Thursday, April 15, 2010

The First Affordable Electric Car

The first $25,000 all-electric car (EV) with at least a 100 mile range between charges is available to order this month: the Nissan Leaf goes on sale, for pre-orders only, on April 20, 2010.

The Leaf, a 4-door hatchback, will be priced under $33,000, but will benefit from a $7,500 government rebate, and will lease for $349 per month. Several states also have additional rebate programs. Nissan recommends the use of a custom home charging station, available for approximately $2,200 from Aerovironment. The Leaf will start shipping in the first half of next year. What this means is that, in 2 to 3 years, we will see EVs that can serve as commute cars under $20,000 on the used car marketplace.

The primary uncertainty in the economics of the Nissan Leaf is the battery. As years go by, it will progressively lose its maximum charge capability, dropping below its original 100 miles range. Car manufacturers have typically assumed a 10-year life cycle for car batteries. At today's cost for batteries, the impact of upgrading the Leaf's battery would probably bring the value of the car close to zero at at 10 years of age. However, most experts assume a sharply dropping price curve for car batteries in the years to come, due to increased production volumes and improved know-how. So it is probable that the economics of used EVs will end up being fairly similar to those of traditional gas-powered vehicles.

This is a true milestone - the the first time that we can buy an all-electric (EV) car, with a practical range, for a price that actually makes economic and rational sense to the consumer. It is not clear if the soon-to-ship Chevy Volt, the first announced competitor to the Leaf, will be able to meet this goal. The Volt's price has not been announced yet, but is expected to be around $40,000 before government incentives.

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