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Expectations Run High as Nissan Turns Over New Leaf

Executive Summary

Why all the fuss over a car that has sold on average less than 40,000 units a year? Because Nissan believes the “era of the EV” is dawning, and its experience with battery-powered cars puts it in a position to succeed.

TOKYO – On the surface, all the pomp and circumstance surrounding the debut of the second-generation Nissan Leaf makes little sense.

To date, Nissan has sold fewer than 300,000 of the electric vehicles. For the past seven years. Worldwide.

That’s hardly the kind of volume automakers typically get excited about – and well below bogeys the automaker originally set for the car.

But on Sept. 6, Nissan brought dealers, VIPs and automotive journalists here from around the world to witness an outsized light-and-laser unveil of the new Leaf at the expansive Makuhari Messe convention center, onetime home of the Tokyo auto show. The invite list included media from countries where the Leaf isn’t even available yet – and is unlikely to be near term.

So why all the fuss? With key world markets now speeding toward vehicle electrification, Nissan believes its decade-old bet on the battery-powered Leaf is about to pay off, and with the new generation, the automaker is transitioning the car from a brand oddity to a central pillar of its lineup.

“The new Leaf has the potential to become the core of the company,” says Nissan CEO Hiroto Saikawa, noting the world is “shifting to the era of the EV.”

As if to second Saikawa’s assessment, several EV pronouncements have been made in the past few weeks, including news China is considering banning vehicles with internal-combustion engines at a to-be-determined date. That follows on the heels of similar pronouncements from France, the U.K., the Netherlands and Norway, promising to prohibit ICE vehicle sales by as soon as 2025.

Jaguar Land Rover last week said it will electrify its entire lineup by 2020 and BMW confirmed plans for 25 electrified vehicles – include a dozen battery-electric models – by 2025. Mercedes says it will offer electric versions of each of its cars and CUVs by 2022 and Volkswagen is targeting battery-electric vehicle sales of 3 million units worldwide by 2025.

That trend, plus a strategy to position the Leaf as more than just an EV, have Nissan bullish on sales of the small battery-powered sedan and additional models to come.

Central to the Leaf strategy is the most complete application of Nissan Intelligent Mobility technology to date. NIM is a suite of features that includes an electric powertrain; driver-assist systems such as adaptive cruise control, lane keeping and automatic braking; and the latest in connectivity – technology the automaker says will change the car-ownership paradigm, making driving easier and improving the lives of those who buy the new model.

Calling the Leaf an EV “doesn’t tell the full story or represent its massive potential,” says Daniele Schillaci, executive vice president-global marketing and sales, predicting that once consumers get a look at all the ’18 version has to offer, sales will double worldwide and possibly triple in Japan. “The new Leaf is the future of Nissan.”

Renault-Nissan-Mitsubishi Alliance CEO Carlos Ghosn echoed that sentiment days after the Leaf unveil promising the launch of 40 vehicles over the next five years that will offer various levels of autonomous drive, including full autonomy by 2022.

The Redesign

The ’18 Leaf measures 106.3 ins. (2,700 mm) in overall length, rides on a wheelbase of 175.0 ins. (4,445 mm) and is 69.7 ins. (1,770 mm) wide, dimensions that are all within an inch of those of the existing model. It uses a carryover battery pack, though more densely populated with lithium-ion cells, a neat trick that saved money on retooling but increases power to 40 kWh from 30 kWh and extends range to 150 miles (241 km) from 107 miles (172 km) in the current car.

Range was a sticking point for some consumers with the first-gen Leaf, Nissan admits, and although the new model falls short of the 200-mile (322-km) mark, a milestone surpassed by the Chevrolet Bolt and Tesla Model 3, executives believe it hits the pricing/range sweet spot.

“Now we’ve improved the range 40%, and that covers most customer (needs),” says Makoto Fukoda, chief product specialist, alluding to Nissan research on Japanese driving patterns that shows the typical Leaf owner now would need to charge the car only once a week.

If that isn’t enough to satisfy some, an even longer-range battery – promised to deliver well over 200 miles between charges – will be offered as an option about a year from now. That may be needed to expand sales in markets like the U.S., where the Model 3 and Bolt should offer the type of stiff competition the Leaf doesn’t face in Japan.

The electric motor also is more powerful, listed at 147 hp and 236 lb.-ft. (320 Nm) or torque, hikes of 38% and 26%, respectively.

Because the basic packaging is unchanged, most characterize what Nissan is calling a second-generation car as really a mild update of the original Leaf that hit the market seven years ago, with this latest rendition more of a stopgap until an all-new modular platform is developed for early next decade that is aimed at much wider application.

But company officials say the current revamp is as complete as it needs to be for now.

