Subsidies and Credits May Make the Nissan Leaf Affordable -- But Not a Slam Dunk

The last remaining mystery about the Nissan Leaf battery car was how much it would cost, and that question was finally answered today. But the way Nissan announced it is interesting. Is the car $25,280, or $32,780? It depends on how you look at it.

Consumers buying electric cars are eligible for a $7,500 income tax credit, which explains the price discrepancy. Automakers have taken to quoting prices after the credit, because electric cars are, well, expensive, and the lower figures just sound so much better. You'll hear similar quotes from Tesla, Fisker, Wheego, Coda and many others. Unfortunately, not every potential buyer of this car (and especially government fleet operators) has any use for tax breaks. Non-profit groups are also tax-exempt, and thus not benefiting, either.

So $32,780 is the manufacturer's suggested retail price for the Nissan Leaf, and it appears that you will get a whole lot of car for your money. The standard Leaf (known as the SV) comes with a navigation system, Bluetooth capability, Sirius/XM satellite radio with roadside assistance, stability and traction control. For an additional $940, Leaf early adopters can upgrade to SL trim, which adds a rear camera, a solar-equipped spoiler and fog lights.

Since you can buy a very well-optioned Honda Civic or Mazda3 for $20,000 (and get at least 300 miles of range out of it, compared to the Leaf's 100), this yawning pricing gap concerns automakers, who really have no idea how big battery car demand will be when these cars first appear on the market late this year.

At $25,280, though, the cost differential doesn't seem that great, and there are other ways of getting it down even further. As Nissan points out, several states offer useful tax incentives and, even better, outright rebates, to EV buyers. California has the best deal with a $5,000 cash rebate (akin to "Cash for Clunkers") for the Leaf and its ilk. Tax credits include $5,000 in Georgia and $1,500 in Oregon. Many states also offer other benefits to EVs, such as free access to HOV lanes and no-cost downtown parking.

"With these benefits, we think we're in the middle of the mass market," said Nissan's Mark Perry. According to Perry, driving a Leaf 1,000 miles over a month's time will cost consumers about the same as driving a 29-mpg gas car under the same circumstances (assuming $2.94 gas prices). Electric prices vary, too, but this is based on an average around the country.

The Plug-In America advocacy group is bullish that the Leaf will be a good seller. "For the first couple of years, every Leaf built will be spoken for before it ever gets to a dealership," said the group's president, Dan Davids. "Like the Prius, these cars won't linger in showrooms. There is huge pent-up demand for electric cars and at this price-point, Nissan might have to accelerate completion of its new Leaf factory in Tennessee."

Added Paul Scott, the nonprofit organization's vice president: "Word of mouth on electric cars is going to be better than any consumer product since the iPod."

I expect to see more sales resistance than that. I'd be glad to see the Leaf as the next iPod, but I'm not counting on it. As I've noted before, the first-year demand for EVs is completely unknown.

Photo: Nissan