Will Nissan Leaf Chevy's Volt in the Dust?

Nissan announced the price for its new electric car, the Leaf, today. It will only cost around $25,000, after a $7,500 government rebate. That's significantly cheaper than early reports indicated for the price of the plug-in Chevy Volt hybrid -- $32,500 after rebate. Does that mean Nissan will win the electric car war? Not necessarily, but perhaps.

Volt's Price Isn't Finalized

First, it should be noted that the Chevy Volt may turn out to cost buyers less than the $32,500 initially reported. Some rumblings since then have indicated that GM may be trying to get the price down. But that might not be easy, since it appears that Nissan's cheaper version might be due to superior technology the automaker developed. The Washington Post says:

The relative affordability of the announced price surprised some industry observers. Nissan officials say that breakthroughs in research on batteries, combined with a $7,500 federal tax credit for the battery-powered cars, has enabled the company to make the cars available at that price.

So unless GM has the same research, the Volt might not escape a higher price tag.

The Leaf Isn't A Volt

To be fair, these vehicles are not the same. The Leaf is a purely electric car that runs on its battery alone. The Volt is a plug-in hybrid, so the gasoline power kicks in when you run out of charge. That provides the Volt with an advantage. After 100 miles in the Leaf, you must find a charging station. The Volt's battery only lasts 40 miles, but it can still drive much further after one charge. In fact, GM claims that the Volt can rack up hundreds of miles on a single charge, as the gasoline power will recharge the battery en route.

Also notable is that the Leaf would require a special charging dock, which costs around $2,200 -- though a federal tax credit will also cover half of that. The Volt, however, can be plugged into a standard outlet.

Of course, the Leaf can boast zero tailpipe* emissions, but the Volt cannot.

Still, Affordability Matters

The Leaf will be available in some markets as soon as December. That's around the same time the Volt will hit the streets. At that time, the U.S. economy is still expected to still have pretty high unemployment and consumers will probably still be apprehensive about spending a lot on a new vehicle. So the Leaf's cheaper price tag could go a long way in giving Nissan a distinct advantage.

Think about the monthly payment for each. At the after-rebate prices listed above, with a 5-year loan and a 6% interest rate, the Volt would cost $628 per month. The Leaf's payment would be just $500 (including charging station). The Leaf also goes further on one battery charge, so its energy costs would likely be cheaper, since Volt owners would have to rely on gas whenever they drive more than 40 miles.

Leaf vs. Corolla

When the Volt news broke back in August, I explained why that price was still too high to be affordable for most Americans, even if you figure in the fuel cost savings. Let's do a similar analysis for the Leaf, compared to a Corolla. According to Nissan, the Leaf would get around 100 miles per charge, which should cost "less than $3." Since that's also about the current price of gas, we just need to consider the Corolla's gas mileage -- about 30.5 mpg (the average of its city and highway rates) -- and its $15,450 price.

Under those assumptions (and including the after-rebate charging station cost), the Leaf's break-even compared to the Corolla for total price, including power, comes after driving around 155,000 miles. For the Volt, that jumps to around 200,000 miles, given its reported 230 mpg estimate and assumed price of around $32,500 after rebate. Of course, both those estimates assume that gas doesn't increase in price more than electric power, which may or may not be true. If that happens, then fewer miles would need to be driven to make their purchases more cost-effective.

So for consumers who can stomach the 100-mile limit between charges, I think the Leaf should do quite well. Of course, wealthier Americans looking for a green vehicle might be willing to pay a higher price tag for the convenience that the Volt will provide through its hybrid flavor.

For the record: Nissan has been running a prominent ad for LEAF on this site.

*Another note: I added the word "tailpipe" here after receiving a few e-mails from readers who find this distinction important. Of course, the process for creating electricity for homes involves emissions, but the vehicle itself does not create emissions by burning gasoline. I never meant to suggest otherwise, but thought this fact was already generally understood. Sorry for any confusion.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

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