Nissan admits it loses money every time it replaces a LEAF battery

One month ago, Nissan finally announced the news that owners of its LEAF electric hatchback had been wanting to hear for many years: that it would sell them a brand new battery pack for their cars when their existing battery pack reached the end of its useful life.

The company recently put a price on replacement batteries for customers at $5,500 plus the requirement to return the old battery. If the decommissioned battery is worth $1,000 to Nissan, as they have stated, that means the battery costs about $6,500 to make, right? Maybe even less if Nissan wants to turn a profit, as automakers are wont to do? Wrong.

As GreenCarReports found out in an exclusive interview with Jeff Kuhlman, Nissan’s vice president of global communications, the price Nissan is asking its customers to pay is far less than the cost of making the pack. In other words, Nissan is subsidizing its LEAF battery replacement program.

Green Car Reports spoke to Nissan about these battery costs, and found that the automaker actually loses money on selling the replacement battery for the Leaf at the current price. Jeff Kuhlman, Nissan’s vice president of global communications said, “Nissan makes zero margin on the replacement program. In fact, we subvent every exchange.” All you English majors will know that “subvent” is a fancy way to say “subsidize.” Kuhlman added, though, “We have yet to sell one battery as part of the program.”

Interestingly, Kuhlmann says, not a single owner has approached Nissan yet to order a replacement battery pack for their LEAF under the new program. That said, he reiterated, Nissan’s LEAF battery replacement program isn’t about making money: it’s “a ‘customer-first’ initiative” designed to keep Nissan’s existing customers happy and help encourage more consumers to make the switch to electric cars.

The fact that Nissan offers its replacement batteries for less than it costs to manufacture them is telling of a company both cares about what its customer needs and is dedicated to the success of its product. In this case, both of those things encourage people to give up fossil fuels and adopt electric mobility, which is heartening. As more people switch to battery-powered driving, though, battery technology should become better and cheaper, and the scale of production should cause manufacturing costs to decrease. Eventually, Nissan could easily see itself breaking even selling the Leaf battery replacements. Read more about the story here.