Nissan Leaf – Lease vs Buy : A purely financial comparison

Here is some math to help you decide – purely based on financial sense. The calculations are for the SV model.

Let us consider two cases.

Buy Out : Here, after 3 years of leasing, you decide to buy out. The residual is paid using a 2 year loan. In the buy scenario, a loan for 5 years is taken. The large downpayment is to it equivalent to the lease case and includes the 7,500 that would be got back in tax credit. So, the final row shows the total money paid out after 5 years.

Sell Off : In this case, after 3 years of leasing, you return the car to the dealer. In the buy scenario, a loan for 3 years is taken. After that the car is sold off for exactly the residual of the lease scenario – to help us compare apples to apples. Again, the final row shows the total money paid out after 3 years.

Ofcourse, we don’t know the residual. So in this I calculate the “break even” residual for the two cases. If the residual announced by Nissan is lower than the one calculated below, leasing is better. If the residual is higher buying is better. The other variable is the interest rate. I’ve used the national average insterest rate from Yahoo finance.

Note that I’ve not taken sales tax into account. For one thing, it varies from state to state, for another – whether the tax is on lease payments or the entire MSRP depends on the state as well. Ofcourse, in WA, there is no sales tax on EVs. Another thing I’ve not included is disposition fee.

Don’t know whether to buy GM Volt or Nissan Leaf ?

This year we have 2 electric cars with a slightly different philosophy making debut. Nissan Leaf is a pure Electric with nominal 100 mile range. GM Volt has a 40 mile electric range but has an onboard generator that keeps moving the car using our old enemy, petroleum.

What should you buy ?

Here is a simple chart to get you started.

How much money does it take to cover entire US with chargers ?

To cover the entire US (area=3,794,101 sq miles) with one charger every 15 miles (i.e. 225 sq miles), requires 17,000 chargers. Even at $50K per charger that is less than $1B ($850M). Compare that to $4.8B that was paid in tax credits for Ethanol in 2009 alone.

In one stroke this would ger rid off the “range anxiety” FUD.

Congress should start thinking along these lines – instead of granting money to install thousands of chargers in one city. They should first start with free ways – install one fast charger every 15 miles – in the nearest gas station or rest area. Once this is done, they can branch out to highways and other roads to cover the entire country.

Debunking The 50% Coal FUD

One constant criticism that I see every where about Electric Vehicles is that “Coal accounts for about 50% electricity generation”, with the implication being electrification of transportation is useless. Like this one today.

Behind the hype on Tesla

There’s a big problem, however, with the imagery. Wind power represents about 3% of electricity production in the United States. Coal accounts for about 50%. So while Tesla drivers may pat themselves on the back because their cars don’t emit foul greenhouse gases, half the electricity needed to charge the batteries that make the cars run comes from burning coal.

If this country were to embrace electric cars in a big way, we’d probably make our emissions situation worse, not better, for all the coal we’d need to burn — unless alternative forms of electricity generation suddenly put coal out of business, which isn’t going to happen.

Let us look at this from the point of view of CO2 emissions. We have two big sources of emissions.

– Transportation
– Power generation

To reduce emissions we need to cut down emissions from both these sources, as well as from other sources. It will take decades to actually do this transition from fossil fueled cars to electric cars and from coal power to nuclear/renewable even if we start the transition in earnest today. That is why we need to start both the transitions now.

We can’t wait for that 50% of coal power to get greened before starting transition to electric vehicles.

Ofcourse, the states where electric cars will likely become popular first, are also states which have much greener power. Like my state of Washington. Even in other states, as the power generation inevitably becomes greener, automatically the electric cars will get greener too. Not so with say, Prius.

Apparently even the bright minds apparently can’t grasp this simple idea.

Nissan Leaf – A range of ranges

I’m close to Scenario 4 – so I expect an easy 100 mile range.

As they say “Common sense, the only cure for range anxiety”.

How many Leafs will be delivered in US this year ?

I think all of us who are in the initial rollout areas would be very interested in finding out how many Leafs will be actually delivered in December. Production starts in October according to the newest press release.

1. Nissan promised Project EV that they will sell about 1000 cars in each of the 5 areas. That is 5,000 cars. But there is no indication that all those will be delivered in December.

2. Production numbers have been quoted as 50K per year. This would be about 4,000 / month. This would indicate about 24,000 by Mar 2011.

3. But the production till Mar ‘2011 has been quoted as 12,000 or 19,000 (mainly in the Leaf “sold out” in first year stories). This would mean about 2,000 or 3,000 per month.

Let us say cars manufactured till Dec ’15 can be sold before the end of the year. That would be 5,000 to 10,000 cars. If we assume 50% of the cars will come to US – we can expect from a low of 2,500 to a high of 5,000 cars delivered to us before the end of the year.

http://www.mynissanleaf.com/viewtopic.php?f=4&t=578

Leasing the battery – Best thing since … ?

