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Fully electric: The Nissan Leaf is powered by lithium-ion batteries. The battery pack is shown in the lower image, where the front of the car faces right. The car’s electric motor is attached to the front axle.

When General Motors cancelled its EV1 electric car in 2003, some called it a technology tragedy. The cars, which could travel around 60 miles on a single charge of their lead-acid batteries, were taken off the roads and crushed. Protesters staged a mock funeral; others accused GM of failing intentionally. While GM never revealed the actual cost of building an EV1 (the vehicles were only leased, not sold), the company had invested $1.5 billion in the project. But it declared the car an economic failure with no chance of reaching a mass market.

Seven years later, in December of 2010, Japan’s Nissan launched the Leaf, a four-door all-electric sedan. The range of the Leaf isn’t much better than that of the EV1—100 miles, according to Nissan (but closer to 70 miles in government tests). The major difference this time around is that the Leaf has a definite price tag: $35,200.

That’s not cheap. But Nissan thinks the Leaf is the first electric car that will appeal to a mass market. The company says it was able to lower the cost because of improvements in battery technology (it uses more potent lithium-ion batteries) and because it decided to build the batteries itself. In 2012, it plans to open a manufacturing facility in Smyrna, Tennessee, that will be able to turn out 200,000 battery packs—and 150,000 cars—a year.

So far, Nissan has sold about 21,000 Leafs globally, including 9,700 in the U.S. As part of the marketing effort, the company is tracking the cars closely. With the driver’s permission, the Leaf’s navigation system transmits driving data back to Nissan, where it is studied to see how far people drive and how well the batteries perform. And the car is connected in other ways: the navigation system displays a live list of nearby charging stations, and it sends text messages reminding drivers to charge their cars.

Mark Perry, director of product planning for Nissan America, told Mahendra Ramsinghani why he thinks “electrification” will spread across the transportation sector.

TR: Let’s start with innovation and the electric car. What does the marketplace demand in such a vehicle? Affordability? Driving range per charge?

Perry: First off, from an innovation standpoint the Nissan Leaf represents the world’s first mass-produced, mass-market, affordable electric vehicle. As you know, the Chevy Volt is a plug-in hybrid; the Leaf is a pure battery electric car with zero emissions [from the car itself]. Nobody’s done a mass-market electric vehicle before. And second, nobody’s done it at an affordable price point.

The range is a marketing challenge, not necessarily a technical challenge. Consider that 72 percent of the population drives less than 40 miles a day. So a car like the Leaf, which has 100 miles of range, more than satisfies people’s daily driving habits. To meet the affordability target is important—certainly you can add more [battery] cells, more modules, [and extend the range]—but that leads to more cost, a bigger body, and then you’re at $50,000 not $35,000. And now you’ve just killed your affordability goal.

We made a real car that people can use as their primary vehicle—you’ve got room for five adults, enough range for their driving habits, and the affordability. All three of them mean mass market.

What was the tipping point from the product development standpoint?

We had a breakthrough in battery design back in 2003 that allowed us to get twice the energy out of a pack half the size and weight and that cost significantly less. And once we had that breakthrough, then we were able to see a path to that affordability target. That was the biggest hurdle. Certainly you can do a project with 500 vehicles or 1,000 vehicles—a little pilot or test. That’s not that hard to do. But to set out to build 150,000 vehicles a year—that’s a whole different game.

Talk about some of the bottlenecks in the development of a product like this. What kept your team up at night?

What led to some sleepless nights was the decision to vertically integrate the power-train components—the battery, the electric motor, the major components that power the vehicle. One way to do it is to go to a supplier network and try to piece together a kind of jigsaw puzzle with components from supplier A and supplier B. We made the decision early on to build a unique platform totally designed to be an EV, not a conversion of anything else in the lineup. We have a complete assembly line in Osaka, Japan, built up from scratch, especially for the electric motor. The battery construction is done in a clean room—that’s also new for an automotive factory.

We’re now re-creating all that here in the United States, in Tennessee. It will be the world’s largest battery assembly plant—our engine plant will actually be winding away electric motors this time next year. And at full capacity it’ll be capable of putting out 200,000 battery packs a year.

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Credits: Nissan

Tagged: Business, Business Impact, business

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