“We look at the platform, structure, underbody stuff, and then we think, ‛Is this broken? No? Then let’s put the investment in other parts,’” design chief Alfonso Albaisa says, pointing out the money spent on today’s electric cars is best focused on improving the battery and motors and adding new technology, as is the case with the Leaf.

“If you tear down a new Leaf, you’re going to see some things from the current Leaf, but you’re going to see some things from other cars as well,” he adds. “That’s the beauty of our company – we’re huge. When I’m in a situation that I want something, I can either design it from scratch or go into one of our baskets and grab it.”

CEO Saikawa is more succinct. “The model is brand new,” he says flatly.

But there’s no argument about the Leaf’s easily visible parts. The revamped car now better fits with the rest of the Nissan stable and signals the automaker believes EVs are mainstream enough that it is no longer necessary to stand out from the crowd.

“The first Leaf looked unique to our portfolio, because at the time the consciousness of EVs was so low that we really wanted to dress this car with a feeling, a DNA, that was attention-grabbing,” Albaisa says. “Now the circumstances have changed, and EVs are (more widely) embraced. So it’s a strategic opportunity for us to bring it back into the family.”

The revamped model also offers a glimpse of a new design language for the brand that now will evolve further under Albaisa, who moved to Nissan in April after leading a styling renaissance at the Infiniti brand.

The new Leaf “serves as the ambassador of the Nissan Intelligent Mobility (strategy),” he says. “That’s why there is a fundamental shift in the aesthetics of the car. The expression is very agile, emotional and dynamic. Ultra-simplicity, with ultra-recognizability. This is where the Nissan design language is heading.”

Even more important than the restyling is the technology play. By packing the car with all the latest safety and driver-assistance systems Nissan has to offer, the automaker hopes to change the market dynamic for EVs.

“Look at the car and the overall value proposition we have,” says Ivan Espinosa, vice-president-global product strategy. “The price is flat after a full model change and all the technology is in that car. We have a new battery, a new powertrain, so how can this not be attractive to a young customer? The overall package of the car is amazing.”

Schillaci says “the sky’s the limit” when it comes to Leaf sales, once buyers discover the car is packed with capability that goes well beyond battery power. “This is the most advanced technology product in the world,” he says.

Nissan has sold just over 283,000 Leafs globally since the car’s 2010 inception, including 113,000 in the U.S. and about 80,000 in Japan. Officials are reluctant to forecast demand beyond saying global sales will double, which based on the average over the past seven years would mean about 80,000 units annually. The automaker sells the car in 49 countries today and plans to broaden its reach to 60 markets over the next few years. The Leaf will continue to be built in Japan, the U.K. and the U.S.

What's Next

Not everyone is bullish on the near-term future of EVs. Even the most optimistic scenarios put sales at fewer than 9 million units annually worldwide in 2024, points out AutoForecast Solutions, a forecasting partner of WardsAuto. That would account for only about 8.1% of the global market, says AFS, which is even more pessimistic, projecting EV demand at about only 2.3 million units annually by mid-decade.

But even the most pessimistic outlook is a growth track the Leaf can ride on, and that has Nissan doubling down on EV technology, with Ghosn announcing plans for 12 battery-powered vehicles by 2022. To achieve that the Alliance will engineer an all-new, scalable EV platform that will underpin vehicles from a variety of segments, including a small (A-segment), affordable CUV to be developed by eGT, Renault-Nissan’s new joint venture with Dongfeng Motor in China. That vehicle is slated for production at Dongfeng’s plant in Shiyan beginning in 2019.

Range of more than 373 miles (600 km) is promised by 2022 (based on European NEDC drive cycles), with a 30% reduction in battery cost from 2016 levels. Quick-charging times will be reduced to 15 minutes for 143 miles (230 km) of range, up from 56 miles (90 km) today. Nissan officials here say look for a battery strategy that centers on lower-range, lower-cost, lighter-weight units for mass-market vehicles and brands and higher-range, higher-cost and somewhat heavier packs for luxury models.

Executives here say every brand in the chain, including luxury-marque Infiniti and budget-brand Datsun, is eager to add EVs to the lineup, but they shy away from revealing any specifics.

“Of course we are studying this,” Schillaci says.

When all this will make money remains unclear, but executives say the profitability picture is improving already with the new model and Nissan’s years of experience from being on the forefront of the emerging EV market gives it a leg up on competitors now scrambling to catch up.

“We are business people, so we are not making things that won’t project to profits,” says Philippe Klein, chief planning officer. “We are developing our EV profitability. Clearly, in the first generation when you have to make all the investment from zero (it is difficult to make money). But I expect going forward the electric vehicle will not be a profit handicap.

“Global warming, air quality (concerns) and pressure on emissions is making the case for electric vehicles more and more obvious,” he adds. “Personally, I see a tipping point coming in the next decade. (And) you can expect us to defend our positon and expand our lineup.”

dzoia@wardsauto.com @DavidZoia

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