Navigant Research Blog

Nissan Leaf Preparations Hope to Smooth Ride

— December 19, 2009

Nissan is on tour promoting its upcoming electric vehicle, the Leaf, in select cities across the U.S. The 5-passenger EV will become available in December 2010, and faces many challenges in fostering a supporting vehicle charging infrastructure and creating consumer-friendly financing options, but thus far they seem to have a well-conceived plan. During an event in Portland this week I spoke with Nissan senior manager for corporate planning Brian Verprauskus about the Leaf launch plans.

Ensuring that consumers will be ready to charge on the day that they bring the vehicle home is a new challenge for Nissan and the other EV manufacturers. Nissan plans to partner with a nationally known company to provide the wall box for plugging in the vehicle and to manage matching vehicle owners with electricians. Nissan will choose a company that has experience going into consumers’ homes, and will likely announce the partner in early 2010. Consumers will need to connect the box to a dedicated circuit for EV charging, which requires carefully managing the process to reduce risk of a customer improperly plugging in a vehicle and causing damage to the vehicle or property. Nissan’s plan is smart because many consumers will need hand holding to understand the issues of EV charging, and a company with adept at customer relations will be key.

Nissan is putting the majority of the intelligence in the vehicle charging equipment, which enables them to monitor and manage charging. This includes delayed charging, a critical feature for utilities who fear EVs adding to peak demand. This is also necessary because today there are few standards for managing charging and for hardware and communications standards, so Nissan had to create its own technology until the rest of the industry catches up.

Nissan has elected to use cellular networks to send data between the vehicle and the company. This will also enable Nissan to send text messages to consumers to alert them if the vehicle is not plugged in when it is supposed to be. Consumers will also be able to pre-heat and pre-cool their vehicles through messages sent from their cell phones.

These features address a fundamental challenge with electric vehicles – they not only have to be emissions free to satisfy environmentally-conscious customers, but they also need to be the most geeked-out vehicles that most consumers have ever driven. The EV experience must be clearly differentiated from driving a gasoline car because consumers won’t save money driving EVs until the price of gasoline rises significantly.

Down the road Nissan will have to deal with contention between equipment as smart meters and smart wall boxes will also have features for managing charging. As new standards are passed, it will be a bit messy as auto manufacturers will have to upgrade equipment and react to potential hardware incompatibilities.

Another challenge for Nissan and other EV manufacturers is pricing the vehicles and the batteries. The company will lease the vehicles and batteries, sell the vehicles and lease the batteries, or sell the vehicles with the batteries. If Nissan attractively prices the batteries assuming that I can resell them after 5 years but cannot find a market, the company may have to write them off at a sizable loss.

Nissan has picked select markets including Portland, Seattle, San Francisco and Los Angeles to launch the Leaf, which will enable the company to work the kinks out before a nationwide launch. The support of business, civic, and political leaders for a charging infrastructure is critical for EV success. So far Nissan appears to be forming all of the right partnerships to make that possible.



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Automotive Battery Makers to Benefit From Smart Grid

— December 8, 2009

Driving to work and flipping on a light switch may seem to unrelated activities, but very soon lithium ion batteries will assist in making both possible.

The nascent electric vehicle market is likely to standardize on lithium ion batteries. Today the cost of plug-in and all-electric vehicles is too high for many consumers thanks to batteries, which can add $10,000 or more to the price tag. The cost of batteries is only expected to come down after battery cells and packs are produced in sufficient volume to achieve economies of scale.

Despite the media attention around new vehicles such as the Chevrolet Volt and Nissan Leaf, Pike Research does not expect the combined sales of PHEVs and EVs in the U.S. to eclipse 100,000 units annually until 2013. As outlined in our new report “Electric Vehicle Batteries,” auto manufacturers will be slow to roll out the new vehicles, which will limit the size of their battery orders. Several of the new EV models have already been delayed, which forces battery manufacturers to adapt to sudden changes. Many of these companies are younger and not as well capitalized, so the margin for error if orders rapidly shrink or grow is smaller.

Utilities are now exploring using the same batteries that go in EVs to compensate for fluctuations in electric power transmission and generation. Just as different types of vehicles need batteries that can deliver high power (such as hybrids) as well as those that are energy dense (for EVs), grid applications also can benefit from different types of Li-ion batteries.

Grid storage will provide a more stable secondary market for EV batteries. While EV sales are likely to vacillate depending on the price of gasoline and government incentives, utilities will systematically add battery storage as they bring on new intermittent renewable power such as wind and solar, and as they upgrade the grid to make it smarter and more efficient.

Several battery companies, including EnerDel and A123 Systems, are simultaneously pursuing both markets and will benefit from the split strategy. Each of these companies has also received federal funds from the Recovery Act for project and manufacturing grants aimed at electrifying the transportation industry as well as for building a Smart Grid.

The EV industry may well waver depending on consumer acceptance of the new class of vehicles. If it does, the energy industry may be ready to take on a surplus in batteries.



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