Come late 2016/early 2017 if Tesla is looking like they won't be able to get the Model 3 to market while the credit is still available, I'll go buy a Bolt, or a Leaf2, or whatever else is out there that still has the credit available.

Tesla is not planning on the rebates being available for the Model 3.
As they are planning for not having it, I don't see why it is a problem?

That said, I expect that some of the first Model 3 buyers will get the credit.
Remember, the 200,000 number is U.S. sales only, and the rebates phase out, so for a few quarters Teslas will still get partial credit.

 

[epirali]

If Tesla really is producing at that rate in the next few years, they will far exceed the 200,000 cap for the $7500 federal credit by the time the Model3 gets to market. If late 2017 is really their target for the model 3 (and they are always behind schedule) this will be problematic. If the Model 3 is going to be the mass market "middle class" car, losing that $7500 credit could be a big deal for them. $7500 off of a $40,000 car is much more significant than the same amount off of a $85000 car. Come late 2016/early 2017 if Tesla is looking like they won't be able to get the Model 3 to market while the credit is still available, I'll go buy a Bolt, or a Leaf2, or whatever else is out there that still has the credit available.

Tesla is not planning on the rebates being available for the Model 3.
As they are planning for not having it, I don't see why it is a problem?

That said, I expect that some of the first Model 3 buyers will get the credit.
Remember, the 200,000 number is U.S. sales only, and the rebates phase out, so for a few quarters Teslas will still get partial credit.

I think $35K for a 150 mile EV will not sell very well without the Federal tax credit. For that price I can get a lot of nice mid-range ICE cars that will probably be more luxurious and better cars overall. Don't get me wrong, Tesla is a very nice electric car, but it does not compete in any way shape or form now for the price range. So I don't expect it to be able to in the $35K segment either.

For example an Audi A3 starts at $30K and really is a much better overall car in a lot of ways than the model S.

Edit: Just to be clear the last statement is NOT meant to be flame-bait. It is my honest opinion. I also do not thing that the BMW i3 is at all compelling for its price point.

 

[Zythryn]

I think $35K for a 150 mile EV will not sell very well without the Federal tax credit. For that price I can get a lot of nice mid-range ICE cars that will probably be more luxurious and better cars overall. Don't get me wrong, Tesla is a very nice electric car, but it does not compete in any way shape or form now for the price range. So I don't expect it to be able to in the $35K segment either.

For example an Audi A3 starts at $30K and really is a much better overall car in a lot of ways than the model S.

Edit: Just to be clear the last statement is NOT meant to be flame-bait. It is my honest opinion. I also do not thing that the BMW i3 is at all compelling for its price point.

You may be right, however I think it will sell very well.
This is not meant to be an economy car, it is a BMW 3 series competitor.
As for the A3 being a better overall car than the Model S, I'll have to disagree with you there

 

[epirali]

I think $35K for a 150 mile EV will not sell very well without the Federal tax credit. For that price I can get a lot of nice mid-range ICE cars that will probably be more luxurious and better cars overall. Don't get me wrong, Tesla is a very nice electric car, but it does not compete in any way shape or form now for the price range. So I don't expect it to be able to in the $35K segment either.

For example an Audi A3 starts at $30K and really is a much better overall car in a lot of ways than the model S.

Edit: Just to be clear the last statement is NOT meant to be flame-bait. It is my honest opinion. I also do not thing that the BMW i3 is at all compelling for its price point.

You may be right, however I think it will sell very well.
This is not meant to be an economy car, it is a BMW 3 series competitor.
As for the A3 being a better overall car than the Model S, I'll have to disagree with you there

I should be more specific: the interior detail and instrument panel on the model S simply aren't up to par for me. A giant LCD panel does not equate to luxury.

So model S: great electric drive, but that's it for me. Even the quality is paint is not up to Audi/BMW standards.

 

[GetOffYourGas]

Back on topic...

There has been a lot of good conversation on this thread, with lots of good insight. Let's also remember that Nissan seems to have misjudged the market space back in 2009. At that time, they expected to sell ~30k Leafs / year. They didn't hit that number until 2014. They also expected others to join the fray and for governments to - at least partially - fund the roll out of infrastructure.

While both Nissan and Tesla believe that the future will be electric, Tesla is the one that wants to bring about that future. Nissan just wants to be ready when they get "forced" into in - either by regulation, consumer demand, or both.

 

[EdmondLeaf]

Back on topic...
While both Nissan and Tesla believe that the future will be electric, Tesla is the one that wants to bring about that future. Nissan just wants to be ready when they get "forced" into in - either by regulation, consumer demand, or both.

and for that reason Tesla so far sold in US about 44K with GM and Nissan about 70K each. Tesla worldwide 80K and Nissan much more than 200K, but Tesla have big plans.