Ever since Nissan Leaf was announced back in May, one issue that has been much discussed is whether Nissan is going to sell or lease the battery. We have an answer now.

Nissan launched their 22-city nationwide tour of Leaf in LA on the 13th  and CEO Carl Ghosn’s comment gives us the answer.

Because the Leaf’s batteries will be leased, Ghosn said, the Leaf will cost almost exactly the same as a similar gasoline-powered vehicle.

There are a lot of people who post on the internet saying they are dead set against leasing the battery. I find it difficult to figure out why leasing the battery is bad. Are they worried about EV1 style recall and crush or are they have bought too much into the “ownership” society that ironically has the largest debt in the world ? Are they worried whether they can get the federal rebate if the battery is leased – I guess Nissan has figured that out by now. 

Currently Nissan’s battery is holds 24kwh of energy and will propel the car a 100 miles on a full charge. The batteries are for all practical purposes use a first generation technology. The technology is evolving rapidly and no doubt the the future generations will be cheaper, smaller and better. They will hold more energy and thus give better range. They will also be safer.

Given this, why would anyone want to buy a battery which will degrade slowly with usage ? The battery will only hold 80% of the charge after 5 years. With highway driving that would probably result in 50 to 60 miles of range.

Instead, if leased, Nissan is in charge of the battery. They will replace it when it is time – or may be we can buy it in 5 years when we will have 3rd gen battery which would cost half the current estimated $10,000 and/or hold more energy.

That is why I think the idea of leasing the battery is the best thing since …. well the idea of Nissan Leaf itself.

Ofcourse one problem might be the cost of lease. Nissan has not given the monthly lease figures – but Ghosn, has given enough information for us to calculate a rough figure.

For someone who drives between 12,000 and 15,000 miles a year, buying the Leaf and leasing the battery will be cheaper than owning a similar gas-powered car and filling up with liquid fuel.

Let us assume a gas price of $2.50 to $3.00 per gallon. Let us also assume a mileage of 25 miles/gallon.  Then we get a figure of $100 on the low side for the cost of filling up the car and $150 on the high side. In a September interview Ghosn actually quoted 100 Euros as the lease for the Renault EV – which translates to about $150. So, I think we are in the right ballpark here.

Taking what Ghosn is saying about the cost of the battery being same as the gas we need in a month, I expect the battery to be leased for $100 to $150 a month and the car to cost some $25,000 to $30,000 before rebates. I’d pay that much for a battery lease in a heart beat.

Curing Range Anxiety

Next year will see a sea change in American automobile scene. Plug-in hybrids like Chevy Volt and pure electric cars like Nissan Leaf and BYD E6 will start selling in the first determined effort to say good buy to our middle eastern overloards. The idea is that a Bush no longer has to hold the hand while walking with a Saudi King or an Obama doesn’t have to dutiful bow to High Oily Highness.

But there are a number of aspiring futurologists who claim that the world is afflicted with a strange disease called Range Anxiety – and because of that electric cars will not sell. The anxiety is so great that even if you regularly drive no more than 40 miles a day, a range of 100 miles on a charge is somehow impracticle.

Let us cure this disease by looking at some numbers. The data was compiled from the 2001 National Household Transportation Survey by the Department of Transportation, Federal Highway Administration. The pdf document is available here.

The numbers to look at are the Daily Accrued Miles per Day.

This shows that on a daily basis (the second column above) 91.4% of the days Americans drive less than 100 miles. In fact on 75% of the days they drive less than 50 miles. What this shows is if you have a car that gives 100 miles on a charge you can use it 90% of the days.  On those 10% of the days you have to either rent a car or if you have a second or third car, you can use it.

So, let us assume electric only cars with a 100 mile range are impracticle unless you have a second or third vehicle – since nobody wants to rent cars evrytime they want to drive more than 100 miles.

Now let us see  how many Americans have 2 or more cars. From this 2000 US census data we see that a full 57% of American households have two or more cars ! I see no reason why one of those can’t be a pure Electric Car.

Assuming a round figure of 105 million households in America, we see that nearly 60 Million households are ready to own a Electric car with a 100 mile range. All they have to do is to be able to decide before they hop into a car and drive, whether they are going to drive less than 100 miles that day or more than 100 miles. Take the electric car if you plan to drive less than 100 miles, otherwise take the gas car. Hell, make than 80 miles – just to be sure. Take the BEV if you drive less than 80 miles otherwise drive the gas car.

There, Range Anxiety is cured.

