Nissan Leaf Electric-Car Sales Slump: What’s Happening Here?Nissan Leaf Electric-Car Sales Slump: What’s Happening Here?

Last year it was the Chevy Volt, which went through several months of slow sales before rebounding in the spring.
This year, it’s the Nissan Leaf, the world’s highest-volume battery-electric car, whose U.S. sales have slumped to just 600 a month or less–and stayed there since early this year.
Just 3,148 Leafs were sold in the first six months of 2012, fewer than the 3,875 delivered from January to June of 2011.
According to Al Castignetti, vice president of sales for Nissan Division in the U.S., monthly Leaf sales will remain at a level of 500 to 1,000 cars a month until December.
That’s when the revised, U.S.-built 2013 Leaf model starts rolling off assembly lines in Smyrna, Tennessee–interspersed with Nissan Altimas, Maximas, and other gasoline cars.
He stuck with the prediction that Nissan will deliver a total of 20,000 Leafs in the U.S. by the end of March 2013, however.
Yesterday, Green Car Reports interviewed Castignetti about low Leaf sales in 2012.
He attributed the results to three factors:
(1) Lumpy transition to dealer wholesaling
By far the biggest factor in the low sales numbers, Castignetti said, was the March 1 transition from a centralized reservation and assignment system to a more traditional dealer wholesaling model.
Rather than delivering Leafs to local dealerships only after a buyer has been confirmed, Nissan now ships electric cars to its dealers either to fulfill dealer orders or as part of a mix of vehicle allotments.
The move was made, he said, because Nissan didn’t feel the online “Nissan journey” model of taking reservations and assigning cars individually could scale to the volume of orders it expects in 2013.
“That was OK at the start, with low volume” in the first year, Castignetti said.
But next year, Nissan can build up to 12,000 Leafs a month in Smyrna if sales demand.
What on earth makes Nissan think it can sell up to 50 times as many Leafs each month?
Upgrades for 2013 Leaf models
“We have things planned for the [updated] 2013 model that will help it in the marketplace,” Castignetti said–which likely include a better heater, available leather seats, and an optional 6.6-kilowatt charger.
The U.S.-built 2013 Nissan Leaf could also be less expensive than earlier models built in Oppama, Japan, which suffer from the historically high Yen-dollar exchange rate. U.S. Leafs will use U.S.-built lithium-ion cells in their batteries.
At the same time as it started shipping Leafs direct to dealers on the wholesale model, the company completed its rollout of the Leaf across all 50 states.
That meant it had to fill a delivery pipeline with Leaf models, fitted with the options most appropriate for given regions, to dealers throughout the country–not just early adopter states like California, Oregon, and Washington.
Fine-tuning that process has taken time, he said, in figuring out where to allocate vehicles.
“I’ve got 3,000 Leafs in dealer inventory now, but some dealers still have zero cars,” Castignetti said. “It’s a dispersion issue.”
(2) Misunderstanding of how different Leaf buyers are from other Nissan customers
The bigger issue, he admitted, was that Nissan greatly underestimated the effort required to market electric cars at the local level.
“We learned it was somewhat naive to assume we could wholesale the Leaf like an internal-combustion car,” Castignetti said.
“No one walks into a Nissan dealer, crosses over from an Altima, a Maxima, or a Pathfinder, and decides to buy a Leaf instead.”
“We thought dealers would take the car just like any other, but it’s a totally different audience,” the sales chief acknowledged.

Ryan Reynolds and Ryan Hall in an ad for the 2012 Nissan Leaf
“You have to be an electric-car person to buy a Leaf at this stage–and we did a poor job of educating dealers how to market the car, and who to market to.”
So now Nissan encourages dealers to participate in electric-car groups, environmental causes, and other local activities where likely electric-car buyers may be found.
“You need to be included in these kinds of events,” Nissan is telling its dealers, Castignetti said, among “this audience, the green community.”
“That’s our biggest challenge.”
(3) Increased competition in California
A third factor that may be slowing Nissan Leaf sales is the loss of its unique status in California as the sole affordable car granted permission to travel in High Occupancy Vehicle lanes with just a single occupant.
Last year at this time, the electric Leaf was the only new car to qualify for a white zero-emission vehicle HOV-lane sticker in California (aside from the $109,000 Tesla Roadster and a handful of natural-gas Honda Civics).
This year, both an updated 2012 Chevrolet Volt and the new 2012 Toyota Prius Plug-In Hybrid qualify for HOV access, under a new green-sticker program for vehicles that can operate solely on electricity for part of the time.
The Volt eliminates concerns about limited electric range, and the plug-in Prius has both the name recognition and reputation for reliability of the standard hybrid Toyota Prius. Each is a formidable competitor to the Leaf.
And with California having cut its clean-car purchase rebate from $5,000 to $2,500 as more electric cars are sold, the check sent to every Leaf owner after buying is smaller–raising the Leaf’s effective cost.
Tesla Roadster with CA Clean Air Vehicle sticker — flickr user jurvetson
So what now?
Castignetti–befitting his role as a sales VP–remains highly optimistic about the long-term prospects for the Leaf.
It’s a question, he said, of focusing on the long-term sales strategy versus short-term results this year.
And, he said, the Leaf is bringing buyers into dealerships that have never before bought a Nissan car–the coveted “conquest” buyers from other makes.
He also noted that Nissan’s dealers are excited about being able to sell the only affordable battery electric car built in the States next year, once Leaf production at the Tennessee plant starts in December.
“With the uncertainty about gas prices in the industry, and China, India using more and more,” he said, “how long can gas stay at $3.20 or $3.50 a gallon?”
“It can’t. Everyone knows it can’t.”
Prius history as model
2000 Toyota Prius
“We’re betting long-term that the Leaf will be a nice car to have in the stable” for that inevitability, he said. “This will become an amazingly popular platform.”
Castignetti ended the interview on an up note. “I was at Toyota [in 2000] when it launched the original Prius,” he said.
He’s been through the early ups and downs of launching an entirely new type of cars–hybrids, in that case–and he’s well aware of how successful the Prius brand is today, 13 years later.
“Sixty percent of Leaf buyers are coming out of a Prius,” he noted. “If I could get even 10 percent of Prius buyers into a Leaf … that would be huge.”
What do you think? Do Castignetti’s explanations hold up? Or are there other issues with Nissan Leaf sales in the U.S. as well?
Leave us your thoughts in the Comments below.
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