Nissan Leaf buyers, dealers worry about replacing worn-out cells

As the initial Nissan Leaf electric vehicles barrel toward their first decade on U.S. roads, some owners are voicing concerns on Internet forums about battery degradation and clamoring for an affordable replacement.

But more than a year after launching a battery refurbishment program for Leaf customers in Japan, Nissan remains noncommittal about offering the program in the brand's largest market — the U.S.

Nissan, which has sold about 135,000 Leafs in the U.S., told Automotive News it is "looking at potentially putting a battery refurbishment program in place in the U.S.," but it declined to offer a timeline.

The early Leaf batteries are the canaries in the coal mine — their feeble charge an alarm for what is almost certain to become an industrywide issue.

Just as Nissan was a pioneer in selling a battery-powered, zero-emission car in the U.S. in late 2010, the automaker must become a pioneer in figuring out how to address aging batteries that — as consumers have learned with their cellphones — last only so long. It's an industry reality that eventually all automakers that followed Nissan will have to sort out.

The earliest Tesla Model S sedans, launched in 2012, will soon cross their eight-year battery warranty mark. Next is BMW, which launched the full-electric i3 in the U.S. in 2014.

For Ravi Kan-ade, a battery refurb option can't come soon enough. The 24-kilowatt-hour battery in Kanade's 2012 Nissan Leaf SL has lost half its charging capacity after just 60,000 miles.

"A refurb program is needed to help owners who were affected by Gen 1 vehicles," the Hattiesburg, Miss., resident told Automotive News. "I believe that these early battery failures are part of a learning curve that was passed on to the consumer. Nissan offered a battery replacement program for $5,500, but unfortunately they quietly raised the price to $8,500."

Some dealers are equally frustrated, noting the lack of a refurb program hurts residual values and shoos away would-be buyers concerned about range.

Despite Nissan's claims that it is considering offering the program in the U.S., Kanade is doubtful.

"I don't believe they will because it might not be cost-effective for them, and it may take away from new-car sales," he said.

The number of EVs on the road that need replacement batteries is approaching critical mass to justify investing in refurbishment centers, said Sam Abuelsamid, a principal research analyst at Navigant Research.

"Every OEM will be doing this within the next few years," Abuelsamid said.

In spring 2018, Nissan introduced a program to let first-gen Leaf owners in Japan exchange a degraded lithium ion battery for a refurbished and less expensive one. The refurbished battery at that time cost ¥300,000 ($2,853), less than half the cost of a new 24-kWh battery at the time.

At a plant in Namie, Japan, 4R Energy Corp., a joint venture between Nissan and Sumitomo Corp., refurbishes first-gen Leaf batteries by reassembling high-performing modules removed from batteries whose overall energy capacity has fallen below 80 percent. The plant can process 2,250 battery packs a year.

"By reusing spent EV batteries, we wanted to raise the [residual] value of EVs and make them more accessible," Eiji Makino, president of 4R Energy, told Reuters last year.

Nissan's silence about a battery refurbishment program in the U.S. frustrates Dave Wright, dealer principal at Dave Wright Nissan-Subaru in Hiawatha, Iowa.

The No. 1 question from would-be customers of off-lease Leafs is: "How much life is left in the battery, and how do I get another one?" Wright said. "And, we can never get an answer" from Nissan.

The lack of information about battery replacement hurts sales of used Leafs, Wright said.

"What are we to do with these cars? Are they supposed to be disposable after seven, eight, nine, 10 years?" he asked.

By offering an affordable replacement battery, Nissan would stanch erosion of Leaf residual values, a turnoff to buyers.

"If Nissan can make a refurbished battery available for, let's say, $4,000 to $5,000," analyst Abuelsamid said, "it has the potential to make those older Leafs more appealing and raise their resale value."

Affordable refurbished batteries could also enable replacement of the original 24-kWh pack with the later 30- or even 40-kWh units that have the same package size. Increasing the residual value of old Leafs via affordable refurb packs could potentially enable Nissan to offer more attractive lease deals on new cars, boosting sales of those, as well.

The battery pack is the most expensive component in an EV.

When people come in to buy a used Leaf, they aren't asking about the interior, or the electric motor, said Dave Marvin, dealer principal of three Nissan dealerships in Texas and Southern California.

"Their No. 1 concern is the health of the battery," Marvin said. "Having an affordable, well-thought-out battery replacement program would be a great benefit because it helps address that concern."

Spending $8,000 on a new battery pack and related components for a first-gen Leaf does not make financial sense, Marvin said.

"It makes that hard to pencil," he said. "You can't get enough value back out of the car when you have had to put that kind of investment into the car."

One reason Nissan might be holding off on the refurb problem is it hasn't seen enough U.S. demand to justify the cost. Bringing the program to a large market such as the U.S. would require investments in the supply chain and a network of refurb sites because EV batteries are heavy and expensive to transport.

"We've sold hundreds, if not thousands, of Leafs and have had very few battery pack replacements," Marvin said.

Nissan has a number of projects to use its batteries — new or used — beyond vehicles. Last year, for example, a 3-megawatt storage system using the equivalent of 148 new and used Leaf batteries opened at Amsterdam's Arena soccer stadium to provide more reliable and efficient energy.