MPGe of Nissan Leaf and Chevy Volt : How GM-Volt.com got it wrong

Dr Dennis Lyle of GM-Volt.com tried to calculate the MPG Equivalent of Chevy Volt, Nissan Leaf and Tesla Roadster using Progressive Automotive X Prize standard. But he got it wrong.

Automotive X Prize uses the below formula to calculate.

MPGe = (miles driven) / [(total energy of all fuels consumed)/(energy of one gallon of gasoline)])

They have also given an Excel Spreadsheet and a pdf document to help anyone calculate the MPGe of any vehicle.

To calculate the MPGe for an EV we need to know the claimed range for a given charge. In the case of Volt it is 40 miles, Nissan Leaf is 100 miles and Tesla is 244 miles. Let us take these numbers at face value.

We also need to know how much electric power is used to reach that claimed range. That is where things get complicated. Chevy Volt has publicly stated several times that they only use about 50% of their 16kwh battery i.e. 8 kwh. This is what Lyle uses to calculate the EV only MPGe of GM Volt as 170 MPGe (40 miles for 8kwh).

But, unfortunately, Lyle uses full 100% battery capacity of Nissan Leaf and Tesla Roadster to calculate their MPGe. To put is mildly this is comparing apples to oranges. No EV can use 100% of the battery – it will ruin it quickly.

Let us see this from another angle. At 40 miles / 8 kwh, Volt has a 5 mile / kwh efficiency. At 100 miles / 24 kwh, Nissan Leaf would have only 4 mile / kwh efficiency. How can Volt, a much heavier vehicle than Nissan Leaf because of all that gas engine weight, be 25% more efficient than Nissan Leaf in electric only mode ?

Let us say Nissan Leaf uses an aggressive 80% of the battery – instead of the 50% that GM-Volt uses. That makes them use 20kwh for their 100 miles range, giving them the same 5 miles / kwh efficiency.

In general EVs give anywhere between 4 and 5 miles / kwh. GM’s EV1 gave a little more than 5 miles / kwh since it had a very good coefficiency of drag and was a small two seater.

GM stated in in their press conference announcing their 230 mpg nonsense that Volt will give a combined city+highway efficiency of 25 kwh / 100 miles. This is 4 miles / kwh and would reduce their claimed 40 miles electric range to 32 miles.

For now let us stick to the city operation only – since both GM Volt and Nissan Leaf have claimed their per charge range with city cycles only.

Using this information, we get 170 MPGe for both GM Volt and Nissan Leaf in electric operation.

Next, we need to figure out the MPGe for Volt when driven higher than 40 miles. Lyle has done that using the trip distribution table given in the pdf document linked above to be 167 MPGe, assuming 50 miles per gallon for Volt in generator mode, which looks a little high – but we can let it pass. But the combined calculation is wrong, as shown below. Lyle seems to be using Distribution of Trips instead of Distribution of Daily Miles.

This pdf document (AXP COURSE DESIGN – BASELINE DRIVING STATISTICS) gives all kinds of statistics on trip lengths by urban and rural drivers. Automotive X-Prize stipulates 100 miles of driving for EV and PHEV vehicles. Using the below distribution of daily miles, we see that 70% of the daily miles are under 40 miles and 14.8 % are between 40 and 100 miles. Since we are here restricted to 100 miles, our distribution for the sake of calculating MPGe for the GM Volt becomes 83% under 40 miles and 17% over 40 miles. If you incorrectly use Distribution of Trips instead of Distribution of Daily Miles, you get 98% under 40 miles and 2% over 40 miles – which is wrong.

 

Now, getting back to the calculating overall MPGe of Volt, we have 170 MPGe 83% of the time and 50 MPG 17% of the time. This yields a combined efficiency of 149.6 miles for VOlt – let us say 150 MPGe.

So final figures would be : Chevy Volt : 150 MPGe and Nissan Leaf : 170 MPGe.

But there is actually something overlooked here. X-Prize clearly says, we need to figure out how much power is drawn from the mains while charging the vehicle, not just use what is stored in the battery.

The amount of electricity consumed will be measured from the plug (AC) to return the vehicle to the state of charge it started the stage with.

If we assume a 90% efficiency while charging the battery, the MPGe will reduce by about 10% from 170 MPGe to 150 MPGe for Leaf and Volt would be 133 MPGe.

Nissan Leaf : 150 MPGe

GM Chevy Volt : 133 MPGe

What is your political compass ?

Just a left – right political scale is too simplistic.

Atleast you should consider a two dimensional map like the one politicalcompass.org proposes.

The old one-dimensional categories of ‘right’ and ‘left’, established for the seating arrangement of the French National Assembly of 1789, are overly simplistic for today’s complex political landscape.

The X axis takes the economic views while the Y measures social attitude. You can take the 6 page quiz which will tell you where you fall.

 

Here are the mapping of some well known historical personalities.

And finally, here I’m.