At Under $19K for a Nissan Leaf, Does the Math on Electric Cars Finally Add Up?

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Nissan's Leaf, an all-electric car

Nissan’s Leaf has a long way to go to expand beyond its status as a niche commuter car. Sales have been underwhelming, even with cheap lease offers, leading some to declare the Leaf an overpriced, impractical flop. Will this change now that the Leaf isn’t quite so overpriced?

For a while now, we’ve heard that the new Nissan Leaf will have a cheaper sticker price than older models. Now we know just how much cheaper it’ll be.

Impressively, the retail price of the 2013 Nissan Leaf will drop by over six grand.

This week at the Detroit Auto Show, Nissan announced that the new Leaf S series will start with an MSRP of $28,800, which undercuts the previous least expensive Leaf by $6,400, representing a drop of 18%. Add up the incentives for buyers—$7,500 in federal tax credits, plus a $2,500 rebate in certain states, including California—and drivers can essentially pay “full price” for a Leaf for as little as $18,800.

(MORE: Electric Cars: More Models, Cheaper Prices Coming in 2013)

A drop of more than $6,000 in a vehicle’s sticker price is undeniably a big deal. Normally, an automobile model’s MSRP only goes in one direction: up. Any official dip in price can make news, and when the decline is substantial, like whenVolkswagen dropped the starting price of the Jetta by $2,400, it can provide a major boost to sales.

Is that what we can expect from the new Leaf? Surely, the lower price will push some buyers into getting off the fence in the consideration of an electric vehicle. But Leaf sales have underwhelmed before, falling well short of sales goals in each of its first two years on the market, and they may do so again. Nissan anticipated a 50% rise in Leaf sales in 2012, only to see sales increase by 22%, even as the automaker rolled out discounted lease deals toward the end of the year. Before that, Leaf sales were often down compared to corresponding months in 2011.

For 2013, Nissan is projecting a sales increase of at least 20% for the Leaf, thanks to the newly cheaper price. “Now customers won’t have to pay a premium for owning a green car that’s really fun to drive, and that’s exciting,” Billy Hayes, global vice president of Leaf sales, stated via press release. That statement, of course, basically owns up to the idea that anyone buying a Leaf in the past was indeed paying a high premium for the privilege.

(MORE: Is It Time to Declare the Nissan Leaf a Flop?)

While the new lower-priced S model Leaf is getting all the attention, the 2013 versions of the SV and SL Leaf are also cheaper than preceding models, by $3,380 and $2,410 respectively. How can Nissan cut prices like this? Lower costs for batteries and other parts help. Nissan may also be willing to eat some of the potential profits in order to get more Leafs on the road; that wouldn’t be surprising given the speculation that surfaced last year that Chevy loses tens of thousands of dollars on each Volt sold.

Regardless of how Nissan gets to the price point for the Leaf, has it reached the point that mainstream buyers will bite? A report from the Congressional Budget Office published last fall estimated that when comparing a pure battery-powered vehicles like the Leaf to a similar gas-powered car, “tax credits would still need to be about 50 percent higher than they are now to fully offset the higher lifetime costs of an all-electric vehicle.” In other words, instead of a $7,500 tax credit, something like $11,250 would cut it.

The math changes, however, now that the cheapest Leaf is $6,000 less. State rebates help put the math in the Leaf’s favor too, of course. Based on the new math, it would seem that it’s less expensive to own a Leaf rather than a similar traditional car like the Nissan Versa, all things being equal.

The problem, of course, is that all things aren’t equal. After adding up initial price, insurance, “fuel” and other expenses, a Leaf owner may pay less out of pocket than a Versa owner over the course of five to seven years, but over that time period the Versa owner is never subjected to so-called “range anxiety.” The Leaf owner can only make it 70 or 80 miles without having to stop for hours (overnight, probably) to recharge. The Versa owner, on the other hand, can embark on serendipitous road trips without carefully plotting mileage and charging stations and without having to pause for huge chunks of the day to refill the tank.

(MORE: Why the Car of the Future Will Be Powered by … Yep, Gasoline)

For drivers in search of a vehicle strictly for mid-size commuting purposes, the Leaf makes more sense than ever. Yet for drivers who demand more in a car, the Leaf probably isn’t the solution — at any price.